Understanding the 2025 NMFC Changes with Joe Greek

Today, we're diving into some of the most significant upcoming changes to LTL shipping in years. Specifically, the new National Motor Freight Classification or NMFC updates that are taking effect July nineteenth. These changes represent the first major wave in a shift towards density based freight classification, impacting how LTL shipments are rated, quoted, and billed. To help us unpack what this means for shippers, we're joined by Mike Sanders, director of pricing here at Averitt. With over thirty years in the LTL space, Mike offers clear insights onto what's changing, how it may affect your freight, and the simple steps you can take to get prepared. Let's get started. Yeah. I'm Mike Sanders based out of Cookeville, Tennessee. Been with the company, thirty one years, and, we're here today to talk about the upcoming NMFC changes, and hopefully, you know, help you help you navigate, you know, any changes that it makes to your operation. So, we'll move let's see. We'll move forward here. There you go. And just to go back to the start, the the NMFTA was created in nineteen thirty six by the Interstate Commerce Commission. It was charged by the federal government with establishing standards for the LTL industry. Standards for things like packaging, liability, shipper's responsibility, carriers responsibility, engagement. And, they've been doing this for about nine years. They meet once a quarter every year and they review products to determine what freight classification, you know, they determine freight classes. And if a product's manufacturer over time changes and looks different, the density, rises or falls falls, they make changes to the freight classification. And freight classification, now it has evolved since nineteen thirty six into the seventeen layered, freight class level, everything from fifty to five hundred. The denser stuff being, on the low end and the less dense stuff being on the high end. This was adopted from the railroad industry going back in the eighteen hundreds. But, the LTL freight classification structure now has this sort of range, and it was intended to, make sure that rates were compensatory for carriers relative to the density of a product. Because, because carriers charge based on the pound or per hundred weight, five hundred pounds of potato chips takes up a whole lot more space on a trailer than five hundred pounds of nuts and bolts. So the heavier the product, the denser the product, the lower the class. And what has happened over many, many years, it it is, evolved from this sort of, it it's evolved from an an arbitrary class that was assigned by the NMFTA for a lot of products many, many years ago into into if you if any of you have seen it now, the NMF one hundred, the guy the classification guide, looks like a New York City phone book. I mean, it's massive. And you have to sort through it to find individual, you know, where your specific, commodity, has a classification designation. Well, what this is an attempt to simplify and get it back to a more density based application, and which is what the intention was from the get go. We it has a density based scale, and they the NMFTA has identified thirty two hundred products that are moving from a arbitrary specific class to a density based scale, and that's happening on July nineteenth. And this is the first wave of changes. If you notice on this slide, it says first wave, July nineteenth, because there will be other changes made over the next few years. Whether that's a year from now, two years, three years, you will have other products that are migrated to this density based scale. And, for those of you that are, you know, not familiar with it, it's, it it it's an attempt to simplify the classification, and make it easier to calculate freight class using density across all types of products, and it aligns more closely with international shipping standards. You know, if any of you ship internationally, you already know that you are obligated legally to put the cube on the bill of lading. You have to put the space occupied on the bill of And that this is an effort by the NMFTA to more closely align the LTL industry with that sort of, with that sort of trajectory. Any of you that ship, plastic articles, I mean, there there have been dozens of commodities over the last, four or five decades that are subject to a flight class based on density already, plastic articles being one. And this is an illustration of what the item looks like for plastic articles. You ship plastic articles, travel bags in Hawaii, auto body parts. There there are dozens of them now that, are subject to this sort of structure. And the class of each individual shipment is dependent on the density of that shipment. If the shipment is two to four pounds per cubic foot, then it's a class two fifty. If it's twelve to fifteen pounds per cubic foot, it's class eighty five. And, shippers for a lot of these type products have have been having to identify the density on every single bill of lading in order to identify the class for many, many years. The scale that NMFTA is moving to on July nineteenth looks like this. It is adding two layers at the low end of the of the, range. We I talked to a customer a couple of weeks ago that asked about how theirs would be affected, and they actually shipped, their product that was subject to density like this, like plastic articles. And they had the three examples they gave me, they were between thirty five and fifty pounds per cubic foot. So their freight classification is actually gonna be going down. They've been shipping at class sixty for years because it was subject to this. And now it's the old scale. Now under the new one, they're actually gonna benefit from a lower class. So, this is this is not anything that hasn't been done for decades. It's just the NMFTAs attempt to cost cast a broader net, to, you know, to incorporate more products with this type of classification. Now there are a lot of products. I said thirty two hundred products that are being migrated to this format. There are a lot that aren't. There are a lot that are retaining their existing freight classification. And those are ones that have been identified as by the NMFA as, not likely to lend themselves to ideal stowability on a trailer. Because carriers charge based on space, they can only charge but charge based on weight, but has to correspond to space occupied on a trailer. If you have products like, think ladders, like, pallets of, like, eight foot aluminum ladders, eight by two and a half pallets that can't actually load on or around anything to to utilize the full full use of the trailer, those types of products are retaining their existing class. And some a lot are are changing. A lot are staying the same. But we we have a tool that we can show