The way that shippers and carriers classify loads of less-than-truckload (LTL) freight to determine delivery rates is set to change in 2025 for the first time in decades. The National Motor Freight Traffic Association, which represents LTL carriers in North America, plans to introduce a new streamlined approach its National Motor Freight Classification (NMFC) system.
Changes to the NMFC are necessary because the current approach is “complex and outdated,” according to industry group the NMFTA).
But the transition may take some time. Businesses throughout the logistics sector will be affected by the transition, since the NMFC is a critical tool for setting prices that are used daily by transportation providers, trucking fleets, third-party logistics providers (3PLs), and freight brokers.
The current system consists of 18 classes of freight that are identified by numbers from 50 to 500 based on a commodity's density, stowability, handling, and liability, according to a blog post by Nolan Transportation Group (NTG). Lower classed freight costs less to ship, while higher classed freight costs more. For example, class 50 freight would be dense commodities that can fit on a standard, shrink-wrapped 4X4 pallet, while class 500 freight would be low density, highly valuable, or delicate items such as bags of gold dust or boxes of ping pong balls.
In the future, that system will be streamlined, the NMFTA said. The new changes look to condense and modernize commodity listings by grouping similar products together. Additionally, most freight will only use a standardized density scale. This would apply to products that do not have any special handling, stowability, or liability needs. When freight does have special handling, stowability, or liability needs, those characteristics will be taken into account when determining the commodity's class. Additionally the digital version of the NMFC, the ClassIT classification tool, will be rewritten and relaunched.
The changes are important because the current classification system can be difficult to interpret, leading to disagreements between shippers and carriers, according to a blog post from Mark Davis, vice president of Pricing and Traffic for LTL carrier Averitt.
When the updates roll out in 2025, many shippers will see shifts in the LTL prices they pay to move loads because the way their freight is classified—and subsequently billed—might change. To cope with those changes, Davis said it’s important for shippers to review their pricing agreements and be prepared for these adjustments, while carriers should prepare to manage customer relationships through the transition.
“This shift is a big deal for the LTL industry, and it’s going to require a lot of work upfront,” Davis said. “But ultimately, simplifying the classification system should help reduce friction between shippers and carriers. We want to make the process as straightforward as possible, eliminate unnecessary disputes, and make the system more intuitive for everyone. It’s a change that’s long overdue, and while there might be challenges in the short term, I believe it will benefit the industry in the long run."
