THE ELECTRIC HEATER COMPANY
WATER HEATERS SINCE 1920
Commodity Classifications Standards Board (CCSB)
1001 North Fairfax Street
Suite 600
Alexandria, VA 22314-1798
ATTN:
Joel L. Ringer, Chairman
SUBJ:
Reclassification of Water Heaters;
Current NMFC item 26520
Docket 2011-2, Subject 2
45 SEYMOUR STREET / P.O. BOX 288
STRATFORD, CT 06615-0288
TEL: (203) 378-2659 FAX: (203) 378-3593
Hhttp://www.hubbellheaters.comH
April 29, 2011
Dear Mr. Ringer,
Please accept the following information for inclusion in the public docket file for CCSB Docket
2011-2 to amend the NMFC for reclassification of water heaters. The information contained
herein is provided on behalf of Hubbell Electric Heater Co. and its wholly owned subsidiary
Vaughn Thermal Corp. (formally known as Vaughn Manufacturing). Please see the contact
information below for addition to the Party of Record List.
Hubbell Electric Heater Co.
ATTN: Transportation Manager
PO Box 288
Stratford, CT 06615-0288
Vaughn Thermal Corp.
ATTN: Transportation Manager
PO Box 5431
Salisbury, MA 01952-5431
In review of CCSB Docket 2011-2 Subject 2, it is our contention that the Notice of Proposed
Amendments to the National Motor Freight Classification (NMFC) resulting from Research
Project 1108 contains analysis that does not accurately reflect the facts for product category,
NMFC item 26520. The analysis in the docket results in a significant misrepresentation of the
general product and leads to invalid conclusions and a proposed freight reclassification that is
unfair and harmful to the water heater industry. It is respectfully requested that the CCSB
address these issues in order to make a fair and accurate assessment of the freight class for this
product category.
As the first and possibly most important point, the CCSB should consider more accurate and
expanded terminology when discussing the different construction types for water heaters. As the
docket points out, there are two major construction features that are most relevant to the NMFC,
namely “Tank Construction Type” and “Outer Shell Type”. We agree that these are two relevant
and important construction features that should be considered when determining the freight class
for water heaters. However, the CCSB fails to achieve proper reclassification because it
incorrectly correlates “Outer Shell Type” as the critical feature to consider, at least from a weight
density perspective, when in fact the correct construction feature to consider for this purpose is
“Tank Construction Type”. For the benefit of the CCSB when discussing this product category,
please consider figure 1 below as the water heater construction types likely to be of concern
when considering reclassification.
Figure 1. Industry Standard Water Heater Types
A. Typical Tank Construction Types
1.) Metal tank (e.g. steel, stainless steel, copper alloy) with no lining
2.) Metal tank (e.g. steel) with light weight lining (e.g. glass, epoxy, galvanizing)
3.) Metal tank (e.g. steel) with heavy weight lining (e.g. cement)
4.) Plastic tank
5.) Fiberglass reinforced tank
B. Typical Outer Shell Construction Types
1.) Metal
2.) Plastic
There are important distinctions between each of the above types, and the docket seems to
confuse the issue at times and not fully appreciate the differences with respect to weight between
the various types of construction. As an example, on page 3 of 8 of the subject docket, the report
states “When tank-type water heaters are evaluated on the basis of the tank material, water
heaters that have a metal outer shell range in density from 0.80 to 16.13 pcf, with an average of
8.09 pcf, while water heaters that have a plastic outer shell range from 2.16 to 7.71 pcf, with an
average density of 4.87 pcf. It is noted that while the density ranges overlap, the average density
of the metal units is significantly higher than that of the plastic units.” This analysis is
misleading and illustrates the lack of understanding of the relevant construction features for the
product. The fact of the statement might well be true, but it is invalid because it incorrectly and
misleadingly groups water heaters by the outer shell type, when in fact the most important factor
when considering the density is the tank type not the outer shell type.
