LTL Freight Cost Spike Analysis: Q1 vs Q2 2025

Cost Increase Summary

Metric	Q1 2025	Q2 2025	Change
Avg Cost per Shipment	$881.32	$1268.53	+43.9%
Total Shipments	95	98	+3.2%
Avg Weight (lbs)	2122	2218	+4.5%
Monthly Spend	$27,908/mo	$41,439/mo	+$13,530/mo

Your shipping profile is essentially unchanged. This is a rate-driven problem.

Root Cause Breakdown

Root Cause #1: Reclassification Fees (18% of increase)

Impact: +$69.28 per shipment | +$2,263/month

Quarter	Shipments with Reclass	Avg Fee	% Affected
Q1	3 of 95	$2.67	3.2%
Q2	73 of 98	$71.94	74.5%

Cause: April 1, 2025 NMFC code updates reclassified 50%+ of commodity codes.

Common reclassifications observed in your data:

• Class 70 items -> Class 85 (+21% rate base)
• Class 85 items -> Class 92.5 (+16% rate base)
• Class 92.5 items -> Class 100 (+11% rate base)

This explains the dramatic jump from 3.2% to 74.5% of shipments being reclassified.

Root Cause #2: Fuel Surcharges (23% of increase)

Impact: +$90.75 per shipment | +$2,965/month

Quarter	Avg Fuel Surcharge	% of Total Cost
Q1	$104.51	11.9%
Q2	$195.26	15.4%

Diesel prices rose from $3.82/gal (Jan avg) to $4.51/gal (May avg) = +18.1%

Root Cause #3: Base Rate Increases (59% of increase)

Impact: +$227.19 per shipment | +$7,422/month

All major LTL carriers implemented General Rate Increases (GRI) effective April 1, 2025:

• XPO: 7.2%
• Old Dominion: 7.4%
• YRC Freight: 6.9%
• R+L Carriers: 7.0%
• Estes: 7.3%

Cost Breakdown by Carrier

Q1 2025

Carrier	Shipments	Avg Cost	Avg Fuel	Avg Reclass
Estes	14	$1076.95	$128.09	$0.00
Old Dominion	20	$841.47	$100.09	$0.00
R+L Carriers	18	$839.91	$99.28	$5.18
XPO	22	$935.57	$110.41	$7.28
YRC Freight	21	$767.49	$91.29	$0.00

Q2 2025

Carrier	Shipments	Avg Cost	Avg Fuel	Avg Reclass
Estes	9	$1222.46	$188.55	$67.00
Old Dominion	30	$1263.02	$192.06	$86.02
R+L Carriers	10	$1460.16	$226.72	$70.80
XPO	25	$1268.44	$198.27	$53.41
YRC Freight	24	$1212.96	$185.53	$75.98

Freight Class Distribution

Q1 2025

Class	Shipments	Avg Cost
70.0	27	$707.75
85.0	34	$821.82
92.5	15	$1087.87
100.0	10	$941.66
110.0	6	$1135.78
125.0	3	$1374.88

Q2 2025

Class	Shipments	Avg Cost	Avg Reclass Fee
70.0	28	$983.93	$81.97
85.0	25	$1179.87	$70.60
92.5	16	$1304.91	$66.57
100.0	14	$1437.13	$68.27
110.0	6	$1581.80	$85.86
125.0	9	$1864.50	$50.50

Note: High reclassification fees on Class 70 and 85 shipments indicate these are being bumped to higher classes.

Top Cost Anomalies (Q2)

Date	Carrier	Dest	Weight	Class	Cost	Cost/lb	Issue
2025-06-25	R+L Carriers	CA	3479	125.0	$3135.23	$0.901	High reclass fee
2025-04-10	XPO	TX	2934	125.0	$2573.08	$0.877	Review charges
2025-05-25	R+L Carriers	CA	2468	125.0	$2268.55	$0.919	High reclass fee
2025-06-25	Estes	CA	2436	125.0	$2136.34	$0.877	Review charges
2025-04-29	XPO	FL	1189	110.0	$1141.59	$0.960	High reclass fee

Action: Review these shipments for unexpected accessorial charges or address correction fees.

