How To Get A Good Deal On LTL Shipping

LTL shipping is really expensive! Are you getting the best deal you can?

Typically a sales rep will visit with you and ask about what products you ship, how often, how much. They will offer you a discount on their base rate. You’ll usually get a better discount if you ship more product. That is your first step for comparing different carriers. But, if you often use particular accessorials (extra services) you might be able to strike a deal with a carrier to reduce rates on a variety of services. For example:

• Guaranteed on-time
• Liftgate
• Limited Access
• Residential
• Sort and Segregate

For instance, if a lot of your customers are residential, ask if you can knock 50% off of that charge as part of your contract. Even if you can’t get a lower cost on your base rate, discounts on accessorials can save you a  lot of money in the long run.

You can also deal with class exceptions. Depending on the type of product you move, or if you move all types of products, a carrier may grant you a class exception (EX) or an FAK (Freight of All Kinds). I have seen FAK used more often in government contracts, and EX in commercial moves. If you ship items that range anywhere from c70-150 the carrier might, just for example, give you a class exception of 85 across the board so you don’t have to concern yourself with all the math for every shipment. For the carrier it kind of evens out in the end, and it might make your job a little easier. Be careful with EX and FAK’s though and read your contract. Accepting a lower class/lower cost may reduce the carrier liability in cases of loss or damage.

If you are shipping primarily using a 3rd Party Logistics company (3PL) you will probably be dealing mostly with a discounted rate program, but it does not hurt to ask about accessorials. They may already have special rates in place with their partner carriers on some services.

If you do not use LTL very often then you have less to bargain with. If you only ship LTL on rare occasions make sure to get a rate quote prior to shipping. LTL carriers usually give a one-time discounted rate as an incentive to get you to ship more product with them. Always write your quote number on your BOL!

Everything is negotiable.

Carrier Liability vs. Insurance

In a previous post I discussed how to file a claim in case your freight is damaged or goes missing. Taking that a step further, it is important to understand the difference between “insurance” and “carrier liability.” I find these terms used interchangeably and they are really not the same thing.

Carrier Liability is when a carrier (transportation company) is liable – ie, responsible – for any damage or loss. The typical maximum is $25/lb per package for LTL, or $100,000 for a full truckload. That is the MAXIMUM. Some commodities have their own release value factored in, so pay attention to your NMFC’s. In this case the customer is responsible for proving that the freight carrier caused the loss/damage.  If the carrier accepts the evidence presented by the customer, then they will only pay what the product is actually valued at, or for the cost of repair if that is an option. They may even only pay part of the value, with an explanation as to why they are not 100% liable. The carrier will not pay for the potential retail sales value, sentimental value, etc. Carrier liability is also factored into freight charges.

Insurance does not require the customer to prove that the carrier was at fault for damage/loss, just that damage/loss occurred. So less work for the claimant! This is an extra charge, typically based on the declared value of the product. Each carrier has their own system so consult your sales rep for info on that cost. The company I work for charges $.75 per $100. [Ed: There will be a deductible for this type of insurance, be sure to ask what it is].

There are some commodities that carriers will not haul at all because of the high liability – antiques and original works of art, for example. Or a carrier may accept them but with the understanding that the customer will waive liability. If you need additional coverage that the carrier can’t provide, your own insurance company may be able to create a policy for that move.

There are some instances where the customer must accept lower liability, or waive carrier liability all together. In cases of volume shipments, LTL carriers typically restrict liability to $1/lb per package maximum. That is the tradeoff for having a lower cost on the freight charges. In cases where the customer has loaded the freight into an exclusive use trailer, or in a trailer with a sealed divider, the carrier will refuse any liability. This is because the customer is responsible for the condition of the freight and how it is loaded. If the carrier doesn’t touch it, they can’t be held liable.

In “act of god” circumstances the carrier’s own insurance company typically will come into play. If the truck is on a bridge that collapses, or is sucked up into a tornado or some such thing, the freight is usually covered for the declared value. HOWEVER, that is not always the case. I have heard stories of carriers declaring that an “act of god” is not their fault so the customer was out of luck! But that’s just really bad customer service, and not typical. Again, consult with your sales rep on the individual carrier policies.

As you can see, liability and insurance can be pretty complicated. This is just an overview. Each carrier has its own policies so it is a good idea to discuss this with a sales rep if you have questions.

Let’s Talk About NFMC’s

This is a subject that is very confusing to a lot of people, so I hope I can demystify it just a little bit for you. I know that in Canada freight class tends to be determined by density across the board. Globally there is another standard of identification numbers which is even more complex than the NMFC’s we use in the USA. But if you ship LTL in the USA you will need to have at least a passing acquaintance with this concept.

Everything that can be shipped has its own special number called a National Motor Freight Classification number (NMFC), also known as an “item” number. These numbers and descriptions are determined by The Commodity Classification Standards Board and do change from time to time. Some products may fall under a general category, such as “plastic articles.” Others may be more specific, like “new internal combustion engine weighing more than 5 lbs with an actual value not exceeding $5 per lb.” Some NMFC numbers have sub categories that are dictated by density, packaging or value.
Along with the NMFC number is a corresponding Class. The Class of an item ranges in numbers from 50 to 500. The class determines your shipping cost. The lower the class, the lower the cost to ship. It is determined by several factors:

• Density
• Ease of handling
• Packaging
• Value/liability

For example, it would be relatively inexpensive to move a crate of nuts and bolts; the crate would be easy to handle, the density is an efficient use of space and it would be very difficult to damage, or inexpensive to replace if damaged. It would be much more expensive to ship boxed furniture or industrial electronics because of their delicate nature and higher liability cost.

