Changes to the National Motor Freight Classifications issued Nov. 19, 2020 are slated to take effect one month later, on Dec. 19, 2020. These changes may affect some of your transportation costs.
The NMFC classes, according to the National Motor Freight Traffic Association, are a way of grouping different commodities that move in interstate, intrastate, and foreign commerce. The commodities are grouped into one of 18 classes, ranging from class 50 to class 500, based on four characteristics that determine how easily different commodities can be transported, or their “transportability.” Generally, products with a lower the class are denser and easier to ship. That translates to a lower freight rate.
Each quarter, the National Motor Freight Transportation Association, which is made up of motor carriers, considers updates to the NMFC. The proposed changes then are voted on by the members of the Commodity Classification Standards Boards. The CCSB is made up of employees of the National Motor Freight Traffic Association.
It is important to understand how the latest round of changes affect your freight. Doing so allows you to make adjustments and leverage these changes to your benefit to improve your transportation cost control.
NMFC classifies commodities for transportation based on four characteristics: stowability, liability, handling and density.
Stowability: This considers how easily items will fit and/or can be transported with other items on a truck. For instance, hazardous materials generally cannot be transported with non-hazardous materials, making them less “stowable.” The same tends to hold true for items of unusual or oversized shapes. The lower the stowability of an item, generally, the higher its class and cost to ship.
Liability: This covers the likelihood a product may be stolen or damaged, or damage the freight around it while in transit. It also takes into account whether a product is perishable. The more a product faces these risks, generally, the greater the liability to the carrier, and the higher its class and cost.
Ease of Handling: This covers multiple characteristics that affect how easily products can be loaded or unloaded, including their size, weight and fragility.
Density: As you might guess, this is calculated by measuring an item’s weight and dimensions. The higher the density, the lower the NMFC class and thus, the cost. While this may initially seem counter-intuitive, the calculation recognizes that denser items take up less room than less-dense items, when compared to their weight. That leaves more room on the truck for other shipments.
Updates to the NMFC
In general, the changes this quarter take the density of shipments into account to a greater degree than they previously did. For instance, gloves and mittens, along with sealing and masking tape, are shifting from a single class to a density-based classification. This is similar to other NMFC classification changes that have occurred recently.
This quarter, the changes cover about 20 NMFC Groups:
- Automobile parts
- Building materials, miscellaneous
- Building metalworks
- Building woodwork
- Drawing instruments, optical goods, or scientific instruments
- Electrical equipment
- Games or toys
- Iron or Steel
- Paper articles
- Plastic or rubber articles, other than expanded
- Tools or parts named
- Bases, flagpole or sign, concrete, with or without metal attachments
- Compounds, industrial process water treating, o/t toxic or corrosive materials
- Forms, concrete retaining, sign or lamp post base, taper-sided, sheet steel
In addition to these changes, a rule change under Item 110 clarifies that “coin- or currency-operated” refers to items that accept debit or credit cards, or other forms of payment, as well as cash payments.
Working with Transportation Insight to Stay Abreast of Changes
When your product ships, you will want to make sure the correct NMFC code is visible on the bill of lading, so the carrier knows to use it. It also helps to describe the product being shipped to the extent possible.
Every year hundreds of shippers master their supply chain leveraging Transportation Insight’s ability to monitor the industry trends that affect transportation costs. To ensure our clients are using updated codes, Transportation Insight proactively checks all products against the NMFC database to help you manage the changes and control your spend. Our freight bill audit and payment solution provides an additional layer of support that ensures alignment between your billing and invoiced classification.
Do you have questions about how the fourth quarter NMFC classification changes affect your products? Contact a member of our team for a consultation.
Classification adjustments are one piece of the evolving transportation environment. For Q4 insight that can help you plan and adjust your transportation strategy, open our ChainLink 2020 Rate Trends and Forecasts. It provides multi-modal guidance on activity that is affecting your network.
For more analysis on freight capacity planning strategy for 2021, join our Capacity Masters Roundtable on Nov. 19. Reserve your webinar seat today for commentary from our truckload, LTL and brokerage experts that will help you understand – and control! – cost drivers in the year ahead.