The importance of freight classification in today’s pricing market
Ray Bohman -- Logistics Management, 2/1/2009
If your company ships less-than-truckload (LTL) shipments via LTL carriers of general commodities, chances are that those shipments are subject to some provisions published in the National Motor Freight Classification (NMFC).
Nearly 1,000 LTL carriers operating interstate and/or intrastate are participants in the NMFC, including major LTL carriers such as Yellow Roadway, Con-way, FedEx Freight, ABF Freight System, Saia, and UPS Freight, to mention a few.
The NMFC, in effect since 1935, applies nationwide, and to a number of carriers that operate from or to Canada. It contains descriptions of more than 10,000 commodities or articles, classification ratings (Classes), rules (primarily protective packaging rules), and specific protective packaging requirements for named products.
Even if your company has negotiated reduced exception ratings or FAK (freight all kinds) ratings with individual LTL carriers that are lower than classes in the NMFC, those exceptions or FAK ratings may well be based on ratings in the NMFC, or your shipments may be subject to rules or packaging specifications in the classification. And most LTL carriers of general commodities base their class rates on the 18 classification ratings published in the NMFC—so don’t kiss off the NMFC as being totally irrelevant.
There’s a new group in town
For years, the NMFC was kept current by a group of 100 elected representatives of U. S. and Canadian carriers called the National Classification Committee (NCC). That group decided what changes, additions, or deletions would be made to descriptions, ratings, rules, and packaging specifications in the NMFC.
But now the NCC is no longer in existence. Back in 2007, the Surface Transportation Board (STB) decided the motor carrier rates bureaus, which included the NCC, should no longer be granted anti-trust immunity that had allowed carriers to act collectively in setting general rate increases, classification ratings, etc. That immunity was cancelled on December 27, 2007.
Rather than allow the NMFC to become dormant, the National Motor Freight Traffic Association (NMFTA), which owns the NMFC, decided to create a new group composed of classification specialists who were not employees of any carrier. The new group is called the Commodity Classification Standards Board (CCSB) and Joel Ringer is the chairman. Ringer was formerly the manager of classification development on the staff of the NMFTA when the NCC was in existence.
The new CCSB functions much the way the NCC did in the past, but there are several procedural changes you should be aware of that will be covered later in this column.
The board holds three public meetings a year—one in early February at a resort area, and the other two in Alexandria, Va., in June and October. Just 60 days prior to these meetings, the CCSB issues a docket listing all proposals for changes in the NMFC that will be considered and voted on. Interested parties are required to submit data in support or opposition to a proposal at least 30 days prior to the public meeting.
You can access every CCSB docket at nmfta.org. Click on public dockets and go to the latest docket, CCSB Docket 2009-1. There you’ll see a full rundown of each subject, along with present provisions and changes being proposed, data the CCSB has gathered concerning density, liability (value per pound), loadability, and stowability.
Rock the vote
You should know that any interested party may attend any CCSB public meeting; and if you wish, you may speak to the board in favor of or in opposition to any docketed proposal. This includes shippers, receivers, parties representing shippers or receivers such as attorneys, consultants, or third-party providers, and yes, even motor carriers—although they don’t have a vote.
Once all parties are heard and any discussion among board members is concluded, the entire board votes. The results of the vote are immediately posted; and if you’re a party of record to any particular subject and you’re not satisfied with the vote, you may request reconsideration by the board.
Unlike the procedures that were in effect when the NCC was in business, the CCSB allows any interested party not satisfied with its vote on a docketed proposal to request reconsideration. However, such a request does not automatically stay any decision by the board. If the board feels it did not have sufficient information on the transportation characteristics of a particular commodity when it took its vote, it may decide to hold the proposal in abeyance until its next public meeting.
On the other hand, if the board believes reconsideration is not warranted, it may deny the request within days after it receives it, thus allowing publication to go forward as scheduled. Previously, the former NCC procedures allowed any party of record to a proposal to appeal the decision of an NCC Classification Panel to the full NCC. Such an appeal automatically stayed with the panel’s decision until the next meeting of the full NCC four months later. Unfortunately, the STB is now out of the picture and would not intervene even if a petition for suspension and investigation were filed.
Once the CCSB adopts a proposal as it was docketed, or adopts it with modification, it’s published in a supplement to the NMFC with an effective date of about 2.5 months later. This gives you time to sit down with your carrier (or carriers) and try to work out something better than what would be forthcoming in the NMFC—something that would apply for the sole account of that carrier (or carriers).
One new procedure that has evolved is a listing on nmfta.org of commodities that the CCSB is reviewing. Some reviews might take months before they show up on a CCSB docket, but at least you’ll have a heads up on what might be in the offing.
Any time you find out that a classification rating increase is under consideration, check out the CCSB density guideline on page 19. If you see that your densities (weights per cubic foot) warrant a rating (class) lower than what the CCSB density guidelines would call for, provide the CCSB with that information (cube, shipping weight, and weight per cubic foot) making reference to the product under review.
Changes ahead?
Looking ahead, what changes might be in the offing? One ongoing project the CCSB has underway is a review of all articles in the NCC that are subject to NOI (not otherwise indexed) descriptions. This is a final catch-all item that does not cover articles more specifically described.
If the CCSB finds a wide range in densities, they usually propose a multiple scale of ratings based on density. One scale runs from class 70 (on articles having a density of 15 pounds per cubic foot or greater) to a high of class 400 (on articles having a density of less than one pound per cubic foot). A second scale ranges from a low of class 60 (on articles having a density of 30 pounds per cubic foot or over) to a high of class 400. Altogether, over 150 NOI items are subject to one of those two density scales—with more to come in the months or years ahead.
Even though your products may be subject to negotiated FAK ratings, many LTL carriers put a class 125 or possibly class 150 cap on their FAK If a proposal should come along for a rating higher than class 125 in the NMFC, you could lose that favorable FAK rating because the NMFC rating would exceed that carrier’s cap.
Here again is another reason why you should keep checking CCSB dockets so you can take appropriate action to protect your company’s interest as far in advance as possible rather than trying to respond after an adverse change takes effect.
| Minimum avg. density (in lbs. per cubic ft.) | Class |
| The density guidelines are used in the assignment of classes where average density is representative or reflective of the range of densities exhibited. Further more, the density/class relationships set forth in the guidelines presume that there are no unusual or significant stowability, handling, or liability characteristics, which would call for giving those characteristics additional or different “weight” in determining the appropriate class. | |
| 50 | 50 |
| 35 | 55 |
| 30 | 60 |
| 22.5 | 65 |
| 15 | 70 |
| 13.5 | 77.5 |
| 12 | 85 |
| 10.5 | 92.5 |
| 9 | 100 |
| 8 | 110 |
| 7 | 125 |
| 6 | 150 |
| 5 | 175 |
| 4 | 200 |
| 3 | 250 |
| 2 | 300 |
| 1 | 400 |
| Less than 1 | 500 |
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