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March 17, 2020

LTL Freight Class: Does Density or NMFC Benefit You More?

Density Calculators vs. NMFC Freight Classes

In recent years, less-than-truckload (LTL) freight carriers started “encouraging” shippers to use density-based freight class instead of the National Motor Freight Classification® (NMFC®) system. It’s simpler than the tedious exercise of using the NMFC directory to identify the freight class of a commodity.  And, we’re told, it will eliminate disagreements between shippers and carriers about the proper classification of a shipment.

Sounds great, right?  But who really benefits from abandoning the long-held practice of using the NMFC system to classify freight?

What is the National Motor Freight Classification or NMFC?

Established in 1956, the National Motor Freight Traffic Association (NMFTA) is a non-profit membership association that publishes National Motor Freight Classification (NMFC). Shippers and carriers use the NMFC freight classifications as a common standard when setting shipping rates.  Using the NMFC freight classification has been a standard practice for more than 60 years.

NMFC Freight Classes

The NMFC bases freight class upon these four traits:

Density

This is the key factor in calculating the LTL freight class. It’s expressed in lbs per cubic foot.

To calculate density:

Length X Width X Height = Volume.

If you’re measuring in inches, divide by 1728 (the cube of 12). This gives the volume in cubic feet.

Weight in lbs ÷ Volume in cubic feet = Density in-lbs per cubic foot. 

Handling

If your shipment needs some special attention, you’ll pay for a higher freight class. Fragile goods and temperature controlled items are examples.

Stowability

This has to do with how well your goods travel with other freight. A load with unusual dimensions, for example, might fall into a higher freight class.

Liability

The risk of theft or damage. High-value goods, for example, come with high risk.

These four factors determine which of the 18 freight classes to assign various goods. To learn more, see Freight Class for Ecommerce 101.

Why You Should Avoid Density-Based Freight Classes

An important difference between NMFC and density-based class is in how you measure volume.

Suppose you have goods palletized on a standard 48” X 40” pallet. With the density-based class system, you use the pallet’s dimensions for length and width, even if the freight on the pallet is only 21” X 20.”  When measuring height, you must also include the height of the pallet.

Density-Based-Measurement-Illustration-400x354

Original illustration from the 2020 UPS Rate and Service Guide.

In other words, if the product’s height is 22,” you must add the 6” of the height of the pallet, making it 28.”

So, when measuring volume, the difference is like this -

Density-based: 48 X 40 X 28 = 53,760 ÷ 1728 = 31.1 cubic feet.

Vs.

NMFC: 21 X 20 X 22 = 9,240 ÷ 1729 = 5.3 cubic feet.

You can see that density-based measurements give you a volume that is almost 6 times that of NMFC density.

Why Density-Based Freight Classes May Hurt You

Let’s suppose that you’re shipping 218 lbs of deck screws. The boxes are stacked and shrink wrapped on a standard 48” X 40” pallet. The stack of boxes measures 21” X 20” X 22.” 

Using the NMFC system, we have a density of 41.1 lbs per cubic foot (218 ÷ 5.3). With help of the FedEx freight class calculator, we get a freight class of 50 - the lowest and least expensive freight class.

Since density is only one factor used to calculate NMFC class, different commodities will fall into different freight classes.

The same size shipment of ceramic tile, for example, would fall into freight class 60. Dog food would fall into freight class 65. Printed t-shirts, into class 70.

However, density-based calculations would put all these products into class 125. Why?

  • It uses the length and width measurements of the pallet (48” X 40”).
  • Height measurement includes the height of the pallet, which adds another 6.”
  • It treats all commodities the same - it doesn’t take into account other transportability factors.

How Density-Based Freight Classes Can Hinder Profits

Let’s say you’re shipping ceramic tile. The product is in Anaheim CA, and you need it delivered to Jenkintown PA.

Each skid weighs 218 lbs. The tiles cover the pallet without overhang. They’re stacked 15” high. We calculate the density:

48 X 40 X 15 = 28,800 ÷ 1728 = 16.67

218 ÷ 16.67 = 13.07 lbs per cubic foot.

That puts it in a density-based class of 85. If I put these numbers into a freight quote tool such as this one from Old Dominion Freight Lines, it tells me that it’ll cost $617 to ship to a residential address in Jenkintown.

But if I look up the NMFC class for ceramic tile, I get a freight class of 60. Using the same quote tool, it costs $474.55.

That's a savings of $142.45, or a little over 23%, by simply using the proper freight class and NMFC number.

By the way, this example comes from a real-life instance of an online merchant who was losing money on shipping. Let’s take a look at his situation:

Case Study: How An Online Merchant Stopped Getting Hurt By Density-Based Freight Class

The Problem

We recently had a support ticket from an online seller of ceramic floor tiles.  At times, the charges from his Third Party Logistics Provider (3PL) were far more than the amount collected from his customers for shipping.  In some cases the difference was so significant that he lost money on the order.

He didn’t understand the impact of rating shipments using his 3PL’s guidelines for density-based freight classes.  Neither, apparently, did the representative of the 3PL to whom he routinely spoke with. When orders were smaller, the density-based system yielded a freight class of 85.  Much higher than the NMFC freight class of 60.

The Solution

Once I realized the root of the problem, I explained how the differences between density-based freight classes and NMFC freight classes were impacting his profitability.  I recommended that he contact the 3PL and ask that they assign the NMFC class of 60 to his shipments, rather than the density-based freight class of 85. If the 3PL refused to accept this legitimate alternative, I suggested he may want to look for a new vendor.

The 3PL agreed to the change, and the merchant saw an immediate improvement in his profits.

Freight Class Tips For Reducing Costs

  • Include the NMFC number and freight class on your bill of lading (BOL).
  • Enter an accurate product description on the BOL.
  • Consider your packaging. Can you redesign so that the product is more compact and uses pallet space more efficiently?
  • Partner with a LTL carrier or 3PL willing to employ the rating method that affords you the lowest cost.

About Eniture Technology

Eniture Technology specializes in helping e-Commerce merchants grow by providing useful information, digital marketing services, off-the-shelf apps that solve common problems, and custom programming services. Please contact us if you need help growing your online business or implementing the concepts presented in this blog post.

If you are interested in offering LTL freight as an option on your online store, take advantage of our free guide on LTL freight.

LTL Freight Primer - Free Guide

 

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