LTL Segment Still Digesting ‘Y2K Moment’ of NMFC Updates
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The less-than-truckload sector has yet to fully digest the National Motor Freight Traffic Association’s , but the reclassification was not as traumatic as might have been anticipated, according to executives.
How long that takes will depend on how quickly and strictly players in the segment enforce reclassification fees, the in Indianapolis heard Sept. 9.
Around the time the changes were implemented July 19, the largest carrier in the LTL arena — FedEx Freight — said it would delay enforcement of the updates for 150 days or through the start of December.
On a panel at the FTR conference, when asked how the reclassification was going so far, Echo Global Logistics Senior Vice President Marty Martin said: “I’d put it in the TBD category.”
Pitt Ohio Vice President of Pricing Shawn Galloway termed the July 19 changes: “LTL’s Y2K moment; where we thought the whole world was going to fall apart and it didn’t. That’s what I’m seeing.”
The biggest change was for shippers that were only shipping under a single class item, Martin said, adding that now they have to think about their density.
Transition to Density-Based Classifications
NMFC is a standardized format of comparing shipments moving as LTL freight between states or internationally.
Each load’s NMFC freight class helps determine the shipping cost, based on how difficult it is to transport.
NMFTA’s changes are intended to reflect more closely the actual cost of shipping freight by shifting the LTL segment of the freight market from commodity-based to density-based classifications.
Galloway. (Keiron Greenhalgh/Transport Topics)
“From a carrier’s perspective, this was always an opportunity. More things are changing over to density, which means you have the opportunity to inspect more freight,” Galloway said. “For us, if the customer is still using an old NMFC number, an old class, it’s up to us to catch that and then make the changes.”
Mid-Atlantic regional carrier Pitt Ohio ranks No. 45 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 14 among LTL players.
“What we are doing is selling space on our trucks. The class was always a pretty good proxy for what space was being taken up, but if you go to a true density measuring of freight, that’s really where you get more synergies,” Galloway said.
“[The reclassification is] a good step towards helping get very complex pricing simplified to the point where, if you figure out what space you’re taking up, you can come close to the right freight charges,” he added.
Delayed Enforcement
Top-ranked FedEx Freight said it was delaying enforcement to ensure customers had ample time to fully adopt processes and pricing for the new classifications.
“I think the biggest shock and change for shippers is that they really have to … if you want to do it right … when the order comes in, you process it, and you build that order down on your dock and you take your measurements and then you go get your freight quote. And that’s totally opposite as to what most shippers do,” Galloway said.
The choice for shippers, he said, was spending a little more money on the loading dock — perhaps through density maximization training or additional manpower — or spending a lot more money on reclassification.
(Echo Global Logistics)
However, “most shippers are a long way from that, and when you really break down what it’s going to cost them to get there, they opt to continue simply paying the [reclassification] fees,” Martin added.
Echo reached out to customers it identified would be impacted in early 2025, providing details on how they would need to change their shipping behaviors, as well as doing wider direct email campaigns plus internal and external webinars.
“I think we’re far from seeing the final result of this change,” Martin said, adding: “There’s going to be a point — and it may be years down the road — where we look back at this as just the first step in many towards what everyone, or what a lot of people have said for a long time what they want, which is to simply work on dimension-based pricing. And to eventually move away from class-based rating.”
More Changes on the Way
Not coincidentally, on Sept. 3, the NMFTA sought industry feedback on further NMFC changes: . The deadline for feedback is 5 p.m. ET Sept. 23. The Freight Classification Development Council will hold a Sept. 29 public meeting — part of NMFTA’s 2025 Fall Meeting in Washington — to review the Docket 2025-2 proposals and stakeholder feedback.
“Following the major advancements introduced in Docket 2025-1, this latest docket reflects our continued commitment to simplifying the NMFC and modernizing the LTL freight classification process,” said Keith Peterson, vice president of operations for NMFTA, in a statement announcing the feedback solicitation.
Carriers will have to show patience with shippers and educate them yet further, the executives told the FTR conference.
The state of the market plus the trade policy conundrum is also distracting players from the issue, said Echo’s Martin. Echo ranks No. 21 on the TT Top 100 list of the largest logistics companies and No. 5 among freight brokers.
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“Especially in a soft freight market, I don’t think it’s a good idea to just go out there and hit customers over the head with a stick and adjust their charges,” added Pitt Ohio’s Galloway.
“What we’re looking to do is to take that internal data that we’re starting to collect, understand which customers should be impacted by these NMFC changes and then have a conversation with that customer and say, ‘Hey, you’re using the wrong NMFC class, let us work with you, make sure that you spend the time to make sure you get these things done and updated,’ ” he added.
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