you, and we'll get to that in a moment, that will help you identify how it's gonna affect your product. Three steps to prepare. Number one, review review your product's packaging both for efficiency and protection. Whatever you because a lot of products are moving to a density based class, whatever you can do to make your product more dense, to reduce padding or without, you know, affecting the integrity of the the packaging. Whatever you can do to make the product more dense, make it more easily stowable, what it the, it will only help drive the freight class down and ensure lower rates for your for your company. Also, you can go to, determine we have a density calculator on the ayritt dot com website. You can go there and key in the DIMMs, and it will calculate the density for you and show you what the, the pounds per cubic foot is. Classification of the freight that does not have special handling stowability would be subject to the scale shown on on the screen here. And, the n m f t a dot org, you can go on their website and and access, you know, submit questions to them. If you're not sure about your NMFC item number for your products, you can send information to them and, send them questions, and they they will help assist you identify what your product what what your products are currently, moving under, which NMFC item number. Understand the effects of freight classification. Talk with your carriers, make sure, you know, there's no surprises on either end. And, also, we've been asked a lot. A lot of people think they they're supposed to begin putting the the dimensions on every single bill of lading. That is ideal. Carriers would obviously prefer that because there's, you know, the visibility is much greater and that the understanding, there's there's less uncertainty in the transaction, but you are not obligated to put the DIMMs on the bill of lading. All a shipper is obligated to do is provide a complete, an accurate description of the products and the actual class. And if you can do that, as long as it corresponds to the density, then it's all good. But, obviously, providing the DIMMs is beneficial for all parties. Preparation tips, investing in dimensioning equipment. When we've when dimensioner, first started becoming prevalent in the hotel industry about ten, twelve years ago, the initial ones were, you know, seventy five, eighty thousand dollars and, pretty pricey. And, the thing is good thing is now that, with technology improvement, over time, the the prices come down on a lot of these, and, it may be a cost beneficial for you and your operation to purchase these and work it so you already know and can scan and and dim all your stuff before you send it out. And, you know, there's less uncertainty, less corrections, less upheaval in the invoicing process. It it tends to be beneficial, if if if the return investment is there for you. Collaborate with carriers to understand the changes. The reason we're having sessions like this for our customers is because we want to avoid any pain. This is new for us too. This is not an Averitt thing. This is an this is an LTL industry thing. So all carriers and all shippers are having to navigate this just like you are. And, we're we're having sessions like this with our customers just to make sure that, we minimize the headaches and hiccups and surprises on the back end. Preparation tips. Also, you can go to the MyCare TMS or Averitt Connect, platform, which helps which, you know, has been, for several years, already had a class a suggested class. You key in the DIMMs, and it it coaches you through how to identify the class based on density. And that's a very beneficial tool. And, also utilize the NMFDA tools. The on their website, they have webinars. They have, instructional videos about, how things are changing and how to accommodate those. And, Averitt expertise, we can help you. If you if you have questions regarding what your current, products in the MC item numbers are or, any questions about, you know, what may be changing, you can contact your transportation specialist, and they can, involve our inspectors. We have a network of inspectors in the system that, can review and look at your product as it comes over the dock and give the the transportation specialist feedback regarding what the proper NMFC item number is for those products. How to determine the appropriate class for your freight? Okay. Determining you divide the weight by the freight and its volume. It's, fairly simple. We're gonna provide everyone a copy of this slide deck, everyone on this webinar, so that you you can refer back to it. But there's a number of ways to cut to, determine the appropriate class, calculate the freight density, like I said, using platforms like Averitt Connect or MyCarrier, or our Averitt, own web Averitt website, the density calculator. You can refer to the NMFC manual, the NMFTA website. The NMFTA has a product called Class IT, a piece of software that they sell that continually updates and, allows users, much more visibility to, on oncoming changes and, in the freight classification of certain products. You can, consult with industry experts, freight brokers, experienced carriers can provide guidance. Aggregate classification not only affects shipping cost, but also impacts liability insurance coverage. Misclassification can result in additional fees or increased risk of damage, which is what we'd all like to avoid. The the actual calculation for a density based, freight classification is on this slide here. It's length times width times height, in inches divided by seventeen twenty eight. That's the number of inches in a cubic foot, and it gives you the pounds per cubic foot. Next, we have a video here, that's gonna walk you through. It's about a three minute video. Please bear with us. It provides some helpful information. Alright. Well, now we have some freight to measure. Would you mind, giving us, the walk through? Well, first thing we do, of course, we walk around the freight, make sure there's no damage visible visible whatsoever. Then we take length times width times height. Now when we do the length times width times height we have to measure it from longest point to longest point. You know sometimes we have shippers that put a cone on top that says do not stack. Well, we'll have to measure to the top of that cone. Or sometimes we'll have shippers that have an oversized pallet. Well, we have to measure the pallet. And if the freight overhangs, then we have to measure the freight. Whichever one is longest point to longest point. And in this case it's going to be the pallet. So we'll go down through here so it's forty four by thirty six by forty eight. And then we'll we'll write that down. We'll record that down. Now how we figure the densities on this, we'll take the length times width times height multiply that