Managing Freight Agreements

In order to calculate the charges for a freight order, and to distribute the charges amongst the delivery items, you must maintain some master data for the purposes of charge calculation.

See the following video to learn more on the charge calculation master data.

Freight agreements are maintained in the Manage Freight Agreements app. You can create and edit freight agreements as the basis for calculating transportation charges payable by you to your carrier. You use freight agreements, along with calculation sheets, rates, and scales to efficiently manage long-term contracts with your carriers. The Manage Freight Agreements app allows you to do the following:

• Create freight agreements with contractual data such as validity dates, charge lines, and rates

• Copy existing freight agreements, including the calculation sheets, rates, and scales in the freight agreements

• Display and edit freight agreement details, including calculation sheet items, rates, scales, and calculation rules

• Add and edit larger volumes of rates using Microsoft Excel

• Use rate tables in freight agreements instead of creating them locally in the freight agreements

• Release freight agreements so that they can be used in freight orders to calculate charges

• Edit released freight agreements (super users only)

• Delete freight agreements (in process freight agreements only)

• Display freight order details and access the freight order (in released freight agreements only)

On the header level of the freight agreement you maintain the fundamental information of a freight agreement, such as the following:

• Purchasing organization
• Carrier
• Validity (from/to)
• Document currency
• General Terms (main transportation mode and shipping type)

The calculation sheet is used to calculate transportation charges. The calculation sheet combines the charge types permitted for a document and the sequence in which the system takes these charge types into account during the calculation. The system uses the calculation sheet to specify which transportation charges to calculate and how to calculate them. This helps to pay suppliers or carriers for subcontracted transportation services. The calculation sheet points to calculation sheet items and each calculation sheet item can result in a calculated amount.

Each calculation sheet item can consist of the following:

• Charge type
• Rate (either flat rate, local rate table or referenced rate table)
• Calculation resolution base (root, product, or stage)
• Calculation method (for example standard, breakweight)
• Rounding profile
• Reference item (for relative calculation sheet items)

In more detail, the items above refer to the following:

Rate:

Rates contain details of the rate table for each calculation sheet item. It is also possible to enter fixed rates or percentages of other lines in the calculation sheet.

Calculation Resolution Base:

During charge calculation, the system determines the calculation resolution base by the origin of the data on which the charge aspect is based. You can define the charge aspect for the resolution base as:

• Root: This is the header of the freight order.

• Stage: To utilize stage attributes such as distance between the locations visited on a tour.

• Product: When product attributes like product quantity, weight or volume need to be used.

For example, you want to determine the freight rate based upon the gross weight of the freight order. To do this, you need to use the calculation resolution base of root. If, however, you want to calculate the freight on a per product basis, the calculation resolution base must be product.

You can use Microsoft Excel to speed up the process of adding and editing large volumes of rates in local rate tables. You download the rates to Microsoft Excel and then you can add rates, edit existing rates, and add scale items. Then you can upload your changes to the freight agreement. When you download the rates, the system creates a Microsoft Excel file for each calculation sheet item (charge type). The file name of each Microsoft Excel file is in the format of Rates_<ChgType>_<Timestamp>, for example, Rates_FB00_20190928131240.

The downloaded Microsoft Excel file includes the following details:

• Charge type data

• Currency

• Organization data

• Calculation rule

• Calculation bases

• Existing rates

If there is just one scale, or if all the scale bases have the Same Scale type, the rates are displayed in the file as a list. If there are multiple scales or the scale bases have different scale types, the rates are displayed in a table. The table is pivoted at the last added scale with its scale items as column headers.

You can calculate the charges for transporting goods in freight orders based on the rates that you maintain in a rate table, or locally in a freight agreement. A prerequisite for charge calculation in a freight order is a valid, released freight agreement between the purchasing organization and carrier with rates for each calculation sheet item.

Note

You can not have a released agreement with the same validity period, purchase organization, and carrier (duplicate check).

If you are using a rate table instead of a local rate table or flat rate, you must release the validity period in the rate table that you want to use to calculate charges for the freight order.

The system determines the relevant freight agreement based on the business partner (carrier) and purchasing organization. The calculation date must be within the validity period of the freight agreement.

The freight order contains the logistical data on which the charges are based, such as source location, destination location, item information, and quantities.

The system calculates transportation charges automatically for freight orders when you transfer the freight orders from a de-central transportation management system to Transportation Management (TM) in SAP S/4HANA Cloud, public edition or when the freight order is updated (internal transportation planning). For example, if the source business document (sales order) is changed, this results in a change of the freight unit and ultimately in a change to the freight order, either through an update from the de-central transportation management system or from internal planning. You can also manually calculate transportation charges in the Manage Freight Orders app.

You can access charge calculation details on the Charges tab of freight orders in the Manage Freight Orders app. The Charges tab contains general charge data and also details of each charge line, for example, the charge type, rate, exchange rate, and calculated amount.