There are important distinctions between the various water heater construction types that result
in significant weight and weight density differences. As an example, a metal tank with a heavy
weight lining (e.g. cement) is substantially heavier than a metal tank with a light weight lining
(e.g. glass) or a metal tank with no lining at all. However, there is no appreciable difference in
weight between a plastic tank and a fiberglass reinforced tank. Likewise, there is no appreciable
difference in weight between a glass lined tank and a tank with no lining at all. Regarding the
outer shell, although a metal shell is heavier than a plastic shell, the difference between the two
is an insignificant portion of the overall weight of the water heater.
Therefore, to properly determine the freight class of a water heater, it is proposed that the CCSB
would be better served to consider the tank construction as the major differentiating feature. The
consideration of the type of outer shell (metal or plastic) is a relatively minor point when
considering weight density. However, it is recognized that a plastic shell is potentially less likely
to be damaged in transit compared to a metal shell, but this is secondary to the weight density of
the overall product. For the CCSB’s consideration it is proposed in figure 2 below a more
accurate grouping that is a fair representation of the different tank construction types.
Figure 2. Proposed Water Heater Tank Types
1.) Metal tank with glass lining/no lining
2.) Metal tank with cement lining
3.) Plastic and Fiberglass reinforced tanks
It should be pointed out that a metal tank produced today is typically constructed with a plastic
outer shell. However, on a relatively infrequent basis a metal tank may sometimes be produced
with a metal outer shell. A plastic or fiberglass reinforced tank on the other hand is almost
always constructed with a plastic outer shell.
The CCSB proposed reclassification as shown in figure 3 below groups water heaters by their
outer shell type, which would result in unfair, inaccurate and improper classification of the vast
majority of water heaters shipments resulting in a significant negative impact on the water
heater industry. It is even possible that if the rates proposed in this docket are approved, that due
to the large volume of shipments and the broad range of customers served, that the negative
impact could extend beyond the water heater industry, potentially putting the CCSB and NMFC
in a difficult and embarrassing position of having to defend unfair and poorly construed rates.
Figure 3. The CCSB Proposed Classification Provisions
Item 25650 HEATERS, water
Sub 1 →With plastic outer shell……….class 250
Sub 2 →With metal outer shell……..….class 150
A major fault with the CCSB’s proposed reclassification is that it assumes a water heater with a
plastic outer shell is by definition constructed with a plastic inner tank, hence the presumed low
average weight density and therefore the justification for the higher freight classification (in this
case, proposed as class 250). This assumption is most definitely not the case. The construction
feature that matters most when considering the weight and associated weight density of a water
heater is the tank construction, not the outer shell construction. From a weight perspective, the
type of outer shell construction (metal or plastic), is insignificant as the weight of either type of
outer shell is a relatively small percentage of the overall weight of the water heater.
In our opinion the proposed reclassification in docket 2011-2 Subject 2 does not accurately
categorize the different construction types of water heaters and as a result is an unfair method for
determining the appropriate freight class. We believe that the proposed reclassification
unintentionally results in a bias against water heaters with metal tanks, which account for the
vast majority of water heater shipments.
As an alternative offered for the CCSB’s consideration, it is respectfully proposed that a more
accurate way to group water heaters is adopted based primarily on the tank type, not on the outer
shell. Given this, the following reclassification is proposed in figure 4 below.
Figure 4. Proposal #1 for the Reclassification of Water Heaters
Item 25650 HEATERS, water
Sub 1 →Metal tank with glass lining/no lining………….class 150
Sub 2 →Metal tank with cement lining………………… class 77.5
Sub 3 →Plastic or Fiberglass Reinforced tank.………… class 175
If the CCSB contends that the outer shell construction type (metal or plastic) is a considerable
factor when determining the proper freight classification for water heaters, then the CCSB might
consider expanding the categories further, as proposed below in figure 5 which takes into
account the two different types of outer shells in addition to the different tank types used in water
heater construction.