altogether and then we'll divide that number by seventeen hundred and twenty eight. Where we get seventeen hundred and twenty eight is twelve times twelve times twelve, which is how many cubic inches are in a cubic foot. Say this one comes out to fifty cubic feet. Then we'll take the weight and we'll say that it's six hundred pounds and we'll divide six hundred pounds by the cubic footage. So six hundred divided by fifty would be twelve. So the density of this pallet would be twelve pounds per cubic feet. Now on a density scale, you're looking at for anywhere from a class four hundred all the way down to a class sixty. So depending on where that falls, say twelve pounds per cubic foot would fall between twelve and fifteen, which would be a class eighty five. So this particular shipment would be a class eighty five, and that's how we figure that up. And if you're not an expert at math like myself, you can also go on a ridd dot com slash density dash calculator to input your numbers to get the actual density as well to help speed up the process. Yes. All you need to know is the measurements of your shipment and the weight of your shipment. You can put that into our calculator, and it will figure the density for you. Great. And we'll show how that works. Alright. Now that we're on the Averitt website, we can get to the density calculator. So when we're here, we can put in the number of pieces for the shipment, which was one. Then we can put in the length, which was forty four inches Then we can do the width, which was thirty six inches And then we can do the height, which was forty eight inches Finally, we'll put in the weight, which we said was six hundred pounds. Now that we've put those points in, we can calculate it. Now we have our measurements at forty four cubic feet with a density of thirteen point sixty four. Okay. Thank you. The now we have, we we have put on our website favorite website now has, on the rate quota portion where you can we've added fields for DIMMs for length, width, and height. It's not required to pull a quote, but you can enter that, and it will calculate the density for you and and help coach you into finding the proper class if you're unfamiliar with it. That's that's a nice feature. We've also, changed, done some programming to make sure that, if you use that rate quoted Integrated bill of lading, then, the bill of lading will also show, it'll automatically put the DIMS and the freight class and all on the bill of lading for you if you use our website to initiate that. It can save you some steps. Very helpful. We mentioned before that, NMFTA had a tool, that would help you find out if your product is changing or not. They have, they have, set up this website, get classification dot com, and we encourage customers to use this, extensively and very quickly. This is a temporary site that will not be up, very long. They may take it down maybe by the end of August, but, it is you you can use this. It is absolutely free. It does require registration. You do have to you have you will have to key in your contact information, but it is absolutely free. And you can go and key in your current NMFC item numbers, and it will tell you whether or not that item is changing and, whether it's changing or not. And if it is changing, what what it's moving to. The examples on the screen here, it shows, the the third example, it shows that the current item was two five, eight six three, and it moved to two five five two five, new new item, full density. That is one that was not subject to density that is moving to a full density freight class, like we showed earlier. The second example there, the four seven five zero zero, it was already full density, but it's moved from eleven layers to thirteen. And then the one at the top, one one two five o, it says it's not part of the changes. That means that freight class is not changing. So you can go and key in your NMFC item numbers. You can either key them in one at a time and get this sort of feedback, or you can even you can key in multiple ones like it like it's shown on the screen here with commas between them, and it will give you a list of them. And if you'd like, if you have a lot if you have a ship warehouse, you have, like, eighty SKU and you wanna load up eighty different NMFC item numbers, you can do so with a CSV file, and it will load back an entire CSV file that you can download and distribute internally. But, again, this is a temporary site that is available. It will not be up, very long, maybe another, you know, sixty, ninety days. So we strongly encourage people to use this as much as you can, as quickly as you can. It walks you through the steps when you get on there once you register. It walks you through the steps as to how to do it. It's mostly self explanatory. If you have questions, you can ask. You can send questions to n m f t a dot org, on the get on their, help site, or you can ask your TS, and we'll try to help you if you get a message back that you're unsure what it means. But, use this as quickly as possible. And finally, yeah, the art in summation here, this is, you know, we we encourage people to invest in freight class calculators, make use of the technology that is, more prevalent and much cheaper now. Consult an MFC manual. Build strong relationships with your carriers. Talk about this. Talk about how it's gonna affect them and you. And make sure, you know, make sure you avoid unpleasant surprises on the back end. And the most important one to me is the last one. Continually educate yourself as a shipper. Make sure you're keeping up industry changes. NMFC sites. You can follow webinars and newsletters and updates that that you can stay ahead of changes that are taking place in the classification, you know, environment. And, anything you can do. If you have questions, ask your transportation specialist, and we'll be glad to we'll be glad to help you as best we can. But again, we're conducting these for the benefit of our shippers and for us. It's a new thing for us, but, I think, you know, if we work together, it can be a positive and easy transition for all of us. Thank you very much. Thanks again for watching. As Mike explained, these NMFC changes are designed to bring more consistency to LTL freight classification, but they also bring new considerations for shippers, Whether you're managing a few pallets a week or coordinating high volume LTL shipments, understanding how density affects freight classification is critical. The good news? You're not in this alone. Averitt has the tools, technology, and experienced people that are ready to help you evaluate your freight and make informed decisions. Reach out to your Averitt transportation specialist with any questions. We're here to help support you in every way that we can. Take care and stay tuned for more updates and resources.