The National Motor Freight Classification (NMFC) system was established in 1936 to standardize Less-Than-Truckload (LTL) shipping. It uses a uniform system for classifying commodities to ensure consistency and fairness in pricing and handling. The NMFC system is undergoing a significant transformation for the first time in decades. Starting July 19, 2025, the industry will begin a multi-phased shift to a predominantly density-based classification system to achieve greater clarity and efficiency for all stakeholders in the LTL supply chain.

Traditionally, the NMFC has evaluated freight based on 4 characteristics: density, stowability, handling, and liability. While comprehensive, this complex system leads to frequent misinterpretations and disputes between shippers and carriers (which can drag out for years). The 2025 update intends to streamline this process by using density as the primary means for classifying the vast majority of freight shipments, while the remaining 3 characteristics will be reserved for classifying only the more complicated commodities. Let’s look at each in more detail:

1. Density refers to how much a shipment weighs compared to the space it occupies. Higher density typically results in a lower freight class and lower shipping costs because these shipments take up less space on a truck. For example, a small box of steel parts weighing 200 pounds in a small cubic space is denser than a large box of pillows weighing 200 pounds.
   
   
2. Handling considers how easy or difficult it is to move freight. Heavy, fragile, oddly shaped, or hazardous items often require special handling, increasing the freight class and, thus, the cost. For example, a granite countertop may need extra care due to its weight and fragility, while a box of sand is easier to manage despite being dense.
   
   
3. Stowability refers to how well the shipment fits in the carrier’s space (e.g., a 53-foot trailer). Again, size, shape, or transportation restrictions on certain items (e.g., hazardous materials) can make freight more challenging to load on a truck (think about a poorly played game of Tetris), leading to higher costs. For example, a shipment of pipes with irregular protrusions may leave unusable gaps in the truck. In contrast, neatly packed boxes fit more efficiently, allowing for the truck to move more items in a given move from point A to point B.
   
   
4. Liability measures the risk associated with the goods, including susceptibility to damage, potential to harm other goods, perishability, and/or hazardous considerations. For example, a shipment of fresh produce is perishable and requires more careful handling and faster transit than a carton of vitamins, which is durable and lower risk.

Key Changes Coming in 2025

The new NMFC structure introduces several significant changes, notably the expansion of the density scale. Moving from 11 subprovisions to 13, the system now includes classes 50 and 55 for heavy, dense products. Approximately 5,000 commodity listings will be affected, with an estimated 3,500 single-class items moving to the new subcategories.

The updated classification system maintains all 4 of the transportation characteristics. Still, as noted above, it aims to simplify the classification process by defaulting to density-based classification when NO special handling, stowability, or liability concerns are known. In addition, products requiring special consideration will be marked with a new unique identifier, making it easier to identify freight that needs additional attention.

The transition begins with the public release of Docket 2025-1 on January 30, 2025, and the final implementation becomes effective on Saturday, July 19, 2025. Docket 2025-1 is the list of NMFC codes considered for class changes based on the new density scale (nearly 40%). Once the list is finalized, changes will be made before the effective date.

Impact on Shippers and Third-Party Logistics (3PL) Companies

The simplified system should make identifying the correct freight classes for most shipments easier but still rely on accurately measuring and reporting “handling unit” dimensions and weight (pallet length, width, height, and weight) used to calculate density. In short, Shippers and 3PLs can multiply length x width x height in inches, divide by 1,728 to convert cubic inches to cubic feet, and then divide the shipment weight by the cubic feet to determine pounds per cubic foot (PCF). Don’t forget to include the ~6-inch height and ~30-pound weight of the pallets. Carriers will still remeasure/reweigh and reclass/rebill for underreported shipment details.

Preparing for the Transition

To prepare for these changes, organizations should:

1. Train Personnel: Educate staff on density calculations and measurement techniques. Providing training in advance will help reduce errors.
   
   
2. Start Now: Begin creating shipments with accurate dimensions and weights now (if it’s not already being done), so it becomes second nature and prevents tendering delays later.
   
   
3. Assess Current Shipping Pricing: Evaluate historical shipment pricing and contact carriers to identify areas where the updated density-based classifications might affect pricing.
   