Figure 5. Proposal #2 for the Reclassification of Water Heaters
Item 25650 HEATERS, water
Sub 1 →Metal tank with glass lining/no lining and metal outer shell……………. class 175
Sub 2 →Metal tank with glass lining/no lining and plastic outer shell ………….. class 150
Sub 3 →Metal tank with cement lining and metal outer shell………………….… class 85
Sub 4 →Metal tank with cement lining and plastic outer shell………………...… class 77.5
Sub 5 →Plastic or Fiberglass Reinforced tank with plastic outer shell.………..… class 175
With respect to weight density, at least in the case of the category “Metal tank with cement lining
and plastic outer shell”, attached to this letter is data which indicates that the average density
expressed as pounds per cubic foot (pcf) ) is well within the average of 12 pcf typical of class 85.
In fact, the average pcf for the category “Metal tank with cement lining and plastic outer shell” is
13.52 and “Metal tank with cement lining and metal outer shell” is 13.96 pcf, both of which meet
the requirement from a density perspective for class 77.5.
With respect to the comments in docket 2011-2 that claim water heaters have a higher claims
ratio than what is expected for class 85 freight, there is no mention of the offsetting benefit that
the simple average value of water heaters is $2.40 per pound, which is 85% below the $16.42
maximum average value per pound associated with typical class 85 freight. Given the extremely
low replacement cost (as an average cost per pound) of water heaters, it is reasonable to consider
that the low value of the product offsets a slightly higher claim ratio reported by some of the
carriers.
In further regard to the claim ratio, it seems that more information is needed to understand if
these claims are a true representation for what is actually happening industry wide with respect
to water heater shipments. Of particular concern is the extremely wide range of reported claim
ratios, which the docket claims range from 1.73% to 30%. This information in and of itself is
misleading, as it simply states the overall range. To more accurately and fairly understand the
claim ratio, it must be understood what is the mean and the standard deviation of all the reported
claim ratios. Further to that, it would seem fairly obvious to even the casual observer that a
carrier with a 30% claim ratio represents an anomaly and is indicative of a serious problem with
either the product packaging, the carrier or possibly both. By including the 30% claim ratio
number, the overall numbers are skewed. By probably anyone’s standard the 30% claim ratio
figure reported by one carrier is extraordinarily high and most certainly does not reflect other
carrier’s experience. To use this extraordinarily high claim ratio in the analysis seems unfair and
disingenuous. If the CCSB continues to assert that a high claim ratio is justification for a
significant increase in freight classification, then more details regarding the data sample should
be provided and consideration should be made to ensure a proper sample size and proper
statistical analysis is applied to determine an accurate and fair industry average claim ratio.
The experience of both Vaughn Thermal and Hubbell Electric Heater with respect to claims ratio
differs greatly from the numbers reported in the docket. Over the last 12 months, the claim ratio
for Vaughn Thermal is 0.73% and Hubbell Electric Heater Co. has no claims. Without releasing
confidential information, it should be noted that these ratios are based upon well over 1000
shipments. Clearly, the claim ratio for Vaughn Thermal and Hubbell Electric Heater are well
below the typical 1% or less measure for general commodities.
To account for water heaters that are either not palletized or otherwise not packaged in such a
way to facilitate handling typical of class 85 freight, it is proposed that a separate note or
additional category be added to address these types of freight shipments. In these cases, a freight
class of 200 or 250 seems more than sufficient to account for this type of packaging. It should be
noted that tank type water heaters are typically (i.e. generally) palletized, as is stated on page 4 of
the docket, “tank-type water heaters are generally tendered in crates or in fiberboard containers
that may, but often are not, unitized or palletized”. Please see the proposed classification
grouping in figure 6 below which takes into account product tendered non palletized.
Regarding tankless water heaters, we agree that this product type represents a category which
may exhibit transportation characteristics different from a typical storage type water heaters.
This is in part due to the fact that tankless water heaters are typically unitized and palletized.
These shipping and product characteristics are also equivalent to “compact” water heaters, which
are small storage type water heaters less than or equal to 16 gallon storage capacity. These
compact water heaters are often unitized and palletized, and as such should be grouped
equivalent to tankless water heaters. Please see the proposed classification grouping in figure 6
below which takes into account tankless and compact type water heaters tendered on a pallet.
