Could you “Bump” Yourself to Some Savings?
Dimensional weight is not applicable in LTL…or is it? While, in the truest form, dimensional weight is typically only applicable when dealing with parcel carriers and freight forwarders. However, just as parcel carriers want to invoice for the capacity that the carton occupies and perhaps not the weight, same holds true with LTL carriers. If you ship boxes of pillows, for example, they may be large, but the weight is not significant. If they invoiced solely based on the weight, or weight and destination, it may not be enough to cover their costs. A constant concern for many companies deals with continuously monitoring and increasing their savings. Thus, we have the National Motor Freight ClassificationTM system.
The NMFC®assigns freight classes to commodities, which will be a factor in determining the transportation cost. So, let’s evaluate those pillows. They are NMFC® item number 149265, which is subject to density. This means that the freight class cannot be assigned until you know the pounds per cubic foot (pcf). (Multiply the length x width x height and divide by 1728 to determine the total cubic feet. Divide the weight of the shipment by the cubic feet to get the pounds per cubic foot.) The lower the pounds per cubic foot…the higher the freight class…which means the higher the charges. The highest class for this item is 400 and the lowest is class 70, so there can be quite a disparity in the charges. So, how can you increase your savings? Keep reading.
Here’s the downside. For items that are subject to density, you must show on the bill of lading, at the time of shipping, the actual density or density group. (What is meant by density group is the sub number. Example, if shipping the above item at a class 70, which is 15 or greater pcf, then the bill of lading would reflect item 149265, sub 9; or it can be written as 149265-9.) If you fail to put the density or density group on the bill of lading, the carrier has the right to bill you at the lowest density, which would be the highest freight class. Now, you can have this corrected after the fact if you can provide satisfactory proof of a higher actual density. I don’t know about you, but I don’t have time to do work twice! The other thing to keep in mind is that if you are using a freight audit company, this may not flag as an error in their system because the class and charges would rate correctly, particularly when the bill is sent via EDI and going through an automated rate audit.
Okay, how about some good news now? Here’s the secret that many don’t know or utilize. For commodities that are subject to density and that reference Item 171, you, the shipper, are allowed…yes, allowed to artificially inflate the weight of the shipment to increase the density to apply the next lower class in the density scale where the result is a lower freight charge. This, again, must be done at the time of shipment.
So, how do you do this exactly? Let’s stick with our pillows and say that we have a shipment with dimensions of 48 x 40 x 50 and a weight of 400 lbs. This works out to 55.56 total cubic feet and 7.2 pcf, which would be sub group 5, which is for items with a pcf between 6 but less than 8, and the class would be 125. The next lower class of 100, sub 6, is for items with a density between 8 and less than 10 pcf. To use the “bumping” provision, multiply the total cubic feet of 55.56 by 8 (the lowest density named in sub 6) to determine the declared weight for billing purposes. In this case, it would be 445 lbs.
When using this rule, the shipper must show the actual cube, actual weight, density group for the actual density, the declared density, and the resulting weight for billing purposes on the bill of lading at the time of shipment. Carriers create their own Rules tariff and can take exception to Item 171, so be sure to check that first for the specific carriers you utilize. Application of this item does require a little effort, but it may net some significant savings….perhaps significantly more savings if it puts you into an F.A.K. pricing tier!
About the Author
Tanya Wallace is a Certified Management ConsultantTM with 20 years of experience in the logistics and supply chain industry. Her experience learned through working for a 3PL, a carrier, and a spend management organization have provided insight that has allowed her to successfully save many Fortune 500 companies millions of dollars. She can be contacted via [email protected] or LinkedIn at https://www.linkedin.com/pub/tanya-wallace/64/649/634/. You may want to check out her blog at https://cclccorp.com/blog/.