Many shippers, particularly small businesses and e-commerce companies, don’t have the freight volume to fill a 53-foot trailer every time they need to send something out. If their cargo weighs more than 75 pounds, shipping parcels can be cost-prohibitive. Less-than-truckload (LTL) shipping is best for those in-between shipments, when a shipper needs a cost-effective way to move 6 pallets or less.
LTL pricing is dictated by what category the freight falls into, as defined by the National Motor Freight Traffic Association (NMFTA) and its National Motor Freight Classification (NMFC) system. Recently, the NMFTA announced a major overhaul of this system to make LTL shipping simpler and more efficient.
Let’s take a look into some of the intricacies of LTL shipping and how these changes to NMFC codes will impact shippers
In a Nutshell, LTL Shipping
Think of LTL shipping as public transit for freight: Like a bus, the truck makes several stops in one trip to pick up at some locations and deliver to others. The trailer holds a hodgepodge of freight from different businesses and often needs to be reorganized at docks to offload a pallet from the front of the trailer or make room for new cargo. Like public transit, this stop-and-go system typically takes more time than a straight shot from A to B would. But shippers pay only for the space their cargo takes up, so the tradeoff for a speedy delivery is the lower price point.
Rates for LTL shipping are lower than rates for dedicated deliveries, but to get to this price, many factors besides trailer space are taken into consideration. The type of freight, its density, and any specialty needs are factored into the final rate a shipper pays.
The Big Book of NMFC Codes
The NMFTA sets standards for freight classification called the NMFC to provide a universal guide to pricing LTL freight by sorting freight into classes that dictate shipping costs. Every commodity has a corresponding NMFC code, which falls under a certain class based on that item’s density, handling requirements, stowability, and liability. For an idea of how many NMFC codes there are, the NMFC book was the size of a hefty phonebook before it went digital.
Joe Ferraro, Business Development Manager at Shaker, has decades of experience with complex LTL shipping. He spoke about why shippers might prefer their logistics provider to handle freight classification for them:
“It can be a complicated, drawn-out process. Not everything is classed by density alone, so you might have to scroll through thousands of commodity descriptions to find your NMFC code. It gets specific, too. If the commodity is labeled ‘power units’, you have to know if they’re APUs or generators or turbines. Unless you really understand the NMFC book, you’ll have a hard time classifying anything correctly.”
Misclassification is a costly mistake. When carriers notice misclassifications, they charge a fee for reclassification and the shipment can be delayed in the process. This is why it’s critical for shippers to have clear and specific descriptions of their freight, along with accurate weight and dimensions, to get classification right the first time.
Changes to Freight Classification
In an effort to streamline LTL shipping and reduce classification errors, the NMFTA revised their classification system to make it easier to use. The full details can be found in a 700-page docket on the NMFTA’s website, but here are the main takeaways:
- All non-specialized freight (meaning freight without handling or liability concerns) will now be classified by density only. This reduces time spent hunting for NMFC codes and makes it easier to get a BOL out the door.
- Unique identifiers will be assigned to specialized freight that falls outside of the density scale, and considerations for handling and liability will be factored into pricing.
- The NMFC code book got a trim, and thousands of codes were consolidated or eliminated to simplify the classification process.
How much the NMFTA changes will impact shippers ultimately depends on the commodity being shipped. Shippers moving denser freight may see some rate reductions as density tiers change, while others might be placed into a higher class due to code consolidations. Shippers can take a few actions to prepare for a smooth transition into the new system:
- Have specific commodity descriptions and accurate dimensions, weight, and pallet count for every BOL. Measure each piece of freight carefully. Be as accurate as possible, as cost is directly impacted by class.
- Reach out to your 3PL for help with any NMFC codes. Shaker’s team is closely watching this developing issue and studying changes carefully so we can help our shippers through this transition.
“These changes have been a long time coming,” Joe said. “This updated classification system will bring LTL shipping up to speed with the rest of the industry in terms of booking efficiency and enable our customers to book with confidence.”
The new density-based classification system will also make it easier for shippers to book their own LTL loads directly through Shaker’s LTL portal. When a shipper inputs the weight and dimensions of their freight, our system automatically calculates freight density, which corresponds directly with a class on the new density scale.
High-density items, such as pallets of stone or crates of machinery, are less likely to be damaged during transit and will be classified towards the bottom of the scale (Class 50). Carriers tend to charge more favorable rates for this freight. Cargo that’s less dense, like wood cabinets or ping pong balls, is more susceptible to damage from falling or sliding in the trailer and will be classed higher (up to Class 500), often with higher rates to match.
These changes are just the beginning of a larger overhaul of the freight classification system. When it comes to shipping LTL, misclassification can turn a cost-effective shipment into a costly one. Don’t take a risk and guess about class. Act with certainty and partner with Shaker Logistics for all your LTL shipping needs. Reach out to our team for a quote today!