Some items, like plastic articles, toys, decorations, wooden furniture (just to name a few) are just density-based, and the less dense the product is the more it will cost to ship. In spite of a low value it is just not an efficient use of space. There are quite a lot of items that go by density, particularly if the description ends in “NOI” or “not otherwise indicated.” This is what general density-based items look like, in pounds per cubic foot:

Less than 1	Sub 01	400
1 but less than 2	Sub 02	300
2 but less than 4	Sub 03	250
4 but less than 6	Sub 04	175
6 but less than 8	Sub 05	125
8 but less than 10	Sub 06	100
10 but less than 12	Sub 07	92.5
12 but less than 15	Sub 08	85
15 but less than 22.5	Sub 09	70
22.5 but less than 30	Sub 10	65
30 or greater	Sub 11	60

[EDIT: Please note that the NMFC Board has changed -04 to class 175. It had originally been class 150.]

So if you had a shipment of plastic cups and they ended up being 3 lbs per cubic foot the NMFC would be 156600-03, class 250. If you do not remember 10th grade math so well (I needed a refresher too!) you can Google density calculators and there are plenty of options. Many carriers have them on their web sites in the “tools” section. If you are old-fashioned like me, you can just calculate the Length x Width x Height = Cubic Feet, then divide the Weight by the Cubic Feet. That is your density. LBS/ LxWxH= PCF. This gets more fun when you consider that your dimensions are always measured in INCHES, but the density is in pounds per cubic foot. For more math fun, there are 1728 cubic inches in a cubic foot. So just Google that density calculator.

That is also why it is important to have a really good noun description of your product. While in some cases you may have plastic articles (just as an example) that end up being a higher class by density, it may turn out that your particular article has a very specific NMFC and is a lower class. More info is always better!

There are thousands of different NMFC numbers. If you need help with determining the correct one for your product you can either call your sales rep or customer service and request help, log on to the carrier web site and see if they have an NMFC finder (typically for registered customers only), or you can subscribe to an online service. I have been asked if there are any books of NMFC’s available. There may be, but that would be very inefficient, expensive, and become outdated very quickly.

I hope this has helped you understand the process of freight classification at least a little bit. Please feel free to post in the comments section below.

Case Study: Weight Corrections on Density Items

Today’s post is a case study in paying close attention to your commodity classification.

I received an invoice which was different that quoted, and found that was because the common carrier had reweighed the freight from 270 lbs to 360 lbs. That is fair and typically difficult to argue. However, the freight in question was of a classification based on its density, that is pounds per cubic foot.

I know many people are not familiar with this concept so I will give you a brief overview: Everything under the sun that can be packed into a truck has a number called a National Motor Freight Classification number, or NMFC. Also called an Item number. This is a six-digit number that may also have sub-categories and looks like this: 123456-01 (for example). Every NMFC is accompanied by a class, between 50-500, which determines the cost to move the freight. This is based on things like the freight’s stowability, packaging, potential liability, etc.

For example, plain steel screws shipped in bulk (not card mounted) are class 50 because they are very economical to move and hard to damage. Frozen bull semen (I told you EVERYTHING has a number) is class 500 because it has a high liability and requires careful handling. These items are very specific in their description and packaging. There are other items such as machine parts or plastic articles that are very general, and often the class is assigned based on the density of the freight. That typically looks like this:

NMFC 156600

Plastic or Rubber Articles, other than foam, cellular, expanded or sponge articles, having a density in pounds per cubic foot of:

Less than 1	Sub 01	400
1 but less than 2	Sub 02	300
2 but less than 4	Sub 03	250
4 but less than 6	Sub 04	150
6 but less than 8	Sub 05	125
8 but less than 10	Sub 06	100
10 but less than 12	Sub 07	92.5
12 but less than 15	Sub 08	85
15 but less than 22.5	Sub 09	70
22.5 but less than 30	Sub 10	65
30 or greater	Sub 11	60

This is actually somewhat paraphrased from the full description, but you should get the idea.

For those of you who have been out of high school for too long (like me), density= (weight / cubic feet). Use your web browser to search for “density calculator” and you should be able to find a number of helpful tools to make that task easier.

Let’s say this is a 48″x48″x24″ pallet. That is 32 cuft. At 270 lbs it is 8.43pcf (pounds per cubic foot) and per the chart above it would be class 100, NMFC 156600-06. But, at 360 lbs this becomes 11.25pcf, and that is class 92.5, NMFC 156600-07. At a lower class the price would be reduced slightly, possibly enough to counter the increase in weight.

So if you ever run into a situation where a carrier has reweighed a density item, make sure to double-check the math. It could save you a few bucks!

Extra credit: show my work

(48″x48″x24″)/1728cuin=32cuft – there are 1728 cubic inches in a cubic foot so that is the quick way to convert inches to feet!

270lbs/32cuft=8.43pcf