LTL Shipping Guide

Introduction

The rules and regulations of LTL shipping can sometimes seem overwhelming, even to the most experienced shipper. After all, there’s a lot to understand to keep things running efficiently.

For example, you need to know how the trucking industry defines its product (referred to as the NMFC of the product or load), how to properly prepare shipping paperwork, and how to properly pack or bundle the load. You’ll also want to evaluate carriers and the variety of options available to you to get your cargo to its final destination as quickly, reliably, and cost-effectively as possible.

the NMFC

When it comes to getting your products to your customer, one of the first things to consider is how the transportation industry defines your product.

In the world of LTL shipping, different types of products, from steel bolts to auto parts to blenders, are defined by their composition. Each product definition is called a classification. Your freight class plays a major role in calculating the freight cost to transport the shipment.

How are cargo classes determined? The many classes of cargo are listed on the National Motor Freight Classification rate, commonly known as NMFC. The NMFC is a publication for motor carriers that contains rules, descriptions, and classifications for all products moved in commerce. The post is used to classify freight for billing and freight qualification purposes.

In addition to defining the classes of shipping commodities, the NMFC also assigns item numbers to each type of commodity. The item number is related not only to the product itself, but also to the material it is made of, its packaging, and other factors and considerations. Item numbers are associated with rates as well as commodity classifications.

With page after page of item numbers, commodity descriptions, and freight classes, the NMFC is an excellent reference book for the transportation professional. They also offer an online version of the reference book also called ClassIt. The book also outlines the responsibilities of shippers, as well as many of the responsibilities of LTL carriers.

load classes

What do all these different charge classes mean?

As mentioned, several elements, including density and value, determine a merchandise’s cargo classification. Take ping pong balls, for example. Ping pong balls are class 500 (the most expensive charge class) due to their density – or lack thereof! A transporter can fill an entire cargo trailer with ping pong balls without carrying much weight. Since the fees are based on weight and density, the fee to transport ping pong balls is higher than it would be for heavy pieces of steel.

But even with very low density freight, there are ways to reduce freight rate charges. Take a look at another NMFC example to see how you can reduce your freight charges by accepting some risk (or limiting the value of your goods in the event of loss or damage).

Perfumes in barrels or boxes may be classified under NMFC section 59070, class 85. But NMFC Note 60000 states that as the shipper, you can declare a “released value” in writing on the bill of lading. In this case, the released value of the property cannot exceed $2.15 per pound. If you put this released value on the bill of lading at the time of shipment, the class of your perfume barrel will be reduced to class 70.

This means a lower shipping fee. In turn, the carrier has limited its liability to $2.15 per pound in the event of damage to or loss of the shipment. Therefore, indicating the released value of your goods on the bill of lading and accepting the associated protection offsets can adjust your classification and lower your rates.

How freight rates are calculated

Freight rates are based on many factors, including:

1. The distance the shipment is moving

2. Shipping weight

3. The density of the product being shipped

4. The susceptibility of the product to damage

5. The value of the merchandise

6.Handling characteristics and load capacity of the merchandise

The last four elements (among other criteria) are used to establish the classification of a commodity. The NMFC, or National Motor Freight Classification, lists all product classifications. There are eighteen possible classes ranging from 50 to 500. The higher the class, the higher the fee for every hundred pounds you send. Most LTL rates are stated as a rate per hundred pounds or per hundredweight. Rates are structured so that as the weight of your shipment increases, the rate per hundred pounds decreases.

For example: a shipment that weighs 100 pounds may cost $41.00 per cwt, while a heavier shipment, say 500 pounds, of the same product (moving to the same final destination) may only cost $35.00 per cwt. But doing the math, we see that the total charges for shipping 500 pounds are higher (5x$35 is greater than 1x$41). Most LTL carriers set a minimum charge for very light shipments.

Before sending

Regardless of the LTL carrier you select to transport your goods, taking a few important steps before the driver arrives to pick them up can help keep your business running smoothly:

1. Prepare your packaging

Safe and proper packaging helps ensure trouble-free shipping. It also helps limit any potential damage from transshipping packaged cargo. All products must be protected with proper packaging in accordance with the NMFC. (For tips and examples, take a look at the examples in Preparing Your Package below.)