   
4. Implement Reliable Processes: Establish workflows to ensure every shipment is measured, weighed, and documented correctly before leaving the dock. Documenting shipments early could help resolve disputes more quickly.

Summary

While the initial transition may present challenges, the long-term benefits of modernizing the NMFC system may be considerable. The simplified, standardized approach should reduce classification errors (and thus, disputes), improve and quicken communication between parties, and create a more efficient LTL shipping workflow. Future dockets beyond 2025-1 will continue to refine the system, particularly for freight with specific handling, stowability, or liability requirements. Guidance on the timing of future dockets (NMFC improvements) has not been announced.

Written By:

Jeremy Stewart

Jeremy Stewart leads customer success at Cahoot, helping merchants achieve high-performance logistics through smart technology and process optimization. With a background in both ecommerce operations and client services, Jeremy ensures that every merchant using Cahoot gets measurable results—whether they’re scaling from one warehouse to many or managing complex returns.

UPS SurePost is a hybrid delivery service that integrates UPS’s network with USPS’s extended final-mile reach and capabilities. It’s a partnership between two competitors playing to each of their strengths to achieve greater cost efficiency, and it’s set to undergo notable changes in 2025. In particular, the primary benefit of SurePost, the lower cost of getting packages into the hands of their intended recipients, will see a substantial rate hike and service modifications in 2025, marking a profound shift in what ecommerce shippers have come to expect from the service. Understanding these developments is crucial for merchants to adapt their operations and optimize margins next year.

Key Changes to UPS SurePost Rates in 2025

Starting January 13, 2025, packages weighing 1 to 9 pounds will see a 9.9% price increase, while those weighing 10 to 70 pounds will increase 5.9 to 7.1%. Additionally, surcharges for deliveries to less densely populated areas will increase dramatically. The Delivery Area Surcharge (DAS) will rise 61.8% to $6.15, and the Extended Delivery Area Surcharge will climb a whopping 69.4% to $8.30. These changes reflect the broader trend of rising costs of last-mile delivery services.

In addition to these changes, the U.S. Postal Service will discontinue the allowance of dual shipping labels starting January 1, 2025, as it looks to increase its network’s efficiency and gain more direct customers for USPS Ground Advantage Services, which has a faster delivery SLA than SurePost by ~2 days on average. This will limit UPS’s package routing flexibility which currently allows them to decide which agency will deliver the package to the doorstep much later in the sortation workflow. Now, shippers must use labels that indicate the responsible final mile delivery agent when the package is accepted for processing.

Comparisons Across National Carriers

UPS’s SurePost fee changes align with what we see in the broader shipping industry. USPS will increase rates for its Parcel Select service by an average of 9.2%, depending on where the package enters the postal network, while its Ground Advantage service will rise by 3.2% for commercial accounts. FedEx is implementing various surcharges and rate adjustments, including a new $1.50 inbound processing fee, expanded fuel surcharges to include address correction and dangerous goods, and implementing their own DAS price increases. So, although UPS’s SurePost increases are significant, they reflect all the national carriers’ efforts to address rising operational costs and align pricing with market demands.

Implications for E-commerce Merchants

All shipping rate hikes pose challenges for e-commerce businesses, particularly those with razor-thin margins that rely on lower-cost carrier services to operate profitably. In many cases, the increased shipping costs trickle down to the consumer through higher pricing because online retailers cannot shoulder the entire burden. We may eventually observe altered consumer spending behavior, forcing Sellers to find new opportunities to reduce costs and return the business to healthy and sustainable margins.

Strategic Adjustments for Merchants

Several strategies could be employed to help reduce shipping costs:

1. Shipping Cost Analysis and Carrier Negotiations: Conduct a detailed shipping cost analysis to identify order distribution across the product catalog and which SKUs, customers, regions, channels, etc., will contribute to increased cost. Use the data to adjust the carrier/service mix, matching delivery date promises with carrier/service SLAs and pricing. Identify opportunities to negotiate carrier contracts to reduce shipping costs in other areas, such as different package sizes, weights, variances, zones, and alternative delivery services, to minimize the impact of the new rate changes (or explore alternative carriers and services in particular, regional carriers that are trying to compete with the large national carriers to gain market share).


