For startup shippers, the less-than-truckload (LTL) freight classification process can seem intimidating. In reality, the system of classifying different kinds of LTL freight was created to make product transportation simpler, more accessible for smaller shippers and more equitable for all.
These days, it’s often relatively simple to determine which class your freight falls into. Software systems, online guides and third-party logistics professionals (3PL) all can help you analyze your various products for LTL shipment and decide whether they carry one, two or more freight class designations.
The best shipping and logistics managers, while leveraging all the assistance available, still pay close attention to how their LTL freight is classified. They understand that misclassified LTL freight can cost their company unnecessary time and complication.
If you develop a basic understanding of how the LTL freight classification system works, you can stay on top of changes within your organization and with your shipping vendors. The freight class system is expansive, but it’s to your advantage to carve out your own bank of knowledge on what parts are relevant to your operation.
Why freight classification exists
A nonprofit industry organization called the National Motor Freight Traffic Association developed the first National Motor Freight Classifications and maintains updates to the system. The NMFC was intended to answer industry calls for standardization in freight rates and contract negotiations.
The result is a compact, easy-to-interpret system for industry professionals to rely on when setting and evaluating shipping prices for LTL shipments. The NMFC is available for purchase, with the 2019 version costing $210 for NMFTA members and $330 for non-members.
Features of using NMFC freight classifications:
● Allows companies throughout North America to operate from a common system of pricing and package handling
● Provides a baseline of expectations in contract negotiation
● These baseline expectations can be presented and referenced in case of dispute
Though the use of NMFTA freight classifications is technically voluntary and not mandated, most companies feel obliged to use NMFCs, as they are the industry standard. The vastness of the shipping and logistics industry offers a compelling argument for leaning on such a widely adopted standardization system.
Your company must use NMFC freight classes if it uses or references any National Motor Freight Classification provision in its contracts or rate schedules, including “commodity descriptions, classes, rules, packaging specifications and bills of lading,” according to the organization.
How freight classification works
If your company is new to shipping and logistics, you’re no doubt looking for the most efficient and affordable ways to ship your freight. This can make it seem burdensome to learn about how freight classification works. After all, software can figure it out or you can pass the task along to your 3PL vendor.
The truth is that you can learn how freight classification works — gaining enough knowledge to help you be a more effective logistics manager — without needing to learn how to classify freight yourself. You don’t need to know to classify all freight; you only need to know whether freight classes assigned to your products are accurate.
Freight classification is a system of determining a product’s overall transportability, that is, how relatively easy it is to move it from Point A to Point B. To isolate the freight class of a given item or items of cargo, several attributes of the cargo are examined.
Density: When they transport LTL shipments, ground, air and water carriers all want to maximize the amount of weight they carry. To determine how efficiently they can transport an LTL shipment, carriers are concerned with a commodity’s density, how heavy it is relative to how much space it occupies inside a container.
Density of an item is measured in pounds per square feet, calculated by dividing the weight of the item in pounds by its volume in cubic feet.
Handling: Carriers want to know how carefully they need to handle your cargo while in transit. Delicate and volatile cargo, for example, require special handling. Whether it’s personalized attention or specialized loading equipment, these factors will bump up the freight class.
Don’t forget that LTL shipments typically move through multiple touchpoints during transport, so each part of the supply chain must be taken into account.
Want to take home this Freight Class Guide? Download the Freight Class - PDF Version here.
Stowability: How well does your LTL shipment fit in with the other cargo? No, it’s not a popularity contest. LTL shipments share space in a container, so the extent to which your product can nestle in with others affects its stowability.
LTL shipments that may suffer from poor stowability include cargo that must be kept cold, odd-shaped cargo and anything that must be isolated from other LTL shipments.
Liability: Much of the freight class system is based around potential liability in case of an incident. Carriers want to know what monetary consequences they could face if an LTL shipment is damaged or lost, to determine their risk of liability.
Your LTL shipment might have a high liability associated with it if the product is perishable, hazardous or potentially damaging to adjacent items.
Why it pays to understand freight class
Be confident in your decisions
Multiple factors along the supply chain affect the bottom-line price of shipping your LTL freight, most of which you cannot control. Properly classifying your freight is one way you can take control over getting the best price for your LTL shipments.
Using software and 3PL providers give you convenient ways to manage freight classifications and keep your products moving out the door. As you monitor their performance and sign off on shipping orders, understanding freight class will help you catch errors or opportunities for a better classification.
Properly estimate freight class for new products
Startups with growth ambitions invariably will face changes in product offering, packaging and LTL carrier vendors. Having a baseline knowledge of the freight classification system helps you make the most of growth opportunities by knowing how much you’re likely to pay.
Protect yourself in case of loss
Using appropriate freight classification for your LTL shipments is arguably the single best way to protect your company in case of product loss or damage. Accurate freight classes make it plain, in black and white, what your cargo is and how you expect it to be handled.
Now that you understand the importance of freight class, you are probably ready to ship your LTL shipment. Fleet team can help you figure out the right freight class of your goods. All you need to do is to select the rates that works best for you - leave the rest to us!