HOW PACKAGING CAN AFFECT THE COST OF SHIPPING

There are many factors that go into how carriers cost out their freight; National Motor Freight Classification (“NMFC”) item numbers, cost per CWT, exception ratings, FAKs [freight all kinds], shipment volumes and frequency. However, all carriers are really selling is “space”.

Dimensions play a role in density based rates and minimum cubic capacity rules, but it all boils down to the most basic of concepts – “space” – and how important it is that carriers are adequately compensated for that commodity. Carriers have understood the concept for years and during that time have implemented different pricing schemes in their tariffs in which the space a shipment consumes plays a much larger role than the actual shipment weight.

Furthermore, classification rules have been introduced and/or amended in the NMFC to address the issue of space both within trailers generally, as well as how much space the actual product consumes on the pallet, skid or platform it is shipped upon. For example, some carriers have been implementing an Item in their tariff that applies a 65% rule to liquid products and now to dry products: If the amount of liquid exceeds 65% of the container volume the applicable rate for the liquid is to be applied to the shipment. However, if the liquid content consumes less than 65% of the container’s volume, then the higher of either the product rate or the rate applicable to the empty container multiplied by the gross shipment weight will apply.

In late 2014, an amendment was added to the Item which now applies this 65% concept to dry products that are unitized to skids, pallets or shipping platforms.

As you can imagine, the classification for empty containers, pallets, skids or shipping platforms can be very high given the right circumstances, which would then generate a substantially higher rate than expected if the freight cost is calculated based on the product classification. The rule reads in part “…shall be determined to be in compliance when occupying not less than 65 percent of the full surface area (deck) of the lift truck skid, pallet or platform”. Some carriers have strictly interpreted this to mean that only that part of the product that rests upon the surface of the pallet is to be considered in the measurement of how much of the pallet is occupied.

For example, in the case of a top heavy product with a 30” x 30” (900 sq. in.) base plate and a 36” x 36” (1296 sq. in.) top component secured to a 48” x 40” (1920 sq. in.) pallet for stability reasons, occupies 46.9% of the pallet surface if only the base plate is considered. But if the top component is taken into consideration, then 67.5% of the pallet space is occupied. If you’re a shipper of product that will nicely fill the complete, or majority of the pallet space, this rule won’t affect you. However, if you’re shipping a variety of products with abnormal dimensions that don’t fit squarely on a pallet or skid, be aware that there may be balance due freight invoices in your future.

If you have any questions about how the way you package your freight can affect the cost of your company’s freight shipping, don’t hesitate to reach out to info@pnglc.com or contact us at (717) 626-1107 ext. 1.