When one shipment contains multiple products, freight must be allocated somehow before you can calculate product-level landed cost. The allocation method can materially change apparent margin, so it should reflect the way products consume logistics resources.
Allocation by quantity
Quantity is simple: divide freight by total units and assign the same amount to each unit. It works best when products are physically similar. It can distort cost when one SKU is much larger or heavier than another.
Allocation by weight
Weight-based allocation is useful for dense cargo or transport where mass is a meaningful cost driver. A product representing 60% of shipment weight receives 60% of the freight cost.
Allocation by volume
Volume can better represent space consumption for bulky freight. Calculate CBM using the CBM Calculator, then allocate based on each product group’s share of total cube.
Allocation by value
Value-based allocation can fit some accounting policies because higher-value products absorb more cost, but it may not reflect physical transport usage. Use it deliberately rather than because the data is convenient.
Run the scenarios
The Freight Cost Allocation Calculator lets you compare all four methods across three product groups. After allocation, use the Freight Cost Per Unit Calculator for unit economics.
Keep policy consistent
Choose a method, document it and apply it consistently enough for meaningful comparisons. If the shipment mix changes materially, reassess whether the method still reflects cost causation. See also our freight cost per unit guide for the margin side of the analysis.
Worked three-product allocation example
Assume a shipment has $2,000 of freight and three product groups. Product A represents 50% of shipment weight, Product B 30%, and Product C 20%. Under weight-based allocation, freight would be assigned $1,000, $600 and $400 respectively. If quantity shares were 20%, 40% and 40%, a quantity allocation would produce a very different product-margin picture.
| Basis | Best when | Main distortion risk |
|---|---|---|
| Quantity | Products are physically similar | Large/heavy units subsidized by small units |
| Weight | Mass drives transport economics | Bulky lightweight goods understated |
| Volume | Cube is the main constraint | Dense high-value goods may look too cheap |
| Value | Accounting policy or value exposure matters | Poor reflection of physical transport use |
Use one policy for reporting, scenarios for decisions
Accounting consistency may require one standard allocation basis, but commercial analysis can still compare alternative methods. If product margin changes dramatically between weight and volume allocation, that is useful information about how different SKUs consume logistics capacity.
Frequently asked questions
Which allocation method is most accurate?
There is no universally correct method. Choose the basis that most closely reflects cost causation for the shipment and satisfies your accounting policy.
Can I allocate duties and freight using different methods?
Yes when appropriate and permitted by your accounting/customs process. For example, freight may be allocated by volume while duties follow customs value. Document each rule clearly.
Should I use value allocation for low-value bulky products?
Be cautious. Value allocation can understate the logistics burden of products that consume substantial cube but have low purchase value.
How often should the policy be reviewed?
Review it when product mix or freight mode changes materially, or when the chosen basis no longer represents how transport cost is incurred.
Related guides
PackToolbox guides are built around stated formulas, practical examples and source checks for changeable carrier, freight and logistics rules. Calculators are planning aids; final requirements should be verified with the relevant carrier or service provider.