New LTL Freight Classification System: What It Means for Shippers and Freight Costs

The National Motor Freight Traffic Association (NMFTA) announced back in November a major update to the less-than-truckload (LTL) freight classification system, set to launch on July 19, 2025.  Supported by the new ClassIT+ digital platform, which replaces the current online ClassIT system, these transformative changes aim to simplify freight classification and enhance transparency for shippers, carriers, and third-party logistics providers.

Why the Update Matters

Freight classification is a critical component of LTL shipping.  The NMFC (National Motor Freight Classification) assigns classes based on factors like density, stowability, handling, and liability.  Incorrect classification can lead to significant cost discrepancies, causing shippers to pay more than necessary or carriers to suffer from revenue losses.  NMFTA’s revamped system is designed to address these issues head-on:

  • Simplified Process:
    By introducing a more intuitive classification system supported by an advanced API, NMFTA aims to reduce errors and streamline the freight classification process.  This means shippers can expect more accurate classification on the first attempt, minimizing disputes and administrative overhead.
  • Improved Transparency:
    With enhanced digital tools, the new ClassIT+ platform will offer greater visibility into the classification process.  Shippers and carriers alike can access real-time data, ensuring that freight is classified correctly, which in turn can help prevent inflated charges.
  • Enhanced Efficiency:
    The digital overhaul will boost operational efficiency across the supply chain.  More accurate and prompt freight classification means faster billing cycles, reduced delays, and a smoother process for both shippers and carriers.

Impact on Shippers

For shippers, the new classification system could translate into several tangible benefits:

  1. Reduced Freight Costs:
    Proper classification means shippers will avoid overpaying for freight.  When shipments are classified accurately, fees align more closely with the actual cost of moving goods, leading to potential savings on each shipment.
  2. Enhanced Predictability:
    With a more transparent system, shippers can better anticipate freight charges, facilitating improved budgeting and cost management.  This predictability is particularly crucial in industries with tight margins or high-volume shipping requirements.
  3. Streamlined Dispute Resolution:
    Inaccurate classifications can lead to disputes between shippers and carriers.  The new system's accuracy and transparency will reduce the need for lengthy reconciliations and disputes, saving time and reducing administrative costs.
  4. Better Data for Decision Making:
    Access to detailed classification data and insights can help shippers analyze their shipping practices and optimize their supply chains.  Over time, this data-driven approach can lead to more strategic sourcing and logistics decisions.

Impact on Freight Costs and the Broader Supply Chain

The NMFTA estimates that correct classification can have a substantial impact on the overall cost structure of LTL shipping.  With the potential to minimize errors and reduce overhead costs, the industry could see a ripple effect across the supply chain:

  • Lowered Operating Expenses:
    Both shippers and carriers will benefit from reduced administrative burdens and fewer disputes, leading to lower operating costs and more competitive freight rates.
  • Market Stabilization:
    As the classification system becomes more consistent and reliable, freight pricing is expected to stabilize.  This can create a more predictable market environment, encouraging investment and growth within the industry.
  • Enhanced Cybersecurity and Standards:
    NMFTA’s commitment to developing digital standards and bolstering cybersecurity will protect sensitive supply chain data, ensuring that the new system remains robust and reliable even as cyber threats evolve.

Preparing for the Transition

With the updated system set to roll out in July 2025, stakeholders have time to adjust their processes.  NMFTA is actively engaging with industry participants through public meetings and listening sessions, ensuring that the final system reflects the needs of shippers, carriers, and 3PLs.

  • Shippers Should:
    • Review their current classification processes and identify potential areas for improvement.
    • Engage with NMFTA's resources and training materials to understand the new system.
    • Collaborate with carriers to ensure a smooth transition and accurate classification of all shipments.
  • Carriers Should:
    • Invest in upgrading their digital systems to integrate seamlessly with the new ClassIT+ platform.
    • Train staff on the updated classification protocols to reduce errors and improve efficiency.
    • Monitor regulatory updates closely and participate in NMFTA’s public feedback process to stay ahead of industry changes.

For more information on the updated system and to access training resources, visit the NMFTA website at nmfta.org.

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