2. Shipping Optimization: Leverage technologies such as next-generation shipping label software for AI-assisted rate shipping, automatically creating optimal shipping labels and optimizing fulfillment across inventory locations (in and out of the ‘network’).


3. Free Shipping Adjustments: Retailers offering free shipping may either need to raise minimum order thresholds to balance customer expectations with the new financial realities or, as mentioned above, intelligently merge the new overall expected transportation cost into the complete product catalog pricing to minimize or offset the financial burden.


4. Packaging Optimization: Review packaging (boxes, mailers) and void fill (air cushions, paper) pricing and optimize for smaller packages and less void fill where possible. Also, shift to less expensive padded mailers. Use intelligent cartonization software to pack shipments efficiently to reduce carrier shipping costs and packaging waste. Negotiate with packaging suppliers and consider taking larger deliveries less frequently or pre-buying supplies to take advantage of volume/commitment discounts.

Summary

As carriers adjust to ever-rising costs by updating their fee structures and passing costs on to their customers, e-commerce brands and retailers must also determine how to manage the rising costs by cutting elsewhere or passing all or part of the costs further to their customers.

The last-mile delivery space is continuously evolving as new solutions are brought to market and innovations applied to existing technologies and services continue to mature. There are a dozen prominent regional carriers that could help reduce shipping costs for some percentage of shipments. Or, consider partnering with fulfillment experts to distribute the high-volume inventory and capture meaningful margin savings by shipping orders from warehouses closer to the customer.

In any case, one thing is clear…costs continue to rise year after year, and the solution isn’t one-dimensional. To stay competitive and grow a successful online commerce business, there needs to be a fundamental shift in how e-commerce order fulfillment and reverse logistics are managed.

Written By:

Rinaldi Juwono

Rinaldi Juwono leads content and SEO strategy at Cahoot, crafting data-driven insights that help ecommerce brands navigate logistics challenges. He works closely with the product, sales, and operations teams to translate Cahoot’s innovations into actionable strategies merchants can use to grow smarter and leaner.

USPS has floated a new proposal to Congress that would see it reducing mail delivery from six to five days a week while expanding packaging deliveries to seven days.

The shipping world has changed dramatically over the past decade. Since 2007, total U.S. mail volume has declined 31% to 146 million pieces, including a 41% drop in first-class mail, its most profitable product. At the same time, ecommerce has exploded, offering a way to plug the lost revenue while also adding burden to USPS operations as it handles more packages. USPS has already started to dip its toes into 7-day a week delivery to manage the 20 million packages it averages daily. It now delivers some Amazon.com packages on Sundays and also other ecommerce retail fulfillment during the busy Christmas holiday season.

The agency lost $3.9 billion in 2018, its 12th straight year of losses. According to the agency, this move better reflects the market conditions and would save it billions of dollars per year. Republican and Democratic members of Congress, however are opposed to making a change to mail deliveries.

Read the full article here.

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While the majority of UPS workers represented by the Teamsters union voted against a new contract, negotiations will continue as turnout was low and the no votes didn’t meet the threshold for killing the deal.

According to the Wall Street Journal, 54.3% of 243,000 Teamsters members that include UPS drivers, sorters and other workers voted against a new five-year contract Friday, while 62.1% of 11,000 freight workers voted down a separate agreement; several regional and local deals were voted down as well.

Union rules require a two-thirds vote to reject a contract when less than 50% of members vote.

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By Heidi Vogt

Discounts established to help less-developed countries have continued to apply even as China has become a major e-commerce shipper.

WASHINGTON—A Trump administration threat to pull out of a global mail system over its discounted shipping rates from China could spur a change in those rates as early as April, the head of the United Nations agency that oversees the system said.The U.S. last week started a year long process to withdraw from the 144-year-old Universal Postal Union because it had failed to eliminate international discounts. Those discounts, aimed at helping developing countries, have continued to apply to China even as it has grown to become the world’s second-largest economy. They can make it cheaper to ship small packages from China to the U.S. than from locations within the U.S.

