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A “basing point” refers to a specific geographic location designated by a shipping company or carrier where transportation rates are established as a reference point for calculating freight charges. Here’s how it typically works:
- Designated Location: The basing point is usually a municipality or a specific location within a municipality that is considered a standard point on the carrier’s route network.
- Rate Determination: The carrier publishes freight rates in their rate book based on shipping from or to the basing point. These rates are typically used as a baseline for calculating transportation costs.
- Calculation to Nearby Points: When shipping goods to nearby locations that are not the basing point:
- Distance Calculation: The freight cost is calculated based on the distance from the shipping origin to the basing point.
- Adjustment: If the destination is beyond the basing point, an additional cost is added to the rate. Conversely, if the destination is before the basing point along the route, a deduction may be applied.
- Application in Pricing: This system helps simplify freight pricing by establishing consistent rates to and from a central point, streamlining the logistics of calculating shipping costs across various destinations.
The basing point concept is particularly relevant in industries where shipping costs vary significantly based on distance and logistics. It provides a standardized approach for carriers and shippers to determine and apply freight rates based on specific points along transportation routes.
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