Figure 6. Proposal #3 for the Reclassification of Water Heaters
Item 25650 HEATERS, water
Sub 1 →Metal tank with glass lining/no lining and metal outer shell…………..…..…class 175
Sub 2 →Metal tank with glass lining/no lining and plastic outer shell …….…..….….class 150
Sub 3 →Metal tank with cement lining and metal outer shell………………………….class 85
Sub 4 →Metal tank with cement lining and plastic outer shell………………........…...class 77.5
Sub 5 →Plastic or Fiberglass Reinforced tank with plastic outer shell.…………….....class 175
Sub 6 →Tankless and storage water heaters ≤16 gallons, in boxes and palletized…....class 92.5
Sub 7 →Any water heater tendered non palletized……………………..………….…..class 200
Regarding handling, docket 2011-2 recognizes that most water heater shipments are tendered on
a pallet and are handled in a manner similar to other like packaged freight. The precautionary
information and labels on some shipments is innocuous and generally accepted as obvious
handling instructions. “This Side Up” has no real impact on handling, as most water heater
shipments are palletized and as such it would not make sense for the shipper to change its
orientation. “Handle With Care” is a generic term commonly found on packages and is a general
statement which does not in and of itself call for any unusual handling by the shipper.
The information contained herein is offered to the CCSB to assist in the task of determining if
reclassification of water heaters is necessary, and if so determined, what the new freight class
structure and product grouping should be. There seems to be a clear need to better define the
different construction types, and from there it seems that reclassification makes sense and is
appropriate. However, the proposed reclassification contained within Docket 2011-2, Subject 2
overly simplifies the product. This incorrect grouping results in an unfair freight class
determination, and as such it is respectfully requested that the CCSB revise their proposed
reclassification accordingly.
Respectfully Submitted,
William E. Newbauer III
COO
Hubbell Electric Heater Co.
Vaughn Thermal and Hubbell Electric Heater Co.
Response to Docket 2011-2, Subject 2
Tank Type
Metal Tank with
Cement Lining
Metal Tank with
Cement Lining
Metal Tank No Lining
Tankless/Compact
Outer Jacket Type
Plastic Outer Jacket
Metal Outer Jacket
Plastic Outer Jacket
N/A
Storage
Capacity
(Gallons)
Shipping
Weight
(Lbs)
Shipping Dimensions (Inches)
Width
Length
Height
Shipping
Volume
(Cubic
Feet)
Shipping
Density
(Lbs per
Cubic Foot)
10
117
23
23.0
26.0
7.96
14.70
20
147
23
23.0
37.0
11.33
12.98
30
180
23
23.0
45.0
13.78
13.07
40
245
23
23.0
61.0
18.67
13.12
40
237
28
28.0
36.0
16.33
14.51
50
245
23
23.0
54.0
16.53
14.82
65
290
28
28.0
49.0
22.23
13.04
80
355
28
28.0
61.0
27.68
12.83
100
410
28
28.0
71.0
32.21
12.73
120
433
28
28.0
71.0
32.21
13.44
150
1300
38
44
102
98.69
13.17
250
1850
44
50
112
142.59
12.97
300
2180
50
56
100
162.04
13.45
350
2500
50
56
106
171.76
14.56
400
2700
50
56
122
197.69
13.66
500
3225
56
62
114
229.06
14.08
600
3650
56
62
131
263.21
13.87
700
4150
62
68
107
261.06
15.90
10
80
20
20
32
7.41
7 41
10.80
10 80
10.45
20
120
22
22
41
11.48
30
135
22
22
54
15.13
8.93
40
200
22
22
62
17.37
11.52
50
250
28
28
49
22.23
11.25
65
300
28
28
61
27.68
10.84
80
400
28
28
71
32.21
12.42
100
490
32
32
63
37.33
13.13
120
550
32
32
76
45.04
12.21
4
797
48
40
68
75.56
10.55
6
95
35
21
21
8.93
10.64
16
160
27
27
36
15.19
10.53
Simple
Average
(pcf)
Packaging Characteristics
13.52
Palletized, blocked, double
strapped, shrink wrapped. With or
without wooden corners.
