Food and beverage vendors could see changes to their utilized less-than-truckload (LTL) freight classes as the second-round of 2019 updates to the National Motor Freight Classification (NMFC) are set to take effect later this summer.
The National Motor Freight Traffic Association (NMFTA) will implement its latest reclassifications to the NMFC on August 24, 2019.
This time, herbs and spices are part of the targeted reclassifications and as such food and beverage vendors should be aware how the updates could reshape their decisions about which of the LTL freight classes they use.
To properly explain what the changes are and how they can impact your logistics function, we need to fully explain what is the NMFC?
What is the NMFC?
The National Motor Freight Classification groups all products that can be shipped via LTL.
It is established, maintained, and updated by NMFTA. The Commodity Classification Standards Board (CCSB) is responsible for developing the reclassification lists every four months.
Everything from raw food ingredients to automobile parts is assigned a class based on density, handling, stowability, and liability, which establishes a product’s “transportability.”
This metric determines the class a product will be a part of. There are 18 classes range from 50 to 500. These classes help LTL carriers set pricing structures for all product they will carry.
It can be an extremely nuanced practice and a large undertaking to fully understand how LTL freight classes and pricing works. Our experts work with brands every day to determine their correct class and work to optimize their logistics function.
Changes to NMFC and LTL Freight Classes
The upcoming changes, scheduled to take effect in August, are the second update of 2019. Products set to be reclassified vary, but the most impactful for food and beverage vendors is the reclassification of herbs and spices.
Following the implementation, each of these herbs or spices will be have additional density considerations when determining class:
- Cayenne Pepper
- Chili Peppers, including Chili Powder
- Flowers or Leaves
- Ginger, other than candied or crystallized
- Herbs, dried, NOI
- Lavender, dried, other than decorative
- Licorice Roots, NOI
- Oregano, dried
- Roots, NOI
- Spices, NOI
In bags, bales, boxes, drums, pails or Packages 510, 2093, 2330, 2358 or 2456, subject to Item 170 and having a density in pounds per cubic foot of:
- Less than 10 will shipped at class 125
- Between 10 and 15 will be shipped at class 85
- 15 or greater will be shipped at class 70
What Impact Does Shipping at Different LTL Freight Classes Have?
Changes to the NMFC doesn’t necessarily translate into huge disruption to your transportation operation.
If you are prepared for the updates’ effect, it is feasible to continue without significant changes to your organization.
If you produce and ship any of the above listed items, you will need to examine how order minimums and pallet configurations (ti-hi) will affect density and transportation cost.
The main difference among the three LTL freight classes is the price a carrier will charge to haul items at each.
As the items included in the update will ship at varying LTL freight classes based on density, your organization will need to increase the attention paid to building orders when shipping these products.
Density based classifications add an extra layer of complexity in building orders.
It is critical that you understand exactly which class a product should use to avoid additional fees that can result from incorrect classification.
Even though it is possible to send product at an incorrect class, carriers can hit your organization with penalties months after a shipment is delivered. Carriers can charge reclass, reweigh, rework, and other accessorial fees if you choose to send product at the wrong class.
That is why it’s important to stay informed around NMFC and its relation to LTL freight classes. Without proper knowledge of NMFC, it’s possible to send product at the wrong class for a lower price for an extend period, after which your organization can be hit with chargebacks from carriers as they audit their books at year end.
Effects on Food and Beverage Manufacturers
With this reclassification, food and beverage companies that manufacture products will also need to prep their operation for the changes set to hit in August.
Reclassification of product for suppliers can translate into higher cost to transport product, which means it will ultimately cost food and beverage vendors more to bring the ingredients affected by the reclass into their supply chain.
If your raw ingredient supplier is paying more in transportation costs, those fees will be passed on to your organization to bring their product into your supply chain.
The inverse should also apply; however, that is not always the case.
It’s crucial to monitor NMFC changes throughout the year to see if there is a potential saving that your organization can uncover in class changes.
Partnering with a 3PL Can Help You Navigate NMFC
This NMFC change is not the last of 2019. NMFC reshuffling happens three times per year, which is why it’s critical to be prepared to ship at different LTL freight classes.
By partnering with a 3PL that specializes in LTL shipment, you can be ready for changes when they do happen.
We proactively work with our customers to ensure a smooth transition when updates do happen. While there is potential for other unforeseen impacts tied to these class changes, we are standing by to help shippers navigate the changes.
To talk to one our LTL freight specialists about the NMFC changes or hauling your product, contact Zipline Logistics.
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