When determining the rates, the system considers the following:

• Calculation method

  When calculating a rate during charge calculation, the system applies a standard, clipping, or breakweight calculation method to calculate the charges for the charge type.

  An example of this is shown in the following table:

  Rate Table for Illustration of Different Calculation Methods

  Gross Weight	Rate
  Up to 100kg	2,00 EUR/kg
  Up to 200kg	1,80 EUR/kg
  Up to 500kg	1,50 EUR/kg

  The Standard calculation method, takes the gross weight and uses the rate for the individual scale item for its calculation:

  • Gross weight: 95 kg ==> 95 kg * 2,00 EUR/kg = 190 EUR
  • Gross weight: 110 kg ==> 110 kg * 1,80 EUR/kg = 198 EUR

  The Clipping calculation method, takes the incremental gross weight for each scale item and uses the rate for the individual scale item for its calculation:

  • Gross weight: 95 kg ==> 95 kg * 2,00 EUR/kg = 190 EUR
  • Gross weight: 110 kg ==> 100 kg * 2,00 EUR/kg + 10 kg * 1,80 EUR/kg = 218 EUR

  The Breakweight calculation method, compares the entry price of the subsequent scale item according to the Standard calculation method, and the standard price for the actual weight and chooses the minimum:

  • Gross weight: 95 kg ==> 95 kg * 2,00 EUR/kg = 190 EUR OR 100 kg * 1,80 EUR/kg = 180 EUR ==> Minimum is 180 EUR
  • Gross weight: 110 kg ==> 110 kg * 1,80 EUR/kg = 198 EUR OR 200 kg * 1,50 EUR/kg = 300 EUR ==> Minimum is 198 EUR

  The Fuel Surcharge Calculation method allows you to calculate fuel surcharges based on two different models. Fuel Surcharge Calculation Model 1 is widely used in North America. With this model, you calculate the fuel surcharge based on the fuel surcharge index based on the origin location or zones. To calculate the fuel surcharge, you must maintain two rate tables:

  • A rate table with the fuel surcharge rates for the corresponding fuel surcharge values.
  • A rate table with the location, dates or validity, and the respective fuel surcharge values. You use this rate table as the index base rate table.

  In Fuel Surcharge Calculation Model 2 the logistic service provider or carrier agrees with the customer on an index base date based on which the system determines the base fuel surcharge value. The actual fuel surcharge is calculated based on the current fuel surcharge value and base fuel surcharge value. To calculate the fuel surcharge, you define an index base rate table with the fuel surcharge values for specific calculation dates or validities. You can also define a rate table with the fuel surcharge values for scale items such as location and calculation dates or validity periods.

• Resolution base

  The system calculates the charges based on the resolution base, which is as follows:

  • PRODUCT- Products being transported

  • ROOT- Freight order

  • STAGE- Transportation stage

• Scales

  Scales are used to define a parameter, which then defines a rate. For example, if a rate depends upon distance and weight, you define a separate scale for distance and weight. The distance and weight scales are then used to define the rate.

• Calculation base

  The system calculates charges for a scale based on the calculation base, for example, gross weight, net volume, or destination location. A calculation base corresponds to an underlying scale base. A scale base is generic, but a calculation base is more specific. For example, there is a scale base for weight and calculation bases for gross weight, net weight, and dimensional weight. Therefore, you use a calculation base to allow the system to calculate a charge for different kinds of factors, such as weight, volume, and distance.

• Charge type

  The charge type helps you to determine how the system calculates the transportation charges for the charge line. The charge type also determines the type of value (absolute or percentage) that you can enter for a calculation sheet item. A charge type can result in a positive or negative value for a charge line.

• Flat rates, relative rates, or percentages

  • Specify a flat rate for a calculation sheet item by entering an amount and a valid currency.

  • Specify a relative rate for a calculation sheet line item by specifying a calculation rule and the rates.

    Note

    Only one calculation rule can be specified at the line-item level and you must specify the calculation rule if you have a relative calculation base as a scale.

  • You can specify that a calculation sheet item is a percentage of another calculation sheet item by entering a percentage value (%) as the currency, and a reference line number or a range of reference lines.

• Minimum and maximum amounts

  You can specify a minimum or maximum amount for specific charges in the local calculation sheet of freight agreements. Then, during charge calculation, the system compares the calculated charge to the minimum or maximum amount. If the calculated charge is higher or lower than the minimum or maximum amount, the system charges the minimum or maximum value instead.

  Note

  You can specify the minimum and maximum amounts only for scales with the Same Scale scale type and a relative calculation type.

The following simulation allows you to create freight agreements and rate tables and the calculation logic within a freight agreement.

ExerciseStart Exercise

You can monitor freight orders that have calculation errors with the Monitor Calculation Errors - Freight Orders app. You can also use the app to calculate the charges, which helps with analyzing the errors. When you complete these tasks, you can resolve the errors in the relevant app (for example, specifying a rate that is missing for a mandatory charge in the Manage Freight Agreements app or the Manage Rate Tables app) so that the freight orders can be included in financial postings.