LTL Industry Braces for New Freight Classifications in 2025

The LTL (less-than-truckload) industry is gearing up for significant changes in 2025, as the National Motor Freight Traffic Association (NMFTA)™ is set to introduce a new freight classification system. This update aims to simplify the classification process, reduce disputes, and make the system more user-friendly for all parties involved. As the implementation date approaches, shippers, carriers, and 3PLs are preparing for the transition.

The current NMFC system, established in 1936, has evolved over the years to accommodate changes in the industry. However, the upcoming changes in 2025 will be one of the most significant updates in recent history. The new system will focus on a density-based approach, which will better reflect the actual cost to ship goods. This shift is a response to decades-long complaints about the NMFC being too confusing and complex.



Key changes in the new system include:

1. Expanded density ratings: The new system will have 13 subprovisions for density, up from the current 11. Generic headings will be consolidated, and subprovision 11 will be amended to include densities ranging from 30 to less than 35 pounds per cubic foot.
2. Unique identifiers: Freight with special handling, stowability, or liability needs will be assigned unique identifiers, making it easier for carriers to identify and charge appropriately for these shipments.
3. Condensed and modernized commodity listings: The updated system will have a condensed and modernized list of commodities, ensuring that the system remains relevant to modern shipping practices.

These changes will have a significant impact on the LTL industry, affecting pricing strategies, cost structures, and the way shippers and carriers measure and report shipment dimensions and weight.

Pricing Strategies and Cost Structures

1. Carrier Pricing Strategies:
- The new density-focused model will simplify the classification process, making it easier for carriers to determine freight classes accurately. This could lead to more consistent and predictable pricing strategies.
- Carriers can expect fewer disputes with shippers over freight classes and rates, potentially improving customer relationships and lowering administrative costs.
- Carriers may need to adjust their pricing mechanisms to fit the new classes, which could result in some positive and negative changes to customer pricing initially. However, account profiles and margins will still be determined through negotiation.

2. Shipper Cost Structures:
- Shippers can expect more accurate pricing based on the actual characteristics of their shipments, helping them better plan their logistics budgets and avoid unexpected charges due to reclassifications.
- Depending on the specific density of their shipments, shippers may see increases or decreases in their LTL pricing programs. It's crucial for shippers to review their pricing agreements and prepare for these adjustments.
- In most cases, shippers will need to provide handling unit dimensions and weight to carriers for accurate classification and billing, potentially adding to shippers' operational costs.

New Technologies and Tools

To accurately classify freight under the updated system, shippers and carriers will need to adopt new technologies and tools that focus on density measurement and data management. Some examples include:

1. Dimensioners: These devices measure the dimensions of freight, which is crucial for calculating density. With the increased emphasis on density, shippers and carriers will need to invest in dimensioners to accurately classify freight.
2. ClassIT tool: The NMFTA is enhancing the ClassIT tool to help shippers, carriers, and 3PLs better navigate the updated system. The improved tool will have more expansive APIs, an improved search function, and faster responses.
3. Weight scales: While not new, weight scales will remain essential for accurate density calculations. Shippers and carriers should ensure their scales are calibrated and functioning properly to provide precise weight measurements.
4. Data management systems: To effectively manage the increased data from dimensioners and weight scales, shippers and carriers will need robust data management systems. These systems should be able to integrate with other logistics platforms and provide real-time insights into freight classification and density.

As the LTL industry prepares for the new freight classification system in 2025, shippers, carriers, and 3PLs should stay informed about the upcoming changes and invest in the necessary technologies and tools to ensure a smooth transition. By doing so, they can better position themselves to take advantage of the new system's benefits and minimize any potential disruptions to their operations.

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