TMS Cost Analysis: Freight Class & Classification – Navigating Shipping Costs with Smarter Decisions
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Snapshot: What You Must Know Before You Ship
- Freight class affects how much you pay per shipment.
- NMFC-like classification methods help improve transport cost accuracy.
- Understanding dimensional versus weight-based pricing prevents overcharges.
- A Transportation Management System (TMS) calculates true shipment costs.
- MENA logistics firms benefit by aligning freight type to cost-effective carriers.
- Misclassified freight can cause delays, penalties, or wrong invoices.
- Automated tools reduce manual effort and errors in billing.
- Better classification improves last mile delivery readiness.
- A cost effectiveness analysis begins with accurate freight data.
Introduction: Small Shipping Errors, Big Financial Impact
In logistics, a minor data error can lead to major cost leaks. Freight classification is a great example. When the wrong dimensions or weight are recorded, you risk:
- Paying more than needed
- Losing credibility with carriers
- Slowing down your supply chain
Freight class is a concept that simplifies how shippers and transporters communicate about what’s being moved. For businesses operating across MENA, where cross-border rules and diverse freight types are common, it’s especially important to classify cargo properly.
This blog explores how freight classification influences cost, how NMFC-style systems work, and why using a TMS can drastically improve shipment cost visibility.
Freight Class: What It Means and Why It Matters
Freight class refers to a method of categorising cargo based on a mix of criteria, such as:
- Weight or mass
- Volume or size
- Ease of handling
- Product type
- Fragility or risk
By assigning each item or shipment a category, carriers determine how it should be loaded, handled, and priced.
Though “NMFC” codes are mainly used in North America, the logic behind them—grouping items by how they behave in transit—is applicable anywhere, including Saudi Arabia, UAE, and Egypt.
Weight vs. Dimension-Based Billing: The Practical Difference
Shipping costs are typically calculated using either:
A. Weight-Based Pricing
Used when cargo is dense and compact. Carriers charge by kilogram or tonne. Common in full truckload or pallet shipments.
B. Dimension-Based (Volumetric) Pricing
Used when the package is light but takes up space—think pillows, display stands, or bulky furniture. Here, volume matters more than mass.
This approach is common in:
- Air freight
- Courier deliveries
- Cross-border eCommerce
Choosing the wrong calculation method can lead to overbilling or shipment rejection.
Why It Matters in the MENA Region
In MENA markets, especially where regional trade crosses into free zones or customs-regulated corridors, freight type and cost classification have added implications.
For example:
- A shipment from Jeddah to Muscat might be remeasured at the port if dimensions are off.
- Light items sent by air from Dubai to Cairo could be billed at 3x expected cost due to incorrect volumetric weight.
- Mislabelled cargo entering a bonded warehouse in Riyadh may be held up due to insurance classifications.
Correct freight data ensures smoother flows across:
- Retail distribution
- B2B manufacturing networks
- E-commerce fulfilment hubs
A systemised freight classification process, preferably inside a TMS, prevents these breakdowns.
Conducting a Cost Effectiveness Analysis with Freight Data
You can't reduce shipping costs unless you understand how they’re calculated. That’s where a cost effectiveness analysis comes in.
Here’s a simple model:
| Cargo Type | Volume (cm³) | Actual Weight (kg) | Charged Weight (kg) | Billing Type | Notes |
|---|---|---|---|---|---|
| Kitchen appliance | 60,000 | 18 | 18 | Weight-based | Dense; small footprint |
| Bedding set | 160,000 | 8 | 32 (DIM) | Volume-based | Bulky; light |
| Electronics box | 45,000 | 12 | 12 | Weight-based | Moderate risk; compact |
| Store display | 220,000 | 10 | 44 (DIM) | Volume-based | Needs careful handling |
Insights:
- Items with low actual weight but high volume will be charged on dimensions.
- A Transportation Management System can compare both billing types and suggest the more cost-efficient method.
- This information can guide packaging changes or carrier selection.
The Role of a Transportation Management System
A TMS helps automate the tedious process of freight classification. Here’s how:
1. Freight Calculation Engine: The system matches product data (weight, size) with pricing models to find the most accurate cost. It ensures carriers are billed only for the correct class.
2. Dimensional Weight Detector: When item volume exceeds a threshold, the system automatically flags the need for DIM-based pricing.
3. Real-Time Cost Simulation: Users can compare different shipping options—ground, air, courier—based on freight type and distance.
4. Carrier Rate Matching: TMS platforms like Omniful show multiple rates and recommend the most cost-effective carrier per shipment class.
Freight Class and Last Mile Delivery
While freight class starts at the warehouse or distribution centre, its impact reaches all the way to last mile delivery.
Key Influences:
- Vehicle Planning: Accurate weight and size data ensures no overloading.
- Package Handling: Fragile or irregularly sized items get proper care.
- Drop Density: Smaller, denser parcels mean more stops per route.
- Delivery Failures: Incorrect sizing can result in missed or refused deliveries.
With tools like Omniship, delivery routes are adjusted automatically based on the type of goods being shipped—improving timing and reducing returns.
Real-World Example: KSA Home Goods Retailer
A Riyadh-based retailer ships home décor items to customers in Eastern Province. Bulky items like lampshades and wall art, though light in weight, often led to higher delivery bills.
The Problem:
They were using weight-based logic, leading to billing disputes and unplanned cost increases.
The Solution:
With Omniful’s TMS, they:
- Tagged SKUs with dimensions
- Enabled automatic DIM-weight calculations
- Identified oversized shipments in real-time
- Switched to carriers offering volume-based rate caps
Outcome:
- Shipping costs dropped by 23%
- Billing disputes reduced by over 70%
- Better planning for peak seasons like Ramadan
Key Benefits of Smart Freight Classification
| Benefit | Description |
|---|---|
| Cost Transparency | Know exactly how your freight charges are determined |
| Operational Efficiency | Reduce time spent on manual entry or adjustments |
| Reduced Returns and Damage | Ship items properly based on handling class |
| Improved Cash Flow | Avoid late billing adjustments and penalties |
| Better Customer Experience | Accurate ETAs, fewer delivery exceptions |
How to Start: Freight Classification Checklist
1. Measure and record all product sizes and weights
2. Categorise goods based on how they should be handled
3. Establish internal freight classes if NMFC codes aren’t used
4. Use a TMS to automate carrier matching based on freight type
5. Train your team on why class matters in every shipment
These steps apply whether you're moving items across cities in the UAE or sending pallets from Cairo to Amman.
FAQs
What if my shipping provider doesn’t use NMFC codes?
You can create internal classes based on weight, size, and fragility. Many global TMS platforms allow custom classifications.
Does freight class affect customs clearance?
Yes. Declared value and handling requirements are often tied to freight type, especially for air and sea freight.
How do I know when to use dimensional pricing?
A good rule of thumb: If the package is lightweight but takes up significant space, dimensional pricing likely applies.
Can freight class impact delivery times?
Indirectly. Poorly classified freight may be delayed or rejected during sortation or handover stages.
Is this only for large companies?
Not at all. Even small businesses can improve cost efficiency by understanding and applying freight logic through platforms like Omniful.
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