2.Label each part clearly and completely

Full names and addresses are required on each piece to ensure your shipment packages arrive intact. Label placement is also important. (For tips and examples, take a look at the examples in Proper Labeling below.)

3. Complete a bill of lading

The bill of lading is a legal contract between the shipper or a third-party logistics provider (3PL) and the carrier. You must indicate exactly what is being sent, where it comes from and where it is going, etc. If you use a 3PL, they will typically provide a system-generated BOL for the shipper to use for shipping the cargo.

4.Select a carrier

Selection criteria are often based on the product you are shipping, the services the carrier can provide, where your shipment is going, the date the shipment is due to arrive, and the cost of these services. You should evaluate the options based on your company’s freight forwarding needs.

5. Place the order

Depending on the time of your order, most carriers can have a truck at your location that same day or usually the next day at the latest. The carrier or 3PL provider will likely ask where the shipment is going, how much it weighs, if it is ready for pickup, how late the shipment can be picked up, and who pays the charges. Tip: Order early in the day to increase the chances of same-day pickup.

Proper packaging is a must.

Please do not ship your products without proper packaging and protection. Many shipping damage and claims arise from improper packaging, and packaging errors can eliminate the carrier’s liability.

When possible, heavy and bulky items should be palletized for better handling and care. To maximize the strength of the box, stack the boxes on the pallet vertically. You can secure cartons to a pallet with banding, shrink wrap, stretch wrap, or release adhesive.

The boxes should be stacked at right angles on the skid, without protruding. Box flaps and corrugations should face up. It is better that the top surface is flat.

proper labeling

Shipping labels must be placed on each piece of your shipment. Shipper and consignee information must exactly match the information on the bill of lading, and your labels must be legible and complete.

Ideally, you should place the labels securely on the long and short sides of each piece. DOT Hazardous Materials labels are required when shipping hazardous materials as specified by DOT. Direction markings should be located as shown in the examples below. The location shown indicates the top, one side, or one end. If more than one location is shown, you can choose which one to use.

Bill of lading

The bill of lading is an important document. It acts as a goods receipt, a contract of carriage, and can act as a document of title (if a bill of lading is requested). Take the time to ensure that the bill of lading is filled out completely and correctly, as this will help ensure error-free delivery of the cargo to its final destination. A correct bill of lading also ensures an accurate invoice to you.

Cargo receipt: clear delivery

What happens when you’re at the other end of a freight shipment? Receiving a freight can be as simple as sending it if you follow a few steps:

1. Contact your supplier/shipper to find out when your shipment shipped, which carrier it was delivered to, and an approximate date of arrival.

2. Upon arrival, immediately inspect the shipment for obvious signs of damage.

3. Compare the actual number of handling units to the number on the delivery receipt.

4.Sign the delivery receipt.

The carrier driver will usually help you receive/unload your shipment and answer any questions you may have. While the driver is there, he compares and counts the pieces of freight he is receiving with those on the freight bill from the carrier. When he has determined that the condition and quantity of your cargo is acceptable, the driver will ask you to sign the delivery receipt. The driver will provide you with a copy and take the signed copy with him/her (as a delivery receipt) for the carrier’s record of delivery.

When a carrier receives a signed delivery receipt with no exceptions or damage, it is called a “clear delivery.” Clear deliveries usually mean everything went smoothly – success for both the shipper and the recipient of the cargo.

An invoice for the shipment will be sent to the applicable party shortly after pickup or delivery has been made, depending on whether the shipment is prepaid or collect. Questions about the amounts shown on the bill should be directed to your carrier or 3PL provider. If you think you have paid too much, contact your provider and ask to file an overcharge claim. Please note that carriers charge for incorrect weights and classification of goods. Therefore, it is very important to provide the correct weight and freight class when qualifying and shipping via an LTL carrier to eliminate rate changes due to incorrect information.

If a shipment is short or damaged, you must still accept the delivery, but you must clearly note the defect or damage on the delivery receipt. Be sure to receive a copy indicating the short circuit or damage. It is the duty of the shipper and the consignee to mitigate the loss with the involvement of the LTL carrier. After accepting the shipment, take steps to protect the shipment from further loss and file a claim for the actual shortage or damage involved immediately.