The move was the latest salvo by the Trump administration against China and a reminder of the president’s willingness to abandon international organizations that he says don’t help U.S. interests. American manufacturers welcomed the move, saying the flood of cheap goods from China undercut their business. The UPU, which is now holding previously scheduled council meetings, commissioned a report Tuesday that is the first step toward fast-tracking new rates, Director General Bishar Hussein said in an interview.

“If we work fast enough, and the member countries are all in consensus on these issues and decisions are made, by April next year I think it is a possibility,” Mr. Hussein said.The discounts also benefit countries including Russia and Mexico. The U.S. has stressed that its decision isn’t only about China, though that obviously is a large factor. Administration officials have said the lower rates cost the U.S. Postal Service some $300 million a year, with discounts ranging from 40% to 70%. Mr. Hussein said he welcomed the move by the U.S. if it manages to reform the group’s “archaic” rates.

“Now with the U.S. coming in and saying, ‘Sorry, enough is enough,’ I think this is going to take the conversation to another level, and I’m very happy to see that,” Mr. Hussein said.

Mr. Hussein stressed that even a fast-tracked process has many steps, including the research report, a proposal and a vote by members. At least half of the organization’s 192 members have to vote for a proposal to be considered, and it can pass only with a two-thirds majority.

If the U.S. were to withdraw from the UPU, it would lose access to global processing and coding systems that make international mail possible, and it would have to negotiate bilateral postal agreements with every individual country, Mr. Hussein said. The U.S. has said it hopes to negotiate a solution that keeps it from having to withdraw from the UPU, but also has said it is proceeding with a plan to institute “self-declared” rates that could take effect within six months.

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Recently, the USPS proposed a record price increase. If approved, which is expected, the higher rates will go into effect on Jan. 27, 2019. This will be the biggest rate increase in USPS history. Amazon’s retail operating income would take a 5 percent hit from shipping cost inflation if the new rates take effect, according to Barclays.

Here are some of the significant proposed 2019 USPS Shipping rate changes:

• The elimination of Commercial Plus Pricing (CPP), where now Priority Mail pricing will match Commercial Base Pricing (CBP). Many e-commerce and subscription trade shippers will be facing a painful price increase with the elimination of CPP programs.
• A conservative 5.9 percent Priority Mail increase is expected, while First Class Flat Pricing will change to zone-based pricing with an expected 11.9 percent increase. For shippers with a high proportion of outer zone shipments, the increase will be appreciably higher (as much as 21 percent).
• Perhaps most concerning is the pending reaction of UPS and FedEx as they re-evaluate their “hybrid” postal delivery products that use the USPS for last-mile delivery. Buried in the postal rate change are increases ranging from 9 percent to 30 percent on the work-share rate structures used by UPS and FedEx.

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The U.S. Postal Service has proposed a 9 to 12 percent increase in fees for the shipping service used by Amazon, just months after President Donald Trump criticized the USPS, saying it gives Amazon too good of a deal.

The parcel select service, which is also used by United Parcel Service and FedEx, is the last and typically the most expensive step in the shipping process that gets the packages to customers’ doorsteps. The USPS proposed a 9.3 percent increase on this service for packages weighing over one pound and a 12.3 percent increase on lighter packages.

Trump issued an executive order in April to set up a task force to examine the USPS, claiming that it was on an “unsustainable financial path.” He’s also tweeted that the USPS is Amazon’s “delivery boy” and doesn’t make money from Amazon’s business.

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Less than three weeks before the prices take effect the day after Christmas, UPS announced its 2019 rate schedule, including an overall rate increase of 4.9% for its ground, air and international services, leaving shippers scrambling to adapt at the busiest time of year.

Last year UPS announced its general rate increase (GRI) in October, and in September the year before that. FedEx announced its 4.9% GRI for 2019 in early November. While the new FedEx rate schedule takes effect Jan. 7, UPS’s hike happens as of Dec.26, meaning it will hit the first massive wave of Christmas returns.

“This year (UPS) announced it three weeks before the effective date and in the heat of the fourth quarter peak shipping,” said parcel consultant Jerry Hempstead. “Large shippers will have little time nor the IT resources to sift through the nuances of this year’s announced changes.”

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