How to Allocate Freight Costs Across Multiple SKUs

You get one freight invoice for a container holding four different products. Split it by weight if freight was charged by weight, by volume if it was charged by volume, and by value only when you cannot measure either. Splitting it evenly per SKU is almost always wrong.

Why This Matters More Than It Sounds

A shipment carries 200 ceramic mugs and 200 nylon drawstring bags. One freight bill: $1,400.

Split it evenly, and each product absorbs $700, or $3.50 per unit. Clean and fast.

It is also fiction. The mugs are heavy and dense. The bags are light and compress. They did not consume the same freight. The even split makes your mugs look cheaper than they are and your bags look more expensive than they are — and then you price both off those wrong numbers, discount the wrong one, and reorder the wrong one.

Bad allocation does not lose money loudly. It just quietly points your decisions in the wrong direction for a year.

Method 1: Allocate by Weight

Use when: your freight was priced on weight — air freight almost always, and any ocean shipment where the chargeable weight beat the volume.

Each SKU's share = (that SKU's total weight ÷ shipment total weight) × total freight.

Method 2: Allocate by Volume

Use when: your freight was priced on space — LCL ocean shipments quoted per CBM, and full containers where you are effectively paying for a fixed volume.

Each SKU's share = (that SKU's CBM ÷ shipment total CBM) × total freight.

Notice how different this looks from the weight method. The bags take up nearly as much space as the mugs despite weighing a fifth as much. Which method you pick is not a rounding decision.

Method 3: Allocate by Value

Use when: you genuinely cannot get reliable weight or volume per SKU, or when you are allocating a cost that really does scale with value — insurance, or duty-adjacent fees charged ad valorem.

Each SKU's share = (that SKU's goods value ÷ total goods value) × total freight.

The weakness here is obvious once you see it: value has no physical relationship to freight. A shipment of expensive, tiny electronics would absorb almost all the freight while consuming almost none of the space. Use this method as a fallback, not a default.

Side by Side: Same Shipment, Three Answers

One shipment, four defensible-looking numbers, and the mug's freight cost ranges from $1.21 to $5.80 depending on nothing but your choice of method. If your product sells for $9, that choice swings your gross margin by roughly 51 points.

Which Method Should You Use?

Match the method to how you were actually charged. That is the whole rule.

• Air freight → weight. You were billed on chargeable weight. Allocate on weight.
• LCL ocean → volume. You were billed per CBM. Allocate on CBM.
• FCL ocean → volume. You paid for a box. Space is the scarce resource, so volume is the honest split.
• Insurance, ad valorem fees → value. These genuinely scale with value, so value is correct here rather than a fallback.
• Fixed per-entry fees (brokerage, ISF, and the rest of the charges nobody quotes you) → split by value or evenly. These have no physical driver at all. Pick one, and be consistent about it.

One more thing worth doing: allocate the different cost buckets with different methods in the same shipment. Freight by volume, insurance by value, brokerage evenly. It takes five extra minutes and it is materially more accurate than forcing everything through one rule. Our landed cost spreadsheet is set up to handle each bucket separately for exactly this reason.

Frequently Asked Questions

What is chargeable weight and why does it matter here?

Carriers charge on whichever is greater: actual weight or volumetric weight, which converts your cargo's size into a weight-equivalent. If volumetric weight won, your freight was effectively priced on space, so allocate by volume even though the invoice says kilograms.

How do I get volume per SKU if my supplier only gives me a total?

Ask for carton dimensions and units per carton for each SKU. Length × width × height gives you CBM per carton, multiplied by carton count gives you CBM per SKU. Suppliers have this data — it is on their packing list.

Can I just use one method for everything to keep it simple?

You can, and for a single-SKU shipment it makes no difference at all. The moment you carry products with very different densities in the same shipment, one method starts lying to you. Volume is the safest single choice for ocean freight.

Do I reallocate if part of the shipment arrives damaged?

The freight was already spent, so it stays on the SKU that consumed it. But your per-unit figure should divide by units actually received, which raises the cost per surviving unit. That is the correct answer, not an error — the loss is real. See the full breakdown in our landed cost formula guide.

Last updated: September 10, 2026.