FAKs are bad for LTL shippers, Part 2

LTL carriers rules such as Density Minimum Charge and Linear Foot Charge are designed to protect them from FAK programs. There would be little need for such rules if FAK programs did not exist. Let’s take a closer look.

These rules can add hundreds dollars, or more, to the normal freight charges. Say a shipper tenders 10 shipments in a week with $5,000 of expected freight charges. If one of these shipments has a Density Minimum Charge that adds $500 to the freight bill, total costs for that week are now $5,500.  It yields a 10% increase in overall cost for the shipper, and 10% increase for the carrier, all from one application.

So what are these rules and how do they work?

Density Minimum Charge (aka DMC, Cubic Capacity Minimum Charge) – This rule allows the carrier to bump the weight up based upon a minimum density, usually 4 to 6 PCF, and minimum cubes of 350 or 750 cubic feet. These rules can apply for shipments as small as 3 to 6 pallets depending upon how they are crafted. If your shipment 2.0 PCF, the carrier can triple the weight and charge you at CL150! DMC rules often allow the carrier to bump shipment height to 96 inches if your pallets are non-stackable.

Linear Foot Charge – Not to be confused with Over Length or Over Dimension, this rule measures the overall linear feet used by the shipment. It works similar to a DMC rule, and unfortunately some carriers employ both rules simultaneously. Carriers usually apply this rule on shipments of over 14 feet, or 8-10 pallets, and applies on a rate per mile basis.

Item 680 – This is a rule found in the NMFC guide rather than carrier rules tariffs. It is referred to as the 65% rule. It allows the carrier to classify a shipment based upon density if the item shipped takes up less than 65% of the surface area of a pallet or inner capacity of a crate. So if you ship a CL60 pump strapped to the middle of a standard pallet, you might pay a lot more than CL60.

Capacity Load Minimum Charge  – This rule is designed to apply on shipments that take up most if not all of the space inside a trailer. They will often kick in with shipments over 20,000 lbs or 20 feet of linear space.  If you ship large items over 15 feet in length, this rule could be triggered. It generally applies on a rate per mile basis.

How do you protect yourself from these rules? It’s very simple:

1.     Know your weights and dimensions. This is the single-best solution. You can’t compute accurate LTL charges if you don’t know your dims.
2.     Use an accurate TMS that accounts for all of these “gotcha” rules.
3.     Consider other options for your larger LTL loads such as Shared Truckload which works off the actual profile of your freight and does not employ these types of LTL rules.
4. Eliminate FAKs. Using straight class largely nullifies the application of these rules and allows for smoother freight charge adjustments as shipment sizes and weights change.

Did I miss anything?