The NMFC Changes Are Coming. Are You Prepared?

Four Areas of Increased Focus for Shippers 

After carefully reviewing the new docket of changes, Redwood advises shippers to focus on four key areas in anticipation of the new NMFC classification system. 

1. Accurate, accessible shipping data 

For shippers who excel at maintaining and updating their shipment data, compliance with the new NMFC classification system will be much easier. Ask yourself these questions: 

• Does the master data from your order management system accurately maintain and classify your commodities today? 

• Do you know your correct NMFC numbers? 

• Do you store item-level weights and dimensions? 

• Is ready-to-ship freight reweighed and measured before leaving your dock? 

If you answered “no” to any of these questions, then you need to update your source data immediately. The new density-based ratings will make it even more crucial that all freight shipped has an NMFC number, as well as weight and pallet dimensions, on the bill of lading. Without this information, you’ll face: 

• Reclassifications of your freight

• Inaccurate quotes

• Unexpected invoice charges

• Freight audit and payment rework

• Disputes

• Delays

• Added costs 

The best way to clean up your LTL commodity data? Start collecting it consistently, in a harmonized format, and with an expert team that can help formulate a profitable ongoing LTL strategy. As a trusted partner, Redwood helps our LTL customers collect clean, accurate shipment data, understand the new freight classifications, and accurately estimate LTL costs through freight audit data. Experts at Redwood can immediately step in and start automating and standardizing your data in advance of the July NMFC deadline. 

2. Real-time connectivity, enabled by technology 

Once you’ve collected and cleaned your data, you need to share it with carriers, customers, and key company stakeholders in real time. Technology is the answer, providing these benefits: 

• Improved planning and cost control. As your carriers receive accurate shipment information (including weight, dimensions, and NMFC classification), they can appropriately plan for space on trailers. They can also reduce the labor costs and invoice corrections associated with last-minute reclassification. 

• Accurate pricing. Sharing shipment information with customers in real time supports accurate upfront pricing and pre-payment, while minimizing disputes later. Even if you don’t bill customers for freight, any increased costs will erode your margins. 

• More predictable outcomes. Accurate LTL cost calculation, and real-time visibility and sharing of that cost data, helps your company build freight expenses into your operating and profitability models. You’ll hit your financial targets by minimizing the impact of rising and unexpected transportation costs

• Preferred status with trading partners. By streamlining and automating the real-time sharing of shipment information, you’ll be positioned as both a customer of choice and a vendor of choice.  

The easiest way to achieve real-time connectivity is by integrating your transportation management system (TMS) with Redwood’s proprietary integration platform, RedwoodConnect. With the right system integrations, shipment data can be automatically passed to the TMS, rated accurately through density-based calculations and APIs, and communicated electronically to carriers. Invoices can be audited systematically against shipment data, and financial information can be seamlessly exchanged among partners. 

3. Optimized procurement and rate management 

LTL procurement has become a core competency that impacts your costs and margins, as well as your customer satisfaction, loyalty, and new revenues. To optimize procurement and freight management under the new NMFC rules, you’ll need to answer these questions: 

• What are FAK structures? How are they used, when should they be used, and how do the new density rules impact them?

• What are the differences among LTL carriers? What carriers serve what markets, and what services are required? Where do various carriers excel, have a niche, or struggle?

• What contracting rules apply to your LTL rates? Are there standard carrier tariffs, or rules that are more tailored to your business? How do you think about liability, accessorials, and invoicing requirements? 

• What are the cost impacts of your packaging? How is your packaging affecting your density, rates, and claims? Do you have enough packaging? Can you adjust the dimensions to save costs — or adjust the frequency of your shipments? 

4. Your ready-to-ship packaging and dimensions 

Adjusting your packaging and dimensions to improve density will help mitigate rate adjustments and back-office choke points. This includes, but isn’t limited to, adjusting packaging materials and pallet heights for effective movement and stacking, but also the frequency of your shipments, locations, volumes and other acccessorials.  

• Do you have historical data reflecting your shipping patterns? Trapping single pallet shipments to larger shipments over time will reduce costs. Changing ordering and shipping patterns can also help optimize LTL spending and improve buying power.

• Are you shipping air? Does your packaging inflate your dimensions and your PCF (pounds per square foot)? If it does it will undoubtedly raise your rates.

• Are your pallets optimized for space? Can you fit more on a pallet and change your securing procedures with wraps, bands, or crating?

• Does your whole team know? Do you have multiple shifts? Is procurement or sourcing personnel separate from the warehouse or dock? Do you have the tools, equipment and processes set up to maintain an optimized density-based packaging process over time? 

This is a long list of complex questions. Why not partner with Redwood’s LTL experts to answer them? Redwood has decades of experience working with shippers to negotiate best-in-class LTL pricing, as well as defining optimal network strategies. The real wins are achieved when both of those pieces work together.  

Redwood: A Partner You Can Rely on 

The NMFC changes will impact every shipper in a unique way. Redwood’s LTL experts can help by looking at your current NMFC classifications, your average freight densities, your shipping patterns, and other characteristics of your LTL business. Redwood works closely with both the NMFTA and hundreds of LTL carriers, and we can make the transition as seamless and profitable as possible for you.  

Get over the learning curve, become an early adopter, and maximize the potential efficiency gains quickly by partnering with Redwood. Reach out to get the conversation started before another day passes.