A customer (Shipper) will have a shipment and creates a Bill of Lading. A dispat

Question

A customer (Shipper) will have a shipment and creates a Bill of Lading. A dispatcher from the trucking terminal (Carrier) will receive the shipment request and coordinates the drivers for each truck load required. The Rate Clerk at the terminal will ensure that proper bills are rated, sorted for drivers, and that this information is completed on time for deliveries. The Rate Clerk uses the National Motor Freight Classification Guidelines to look up the commodity being shipped and applies the proper classification. The tariff rate is applied and the clerk uses this information to come up with a total rate. This is used to calculate a total charge (rate x weight) which is listed on the Bill of Lading. This is then transferred to a freight bill for processing. The shipment is sent to the designation point where the Consignee receives the shipment.

1. What is a bill of lading?

2. A Rate Clerk uses factors in determining freight rates. Name a few factors and explain why they are important to the process.

3. Explain more about the National Motor Freight Classification (NMFC) process and provide your resource (web link). How do companies use this information?

Explanation / Answer

1. A Bill of Lading is a legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver.

2. The

four of the most important factors that determine LTL freight rates:

Weight

LTL freight rates are structured so that the more the shipment weighs, the less you pay. As the weight of the shipment increases and approaches the lowest weight in the next heaviest weight group, it will be rated at the lowest weight category and rate in that weight group.

Distance

Typically, the longer the distance, the higher the price-per-hundred weight will be. Many LTL carriers only serve a specific geographic area, so it’s important to consider where you’re sending your product. If a shipment is sent to an area outside of a carrier’s normal service area, the company will transfer the shipment to another LTL carrier for final delivery. This may result in higher costs due to lower discounts and higher minimum charges.

Classification of Freight

Each piece of freight has a classification in the LTL world, and the classification is a huge factor in determining the LTL freight rate. The National Motor Tariff Association (NMTA) has established 18 different classes ranging from 50 to 500. The class of a piece of freight is determined by product density and value, stowability, handling and liability. Lower classes have lower rates because they are very dense freight that’s difficult to damage and is easy to handle. Higher classes represent lighter and less dense freight that tends to take up more space. The higher the class, the higher the rate will be.

Accessorials/Surcharges

Accessorial charges come from extra services performed by the carrier that go beyond the typical business to business pick ups and deliveries. Common examples of accessorial charges include lift gate service, residential pick up or delivery, limited access locations (think jails, prisons, churches, schools and storage units) and inside delivery. These charges can be negotiated or even waived altogether. The most common accessorial is a fuel surcharge, and it’s typically factored into every shipment.

3.

The Standard for Freight Identification and Classification

The National Motor Freight Classification® (NMFC®) is a standard that provides a comparison of commodities moving in interstate, intrastate and foreign commerce. It is similar in concept to the groupings or grading systems that serve many other industries. Commodities are grouped into one of 18 classes—from a low of class 50 to a high of class 500—based on an evaluation of four transportation characteristics: density, handling, stowability and liability. Together, these characteristics establish a commodity’s “transportability.”

By analyzing commodities on the basis of the four transportation characteristics and ONLY on the basis of those characteristics, the NMFC provides both carriers and shippers with a standard by which to begin negotiations and greatly simplifies the comparative evaluation of the many thousands of products moving in today’s competitive marketplace.

The Standard for Packaging, Rules and Bills of Lading

The NMFC specifies minimum packaging requirements to ensure that goods are adequately protected and can be handled and stowed in a manner that is reasonably safe and practicable so as to withstand the normal rigors of the less-than-truckload environment. It contains various rules that govern and otherwise relate to the classification and/or packaging of commodities as well as procedures for the filing and disposition of claims, and procedures governing interline settlements. It also contains the Uniform Straight Bill of Lading and the North American Uniform Through Bill of Lading, including their Terms and Conditions.

The National Motor Freight Classification is a comprehensive, invaluable resource for transportation and packaging professionals. This helps companies to avoid increased costs.

http://www.nmfta.org/pages/nmfc?AspxAutoDetectCookieSupport=1

http://cerasis.com/2014/01/22/freight-classification/

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