Density Charge Miscalculation

Density Charge Miscalculation

Copyright 2004, Traffic World, Inc.

Q:

We are a freight bill auditor and in reviewing some of our clients'' freight bills we see many corrections issued by a particular carrier where the shipper states a particular specific density range and class on their bill of lading. I realize a carrier has the right to correct descriptions and they should make corrections if a B/L is not accurate.

This carrier maintains a so-called "density minimum charge" applicable to some shipments. This is based on what its rules tariff calls "effective occupancy." Its drivers record the most extreme measures of length, width and height of the shipment as loaded in the trailer, and the carrier uses that to calculate the DMC. But the tariff also says that "[f]or the purpose of determining [National Motor Freight Classification] density-based classifications, the dimensions of articles will be calculated in accordance with Section 8, Item 110, NMFC 100 Series."

I think the carrier is misapplying its rules and doing shippers an injustice, as per the following example: The shipper tenders five pallets described as Plastic Articles NOI [Not Otherwise Indexed] 8-10 PCF [pounds per cubic foot], NMFC 156600-6 class 100. The DMC rule is not applicable. The driver writes 144 x 60 x 72 [inches] on the B/L and the shipment weighs 2,700 pounds. [The dimensions given provide a density of 7.5 PCF.] The carrier issues its freight bill correcting the density to 6-8 PCF based on these vague measurements.

This correction seems unfair to me in that in this shipment of five pallets the extreme dimensions recorded by the driver include an empty pallet space. I think their method is flawed and the resultant correction should be void as a result. Of course they have a different opinion, as this must be quite an effective and easy-to-incorporate procedure; it appears to be automated so when the biller enters the driver''s dimensions into their system the bills are issued with the new density.

A:

The method of measuring density isn''t "flawed" at all; indeed, I can see sound economic reasons for the carrier''s DMC rule. The reality is that although carriers bill by weight, the much more common constraint on their equipment capacity is cube. The purpose of this rule, like linear foot rules maintained by other carriers, is to reconcile this discrepancy by ensuring a minimum level of revenue per unit of capacity occupied by a shipment.

But if the carrier wants to adjust NMFC class ratings on this basis, it has to say so up front. In this case its tariff says just the opposite.

According to NMFC Item 100, sec. 8, density is to be calculated per shipping unit - crate, pallet, whatever - without reference to the loaded configuration of the shipment as a whole. That is, the maximum measure of that unit in each dimension (length, width, height) is used to determine the smallest cubic space into which that shipping unit would fit, this is divided into the unit''s weight, and that''s the density for purposes of determining the class of a density-sensitive commodity. And that''s the approach this carrier specifically states is to be used to calculate density for classification purposes.

Therefore the driver''s measurements are meaningless for those purposes, since they''re based on total space occupied in the vehicle by all five shipping units including (as you note) a void. I can''t tell from the information you''ve given whether the shipper''s original density statement is accurate using the NMFC methodology but, given inclusion of the void in the driver''s measurements, it probably is.

Here''s what appears to be happening: A driver may well not be privy to knowledge of when the DMC rule applies and when it does not, and therefore will take the measurements on most if not all shipments (drivers even may be so instructed). The billing clerk, very likely equally unknowledgeable about DMC rule application, automatically enters the information in the billing system, which then does its calculations based on that data.

So what''s "flawed" is either the billing system itself or the data input methodology. That is, either the system is incapable of recognizing the distinction between density calculations for DMC rule application and those for classification purposes, or the billing clerk is putting the density information in the wrong place. I suspect the latter - training of billing clerks is notoriously lax - but a programming glitch is also a possibility.

Either way, if carrier personnel "have a different opinion" about this patent billing error, you''re talking to people too low on the totem pole. There''s a world of folks out there who abrogate their decision-making to computers these days; "if the computer says so, it must be right." In my experience one of the most useful phrases in dealing with individuals of this mentality is, "May I speak to your supervisor please." Move up the ladder and I think you''ll find a more sensible response if you explain things clearly; and if not, simply make the correction anyway in your payments (with a brief explanation, of course). Sooner or later somebody at the carrier will grasp the point.

If you have past erroneous bills on this basis, by the way, you should file overcharge claims promptly; if the claims are declined, setoff against new charges is the course I''d recommend.



-- Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at P.O. Box 76, Morganton, Ga. 30560; phone, (706) 374-7201; fax, (706) 374-7202; e-mail, BarrettTrn@aol.com. Contact him to order the 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.