13.96
Palletized, blocked, lagged, shrink
wrapped and heavy duty wooden
crate.
11.28
Palletized, shrink wrapped and
heavy duty wooden crate
10.57
Unitized, palletized, strapped and
shrink wrapped
April 28, 2011
Mr. Joel L. Ringer
Chairman
Commodity Classification Standards Board
1001 North Fairfax St. Suite 600
Alexandria, VA 22314
Re: Reclassification of Water Heaters, current NMFC Item 26520–Docket 2011-2, Subject 2
Dear Mr. Ringer
The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) is a national trade
association representing manufacturers of air-conditioning, heating and commercial
refrigeration equipment, associated controls and accessories. One of our product sections is
the Water Heater Section which includes all the major manufacturers of residential and
commercial gas, oil and electric water heaters, both tank and tankless types, in the U. S
market.
We have reviewed your March 17, 2011 letter regarding the reclassification of Water Heaters
noted above. Based on discussions with our water heater manufacturers members who
essentially comprise the entire residential storage water heater industry in the U.S. and also
are major manufacturers of all types of water heaters sold in the U.S. we believe that the
proposed classification changes in Docket 2001-2, Subject 2 are not appropriate and are
based on limited data insufficient to validate these proposed changes.
Two key parameters that are discussed in the docket are the density and the claims ratio. We
note that information was received from only 4 respondents. While we recognize that the
CCSB can only work with the information that is available to it, in this case the information
is inadequate to properly characterize the current state of LTL water heater shipments.
We have gathered the following data for 2010 LTL shipments from our major water heater
manufacturer members. We agree generally with the range of densities shown in the docket.
Our information indicates that there are no shipments below 2 pcf but, given the small
number of observations, the percentages of .64% or .32% shown in the docket are close to
insignificant. More significantly, based on shipments of over 200,000 tank-type units, the
overall average density is about 9 pcf. This indicates that the interval shown as the second
largest in the docket document is actually the largest. This density value is associated with a
class 100. In the case of tankless models, our information shows an overall average density
of about 12.6 pcf which is associated with a class 85.
The docket explains the adjustment of the classifications due to a range of claims ratios from
1.73% to almost 30%. The information we have obtained from our members indicates that
all of them had a claims ratio in 2010 under 10%. Although this is more than the 1%
considered normal for general commodities, the small amount of data that was analyzed for
this docket does not support a conclusion that any increase in classification, let alone a 2 step
jump, is warranted for water heaters. Additionally, the information we have obtained from
our members specific to plastic tank and tankless water heaters indicates that their claims
ratios are below the “normal” 1% noted above. For those types of water heaters, this data
suggests that any classification adjustment because of handling, stowing or liability
characteristics should be a lowering of the classification.
We respectfully recommend that the Board not approve these proposed classification changes
and retain the current classifications.
Sincerely,
Frank A. Stanonik
Chief Technical Advisor
From: William Mascaro
Sent: Friday, April 29, 2011 8:42 AM
To: 'Stanonik, Frank'; Joel Ringer
Subject: RE: NMFC Item 26520 Docket 2011 2 Subject 2
Mr. Stanonik,
Thank you for the statement. We have added it to the Public Record for Subject 2 of Docket 2011-2
involving Water Heaters and made you a Party of Record to the proposal.
In your statement, you refer to over 200,000 shipments of tank-type units as the basis for your
information, however no underlying data has been submitted. In order for the CCSB to have as accurate
a basis as possible when considering this matter, would it be possible to provide me with the underlying
data on which the figures in your statement are based. As is our policy, any information you provide will
only be identified as “shipper.”
Regards,
William Mascaro
Member
Commodity Classification Standards Board
1001 North Fairfax Street, Suite 600
Alexandria, Virginia 22314
703-838-1834