Whether you ship a little or a lot, it’s important for you to have a clear understanding of freight classification and what it entails. And it’s no small task to consistently classify freight in a way that is accurate, cost-savvy, and specific to your contracts and carrier tariffs.
However, it’s possible— and understanding freight classification can help. Continue reading to learn more about freight classification and how partnering with Trans Audit can open the door to immense savings and recoveries for mis-classifications and resultant overbillings.
What Is Freight Classification?
Freight classification or freight class is a measurement that facilitates standard prices across all Less-Than-Truckload freight carriers and businesses. This measurement is determined by the National Motor Freight Traffic Association (NMFTA).
In the most simple sense, every single commodity or product has what is called National Motor Freight Classification (NMFC), which is aligned to a specific freight class number of LTL shipments. Freight classifications can range from as high as 500 down to 50 and will always be based on specific types of commodities. For example, refrigerators may be classed as a 92.5, while something like a cabinet can have a Freight Class of 110.
How Does Freight Classification Determine Rates?
Carriers of LTL freight are always concerned about freight class because it is directly related to the tariffs that must be paid to transport goods. And these tariffs are directly related to the fees and shipping rates. Unfortunately, most businesses tend to either declare an incorrect freight class or underestimate freight class.
While it may seem like a good idea to attempt to save money by listing a lower freight class; when a carrier has to re-class your freight, it can lead to wasted time, money, and resources, as well as extra charges. At the same time, the freight class can be directly related to a shipment’s size and density. And carriers need to understand the size of a shipment to properly maximize trailer space.
What Factors Determine Freight Shipping Class?
Freight classification can be determined based on the four following characteristics:
- Density
- Stowability
- Handling
- Liability
Commodity and Density Determine Freight Classification
Within the realm of shipping, density can be explained as space an item occupies in relation to its weight. For perspective, Class 50 is the lowest and is assigned to freight that is more than 50 lbs. per cubic foot. On the other hand, freight that is less dense and takes more space per pound, such as gold flakes, can be classified at a higher level. In either case, density-based freight classifications are found by taking the total cubic feet divided by total weight in pounds. Some commodities, however, are not based on density and have predefined classes.
Stowability Determines Freight Classification
When packed properly, most freight is relatively easy to stow away in trucks, planes, boats, etc. However, certain items are heavily regulated by the government and can’t be loaded alongside other items.
At the same time, freight that features odd protrusions, is too long, or extremely heavy can be difficult to load with other shipments. All shipments should feature clear-bearing surfaces that make it easy to stack along with other freight. Essentially, if cargo is difficult to load, it may have a higher freight classification, which can further increase the overall cost to ship.
Ease of Handling Can Determine Freight Classification
Your cargo will go through several checkpoints and distribution facilities prior to it reaching its final destination. A properly packaged cargo shipment shouldn’t run into any problems.
Although heavy-duty equipment will load the majority of cargo with minimal concern, items that are extremely heavy, hazardous, awkwardly shaped, or fragile do require special handling to prevent damage or harm to other freight or workers. If your cargo falls into this category, it may need to be reclassified as a higher freight class.
Liability Can Impact Freight Classification
Liability refers to the likelihood that any piece of freight may be damaged, stolen, or cause damage to other nearby freight. For instance, freight likely to combust, explode, or that is perishable will have a higher liability, which is determined by the pound.
How to Avoid Increased Costs by Understanding Freight Classifications?
Every so often the NMFC makes changes to freight classification. And these changes can greatly impact how much you pay for shipping. Savvy shippers and companies like Trans Audit who stay on top of all of the changes are poised to recognize savings and achieve refunds for over classified freight.
If you’re like most businesses, you don’t have the time, resources, knowledge, or energy to stay abreast of freight classification changes. This means you may be overpaying for shipping and be entitled to refunds.
At Trans Audit, we offer a state-of-the-art freight post bill solution designed to ensure you’re paying what you should. And if you’re overpaying for cargo shipments, we will automatically work with your carriers to recoup your costs. When you partner with Trans Audit for post bill audits, we’ll do the heavy lifting to help you generate savings, refunds, and competitive advantage, as well as provide you the knowledge to improve your classifications and bills of lading.
We Know Freight Classes – Pay What You Owe and No More
Oversights and errors with LTL freight billing are extremely common, particularly with product classification. Due to the complexity of the NMFC system, products are often misclassified, which results in higher rates. Trans Audit’s NMFC experts understand freight classifications and stays current on changes, providing you with the assurance that your bills are correct and overbillings are recovered.
We Use Technology to Your Advantage
Manually going through all of your freight bills isn’t the best use of your time, and may even seem impossible. Fortunately, the team at Trans Audit can establish a recurring feed of electronic and paper invoices, contracts, bills of lading, and payment information to perform a historical and ongoing review. Best of all, implementing our solution is easy, hassle-free, and requires minimal input by you or your team. And we’ll work directly with your carriers to recoup all monies owed to you, whether for misclassifications or other reasons.
Contact Trans Audit to Ensure Your Freight Classifications Are Right!
In today’s world, we know that you have a lot on your plate. Unfortunately, ensuring your carriers aren’t constantly overcharging you usually isn’t one of your top priorities. However, the team at Trans Audit is always ready to help. And you don’t have to take our word for it — visit our Case Studies page to see how we recovered more than $1.2 million in a single year for one multinational firm.
Contact Trans Audit today to learn more about how we can help generate savings and refunds, as well as provide you the knowledge to improve the accuracy of your carrier billing and payment process.
