Friday, June 1, 2012

Glad You Asked

Readers respond with questions, we try to provide answers.

Responding to the recent “what’s on your mind?” offer in this space to take up specific supply chain questions, a reader asked for thoughts on “how not to miss opportunities for freight savings, and how to use the proper class code for shipments.”

Glad you asked. Bear with us, because there are a lot of factors that need to be considered.

Freight savings can be realized in many ways. Understanding "market rates" is the first step. Are you getting fair pricing for the commodities you ship and receive? Fair pricing is determined by many factors including your commodities, product value, the volume of business you have, where you ship from and to, susceptibility to damage, ease of handling, promptness of payments and other factors.

Next is determining the proper mode for each shipment. What shipments should be moved via a parcel carrier vs. a Less than Load (LTL) carrier? When do LTL shipments become more cost-effective as multiple-stop truckloads? Does your volume warrant the use of pool distribution? What carrier should you chose? With over 700 thousand registered motor carriers in the US, choosing the best carriers for your business can be a daunting task. Today, technology plays a major role, enabling shippers to determine their best and least cost alternatives.

The proper classification of commodities shipped has a major bearing on transportation costs. The National Motor Freight Classification (NMFC), a guide published by the National Motor Freight Traffic Association (NMFTA), is used by most LTL carriers, a large number of truckload carriers, and many freight forwarders. The NMFC assigns a class from 50 to 500 for each commodity – the higher the class, the higher the resulting freight charges. In printed form the NMFC has 329 pages of commodity listings and their relevant freight classes.

Depending on the commodity being shipped, its listing in the NMFC can be very specific or very vague, requiring interpretation. Factors determining a freight class include density, stowability, handling required, and carrier liability. Most carriers can provide you with their interpretation of a NMFC class, or you can try getting assistance directly from the NMFTA. TOTALogistix recommends getting an impartial opinion on the proper classification for your products.

Bottom line: it’s a jungle out there. You want a guide who is familiar with the lay of the land.

NOTE: Get your individual concern addressed in this forum. Just respond to this email, or click the following link for our comments box:

Kirk Shearer
800-989-0054 x103

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