With the advent of online shopping and the rapid growth of e-commerce over the last decade, small to medium-sized retailers have found themselves more and more reliant on having reliable, cost-effective, and timely shipping services. Click and purchase customers expect their goods immediately, and they presume that their goods will be delivered to them safely and securely.
Many of these businesses do not ship in bulk to just one consignee; rather they make multiple LTL deliveries daily to different locations all over the world. As a result, shipping rates account for a large portion of such a business’s total costs. They also make a fantastic place to begin thoroughly comb-over for ways to cut cost. Many companies do not pay enough attention to detail when it comes to their shipping, with waste, improper classification, or redundant shipping being mistakes many e-commerce companies make when they LTL ship.
Understanding the different freight classes and knowing what class your goods fall in is a critical management and accounting step to determine budgets and project expected shipping costs. Having things properly classified can save you in the future by preparing you for and protecting you from any potential freight claims.
It is quite understandable that many businesses might feel ambivalent about which freight class to choose, but it can severely hurt their bottom line in the long run. This is especially true for businesses that choose the wrong class which then must be reclassified, with an additional fee tacked on. Therefore, taking the time to learn the basics on LTL freight class can save you time, money and keep your customers happy by preventing future inbound or outbound freight delays.
In case you do not know what LTL shipping means, we will briefly touch on the basics of LTL shipping. Carriers offer shipping contracts that either reserve the services of the entire 53-foot trailer, also known as FTL (full truckload) shipping or rent the portion of the trailer that your cargo takes up, which is LTL (less than truckload) shipping. Small to medium-sized companies generally ship less than ten pallets of goods at a time and rarely send shipments larger than 4000 pounds.
Instead, they specialize in multiple, regular, smaller shipments, which is ideal for LTL services. The shipments are commonly stacked on pallets, stretch [shrink]-wrapped and packaged for a multi-freight transport. LTL shippers have to provide their own packaging since carriers do not cover that sort of thing unless you wish to pay a fee. When preparing an LTL shipment, there are 18 different freight classes to choose from. After selecting a class, you create a bill of lading, which includes the freight class.
National Motor Freight Traffic Association
The National Motor Freight Traffic Association is responsible for publishing the National Motor Freight Classification (NMFC). They provide a set standard by which companies can compare commodities across the board. NMFC is monitored and updated by the Commodity Classification Standard Board (CCSB). This standard board groups commodities into one of eighteen various classes, 50 being the low class, 500 being the high class.
The National Motor Freight Traffic Association stated goals include: To encourage, develop and push the safety and goals of the motor carrier industry and the motor carriers operating in commerce, both home and abroad. Research, study and share data and information relevant to the motor carrier industry when it comes to transportation.
They seek to progress, collect and broadcast information that will serve for the edification of the motor carrier industry, by establishing best practices. They also hold regular meetings with seminars and educational sessions to progress knowledge regarding the transport industry as to the “best practices” associated with motor carrier transportation.
They also conduct meetings which will include educational seminars and subjects intended to improve the knowledge of matters affecting motor carrier transportation. It also participates in regulatory proceedings or legislative matters that take place in local, state or federal bodies with the intended purpose of promoting and creating laws to protect motorists.
Their final service, most relevant to us today, was to create and maintain a set of standard identification codes. These classifications were used by the freight industry to create a uniform set of rules to follow, as well as, standardized pricing for LTL shipping of goods regardless of carrier, shipping broker or warehouse.
Packages fall under a variety of classes, with each class having different associated tariff costs and thus a different price incurred for delivery. This universal process made it easier for both carriers and senders and established a collective standard set of guidelines as well as comprehensive class system, based on the four transportation characteristics: density, handling, stowability, and liability. These four factors, which we will go into detail below, determine a commodity’s transportability.
An additional vital clarification provided by the NMFC was specifying minimum packaging requirements. These minimum packaging requirements serve to ensure that goods are safe within the transport, not harmful to other goods being shipped, and easy and safe to handle. This includes a set of rules that oversee packaging classification, procedures for filing and disposing of claims, and the Uniform Straight Bill of Lading.
Freight Class Factors
Unless the object is abnormally shaped or an unusual item, density is the most vital factors when assigning classes. The CCSB’s density standards have developed over the years and generally refer to those classes and presume that there are no abnormalities in stowing, handling or liability-wise that would require a different weight class assignment. Density guidelines classify a 50 to freight that weighs 50 lbs/ft3. “The Commodity Classification Standards Board (CCSB) assigns classifications 70, 92.5, 175 and 400 to freight with densities of 15, 10.5, 5, and 1 pound per cubic foot, respectively. Freight less dense than 1 pound per cubic foot is classified as 500. The density is the space the item occupies in relation to its weight. The density is calculated by dividing the weight of the item in pounds by its volume in cubic feet. Your item’s volume in cubic feet is Length x Width x Height/1,728, where all dimensions are measured in inches. The density of your item = Weight/Volume, where Weight is measured in pounds and Volume is measured in cubic feet.”
Standard classification would go as follows:
The vast majority of goods and commodities shipped by carriers on a day to day basis are your run of the mill freight and boxes; relatively easy to lift, and for those that are not, carriers have experienced crew aided by mechanical handling equipment. Thus, most items are given a classification that reflects the ease of portability and loading. However, some freight, whether because of shape, fragility, size, weight, hazardous properties may require special tools or attention. When the CCSB evaluates classification of a commodity or commodity group, they must take into account ease or inconvenience of handling and the difficulties that may arise therewithin. Accounting for odd or unwieldy goods may then alter a packages classification if it is no longer being judged purely just by weight.
As you would expect with handling, the vast majority of goods or cargo do not raise any stability issues, especially since they come packaged and ready for shipment. Some cargo does, however, come with supplementary stowability factors including:
-Loading restrictions required to fulfill government regulations or carrier policies, for example, there are co-loading prohibitions on some types of hazardous materials.
-Loading restrictions due to excessive length or weight.
-Loading restrictions due to protrusions or similar obstructions.
-Object does not stack or tier within the carrier’s equipment.
-Object does not have regular load-bearing surfaces.
Liability characteristics include the chance of damage to the goods, how hazardous a good might be, value per pound, perishability, vulnerability to theft, and the chance of cargo damaging other freight. The CCSB uses value per pound as a form of liability measurement in conjunction with a value guideline that is adjusted to account for inflation via the Producer Price Index at the end of the year. Value per pound, while important, must be judged in conjunction with other liability factors such as density.
Aside from freight classification, there are a host of factors that will determine the cost of your LTL freight shipping. Briefly they include:
Additional Fees: Any service that goes beyond pick up and drop off. This includes lift gate service, fuel surcharges, limited access locations, and residential pick up and delivery.
Base Rates: LTL carriers all have unique base rates that are quoted by the hundred pound. Lane disuse and offline deliveries may cause the cost to increase as well.
Distance: Generally speaking, the farther cargo has to travel, the more it costs. Since some lanes and routes are cheaper, depending on the carrier, it is wise to compare service areas.
Weight: The heavier a shipment, the less it costs per hundred pound.
Thanks to the National Motor and Traffic Association, shipping classification for carriers has been turned into a universal language. This makes life easier on both the shipper and the consignee and has established a good guideline, which, while not exact, gives a good idea of what category your cargo will fall in.
When trying to determine classification of your goods, remember that the most important category is density. Following that, if your goods have any abnormal issues with handling, stowability, or portability, then their class may be shifted to reflect those difficulties. If you have any need for additional clarifications, shipping services are more than happy to solve any shipping challenges you face.