“Logistics” is commonly defined as the management of the flow of goods between the point of origin and the point of consumption in order to meet customers’ specific requirements. Several classifications apply to employers engaged in logistics services. To correctly classify such employers, it is imperative to determine the services the employer performs on a fee basis.
Some employers operate warehouses for the purpose of storing their customers’ general merchandise for as long as required by the customer. In this case, revenue is generated by charging storage fees based on the length of time that the customer’s merchandise is stored and the amount of warehouse space it occupies. Employers engaged in fee storage of general merchandise are classified as 8292, Warehouses – general merchandise – N.O.C.
Note that Classification 8292 directs that drivers and their helpers shall be separately classified as 7219(1), Trucking Firms. Based on this directive, Classifications 8292 and 7219(1) are commonly assigned to employers that both store and deliver their customers’ merchandise.
Many trucking firms have facilities (terminals) to receive, consolidate and temporarily hold customers’ freight-in-transit; however, they do not store merchandise on a fee basis. In these cases, merchandise is staged for short periods of time pending transit or transfer. Since this type of trucking firm does not store merchandise on a fee basis, the terminal operations are classified as 7219(1), Trucking Firms, in accordance with the classification phraseology that specifically includes terminal employees.
Many logistics firms are not in the business of fee-based storage or trucking, but only handle or forward customers’ goods-in-transit on a fee basis. Firms that load, unload or consolidate freight at shipping or receiving terminals, but are not storage or trucking firms, are classified as 7360(1), Freight Handlers. These operations are sometimes described as cross docking and are often intermodal, facilitating the transfer of freight between air, sea, rail and truck transportation providers.
Logistics firms that specialize in arranging various freight transportation services for their clients are classified as 7360(2), Freight Forwarders or Consolidators – N.O.C. Many freight forwarders specialize in international shipments, and it is common for international freight forwarders to have a relatively large office staff to coordinate transportation services and prepare shipping documents. While freight forwarders are not in the trucking or storage business, they may retain drivers to pick up freight from customers pending transfer to transportation companies and facilities to temporarily hold customers’ shipments pending transfer, all of which are assignable to Classification 7360(2).
Fulfillment services have grown significantly in recent years, as they are often used by online stores. In these cases, the online store pays a separate company to store and manage its product inventory, including packing and shipping individual orders that the online store receives from its customers. While fulfillment services often have large storage facilities that resemble warehouses, their order processing, packaging and shipping operations resemble those of a wholesale store. As a result, Classification 8018, Stores – wholesale – N.O.C., applies to packaging and fulfillment services on a fee basis.
Each classification referenced in this newsletter can be reviewed at the links below:
7219(1), Trucking Firms – N.O.C. – including terminal employees and mechanics
7360(1), Freight Handlers – packing or handling merchandise at shipping or receiving terminals – N.O.C.
7360(2), Freight Forwarders or Consolidators – N.O.C.
8018, Stores – wholesale – N.O.C.
8292, Warehouses – general merchandise – N.O.C.
If you have a classification question that you would like covered in a future Classification and Test Audit Insight e-newsletter, email us at firstname.lastname@example.org.