NMFC ratings and class rates don’t match up
By Ray Bohman -- Logistics Management, 9/1/2008
Every less-than-truckload (LTL) for-hire motor carrier of general commodities maintains a set of base rates called class rates.
Most of these carriers move a substantial percent of their LTL freight under those rates, minus discounts. Nearly 1,000 interstate and intra-state carriers participate in the National Motor Freight Classification (NMFC) and base their class rates on classification ratings (classes) published in the NMFC.
There are 18 different ratings found in the NMFC, ranging from a low of class 50 (heavy density products) to class 500 (very light density articles such as ping pong balls).
If you look at a class 125 rating you’d think that it is 25 percent higher than the class 100 rating, but generally it’s not. When the class rates are applied to those ratings you’ll find that the class 125 rate is less than 25 percent higher.
In an example we took from a major LTL carrier applying its level on rates on shipments weighing 500 to 999 pounds, the increase was only 22.97 percent higher. And when we applied the class 200 ratings it wasn’t double the class 100 rate, but only 94.81 percent higher. Thus, if your rating is higher than class 100 you’re getting a break. Those rates are not true multiples of class 100 rates.
And when you look at rates applying to ratings below class 100 we find that they are actually higher than the true multiples of class 100 rates. For example, the class 70 rate isn’t 30 percent below the class 100 rate but is actually only 25.93 percent below that rate—you’ll find this all the way down from class 100.
Shown in the table below is a side-by-side listing of a number of classification ratings showing the percentage ratings that you would think would apply as true multiples of class 100 rates as compared to the actual percentage rates when this particular carrier’s class rates are applied. Please note that the latter percentage may well be slightly different from carrier to carrier.
As you can readily see, you are getting a break on articles classified higher than class 100, but are paying more than the true multiples of class 100 on ratings below that level.
Motor carrier classification certainly has been simplified since the NMFC was established back on April 1, 1936. At that time there were separate NMFCs—one for LTL the other for TL.
About a year later they were combined into a single volume that contained four columns of ratings (classes). There were three columns of LTL classes—one for the East, one for the South, and one for the West—just like the railroad classifications. Later, a single rating for LTL shipments was established, and finally the TL ratings were dropped.
| NMFC Rating | True Multiple | Annual Percentage |
| 200 | 100% | 94.81% |
| 150 | 50% | 46.68% |
| 125 | 25% | 22.97% |
| 100 | -- | -- |
| 85 | -15% | -13.33% |
| 70 | -30% | -25.93% |
| 60 | -40% | -34.07% |
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05/31/2000
