Defending Against Freight Class ChangesWritten by Neal Willis
The National Motor Freight Classification (NMFC) is a grouping of commodities into 1 of 18 different classes ranging from 50 – 500. The items/commodities are assigned a certain class by the Commodity Classification Standards Board (CCSB) based on four transportation characteristics: density, handling, stowability and liability.
Commodity Classification Standards Board (CCSB)
Anywhere between three and five times per year the Commodity Classification Standards Board (CCSB) proposes amendments to the NMFC. The proposed amendments are published for the public to review at least 30 days in advance of the public meeting, where the modifications will be considered and ultimately accepted, denied or reconsidered for deliberation at a later date. The proposed amendments the CCSB suggests ultimately lead to changes to a specific commodity’s classification, which directly impacts a commodity’s shipping cost. As an example, in September of 2014, the CCSB approved changes to Refrigeration and Freezing commodities, changing all related items from class 92.5 to class 150. The cost differential between the two classes was an increase of nearly 62 percent.
After analyzing data from both carriers and shippers regarding the aforementioned characteristics, the CCSB produces a profile of each commodity and publishes proposed amendments based on their findings in a public docket file. Each docket file contains proposals to any number of commodities and displays all relevant facts, data and evidence supporting the proposed amendment. More often than not, the proposed amendments are passed with very little to no contention from the shippers that the proposed alterations affect most.
In the case of the refrigeration/freezer proposal, the CCSB identified 287 potential manufacturers or shippers of refrigerators or freezers and 18 associations believed to represent those companies. Questionnaires were sent out in April 2013 and again in May 2013 (to the non-responders) to gather information and make the public aware of the proposed changes so they could be discussed and/or contested at the meeting scheduled for September 8, 2014. Of the 287 manufacturers/shippers, only 13 companies responded. Only 2 of the 18 associations responded, and those responders notified the CCSB that they did not represent any of the involved companies or commodities. The 62 percent increase in the cost of shipping refrigerators and/or freezers went into effect on November 29, 2014, largely uncontested.
Shippers have the power to defend against changes made to the NMFC. All information is public and the CCSB provides written forms to those who wish to contest the suggested amendments. Everyone’s input truly does make a difference. In fact, earlier this year, the CCSB was scheduled to consider a proposal to change the classification of dishwashers at its public meeting on January 27, 2015. However, during the week prior to the meeting, the CCSB was contacted by a food equipment & supplies industry association and many of its members. The group opposed the proposal and provided information that disputed the data the CCSB presented in their analytical findings. Two members of the CCSB even attended a couple of association trade shows in February and March 2015 to help them gain additional knowledge on dishwashers directly from the industry. In response to the expressed concerns, the CCSB voted to defer disposition of the washing machine proposal until the June 2, 2015 meeting, at which point it was then completely withdrawn pending further research.
The CCSB will be holding additional meetings September 27 - 30, 2015 and has already scheduled meeting dates through September 2017. Information regarding future dockets, proposals, public meeting dates, etc. can be found on the National Motor Freight Traffic Association’s website at www.nmfta.org. Methods to formally dispute proposed classification amendments and packaging standards are also available on the NMFTA’s website. By using these resources, shippers have the power to defend against potential classification and/or packaging changes that could affect freight costs and ultimately profitability.
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