Optimization Recommendations

Priority 1: Challenge Freight Classifications

Potential Savings: $950/month | $11,405/year

74% reclassification rate is exceptionally high and suggests many items may be misclassified.

Actions:

1. Request detailed reclassification justification from carriers for top 20 highest-fee shipments
2. Measure actual density (lbs per cubic foot) for commonly shipped items:
   • Class 85: 8-9 lbs/cu ft
   • Class 92.5: 7-8 lbs/cu ft
   • Class 100: 6-7 lbs/cu ft
3. If items exceed density thresholds, submit NMFC classification appeals
4. Work with packaging team to increase density where possible

Expected recovery: 35-50% of reclassification fees

Priority 2: Negotiate Reclassification Protection

Potential Savings: $792-$1,245/month

Your Q2 annual run rate is $497,266 with carriers. Use this leverage.

Negotiation points:

• Request: Freeze rates for specific SKUs/commodity codes despite NMFC changes
• Offer: 12-month volume commitment at current levels (392 annual shipments)
• Benchmark: Share quotes from competing carriers for same lanes
• Target: 30-55% reduction in reclassification fees

Carriers to prioritize: XPO and Old Dominion (your highest volume)

Priority 3: Optimize Packaging for Density

Potential Savings: $2,078/month | $24,937/year

Increasing density by 10-15% can shift freight class down one tier.

Actions:

1. Audit pallet stacking patterns - reduce void space
2. Test smaller pallet sizes (40x48 vs 48x48) for lighter loads
3. Consider double-stacking compatible items
4. Target: Move 25-30 shipments/month down one freight class

Example: Class 92.5 -> Class 85 saves ~$85/shipment

Priority 4: Fuel Surcharge Caps

Potential Savings: $741/month (if diesel stays elevated)

Action: Negotiate fuel surcharge caps at 18-20% of base rate in next contract renewal.

Current surcharges at 15.4% are high but reflect market diesel prices.

Priority 5: Route Optimization Analysis

Potential Savings: $2,486/month

Action: Request quote from regional carriers for your top 3 destination states.

Regional carriers often offer 8-15% lower rates for shorter haul distances (under 800 miles).

Total Recovery Potential

Recommendation	Monthly Low	Monthly High	Difficulty
Challenge Classifications	$792	$1,131	Medium
Negotiate Reclass Protection	$679	$1,245	Low-Medium
Packaging Optimization	$1,484	$2,598	Medium-High
Fuel Surcharge Caps	$593	$889	Low
Route Optimization	$1,658	$3,315	Medium
TOTAL	$5,206	$9,178	-

Recovery: 38%-68% of the $13,530/month increase

Implementation Timeline

This Week (Immediate Actions)

1. Request reclassification documentation from all carriers for shipments with fees >$85
2. Measure density of your 5 most frequently shipped items
3. Compile Q1 vs Q2 data to present to carriers showing cost impact

Next 2 Weeks (Quick Wins)

1. Submit classification appeals for items that meet lower class density requirements
2. Contact account managers at XPO and Old Dominion to schedule rate review meetings
3. Audit packaging for top 10 highest-cost lanes

This Month (Strategic Changes)

1. Formal carrier negotiations with prepared data showing:
   • $497,266 annual spend
   • Competitive quotes from regional carriers
   • Specific SKU rate freeze requests
2. Packaging pilot program testing denser configurations on 25 shipments
3. Request quotes from regional carriers for IL/OH/MI destinations

Next 30-60 Days (Long-term Optimization)

1. Implement new packaging standards if pilot successful
2. Execute contract amendments with improved terms
3. Set up monthly monitoring of reclassification fees and fuel surcharges

Key Takeaway

The 44% cost increase is NOT due to shipping more or changing your logistics. It’s driven by:

1. Industry-wide NMFC reclassification (18% of increase) - affects everyone, but you can fight it
2. Diesel price surge (23% of increase) - market-driven, limited control
3. Annual GRI (59% of increase) - negotiable with your volume

Focus your energy on challenging classifications and negotiating rate protections. These offer the highest ROI for your time.