Dimensional Pricing
One of the interesting realities of today's transportation marketplace is the emphasis that LTL carriers are putting on being able to charge for the space and weight of shipments that goes onto their trucks. And these carriers have a bunch of data that they are using to justify rate increases and after the fact freight adjustments.
This can be challenging because the carriers often have better data than shippers. For example, how many shippers have dimensional data for every shipment that comes into or goes out of their facilities? Carriers are using this data to be compensated for the dimensional space as well as the actual weight of your shipments. Shippers can get ahead by collecting the same data and using packing the utilizes space.
Carrier Re-Weighs
Carrier Re-WeighsThe issue of LTL carriers reweighing your freight isn't going away anytime soon. Why?
Well, when the CEO of one of the largest LTL carriers tells me that 35% or more of the shipments tendered to them have inaccurate weights on the Bills of Lading, you can expect them to place a lot of emphasis on being able to charge for this extra weight.
Carrier re-weighs are significant since they're one of the most frequent issues faced by shippers.
A re-weigh can happen at any time throughout the shipping cycle. If you're estimating appoximate weights, chances are greater that you'll face a re-weigh and may have increased shipping charges. You might even be re-billed at a non-discounted rate.
The good news is that for re-weighs, there are things that you can do to work around this. For example, you can negotiate with your carriers and set a tolerance to limit the number of charges passed on to you.
Freight Classification and Other Adjustments
In addition to re-weighs, another common freight adjustment to watch out for is freight classification errors. The National Motor Freight Traffic Association (NMFTA) publishes the National Motor Freight Classification (NMFC) and groups commodities into one of 18 classes—from a low of class 50 to a high of class 500—based on an evaluation of four transportation characteristics: density, handling, stowability and liability. The carrier then bases their shipping charges off the NMFC code, so it's important for shippers to identify the right NMFC number and freight class. When the carrier suspects the wrong NMFC number was used, we often see a re-class, which can result in a higher or lower shipping charge than what was budgeted.How to prevent freight classification errors:
- Get educated: It might be painful at first, but it's worth the work. The National Motor Freight Traffic Association offers regular webinars that help educate shippers about how to determine the correct description, NMFC Item number and class for their freight. This information can be printed bill of lading to prevent a carrier from making an adjustment. The NMFC also offers an online tools called ClassIT to help shippers classify their freight, which is a seachable online version of the NMFC publication that makes it easier to find the right classification.
- Use a TMS: Using a transportation management system (TMS) can help by giving you the ability to save your common freight classifications for future use and reference.
- Freight Auditing: Shippers or the parties they use for freight audit and payment should audit a freight’s BOL (bill of lading) to ensure it has the right class and hasn't been billed at the wrong rate, especially at a higher rate than it should have been.
There are several other adjustments that can occur as a results of accessorial charges such as residential fees, lift-gate charges and oversize fees. It's important to identify and these and track what's driving up your transportation costs so that you can control and reduce your costs as much as possible.
Don’t forget: we’re on your team, we’re here to help and we’re passionate about seeing you optimize your transportation costs. If you have any questions or comments, please give us a call at 630-833-0890 or send us an email.
