In the world of commercial shipping, choosing the right method can significantly impact your bottom line.
LTL shipping—also known as LTL freight—is a key player. But when should you use it? And how does it fit into an optimized shipping strategy?
This comprehensive guide explores the ins and outs of Less-than-Truckload shipping, from its operational structure to cost considerations.
You’ll discover best practices for integrating LTL into your shipping strategy, when to opt for alternative methods, and much more.
TL:DR:
LTL Shipping Essentials
LTL shipping consolidates smaller shipments from multiple shippers into one truck, offering cost-efficiency for loads between 150-15,000 pounds.
While LTL provides flexibility and cost savings, it may have longer transit times and higher per-unit costs compared to full truckload shipping.
Factors affecting LTL rates include shipping distance, dimensions, weight, freight classification, and special handling requirements.
Optimizing LTL shipping involves accurate measurements, proper packaging, correct documentation, and regular comparison of carrier options.
The LTL process includes pickup, consolidation at local terminals and hubs, long-distance transport, and final delivery, maximizing efficiency through economies of scale.
The basics of LTL shipping
Less-than-Truckload (LTL) shipping is a cost-effective way to transport smaller shipments that don’t require an entire trailer.
LTL consolidates multiple shippers’ freight into the same trailer. This efficient approach allows businesses to pay only for the portion of the trailer their goods occupy.
An LTL shipment typically…
- Consists of 1 to 12 pallets.
- Occupies less than 12 linear feet of trailer space.
- Weighs between 150 and 15,000 pounds, though size and density typically play more of a role in determining cost than weight.
Benefits of LTL shipping
Depending on your situation, LTL shipping can bring some serious benefits over the alternatives.
Cost-efficiency for small and medium businesses
LTL shipping offers significant cost advantages, particularly for small and medium-sized businesses that ship fewer goods and need less shipping space. By paying only for the portion of the trailer they use, companies can reduce their shipping expenses considerably.
Increased flexibility and accessibility
LTL shipping provides a range of additional service options, such as liftgates and inside pickup or delivery. Shipment tracking is made easy through methods including BOL number, PRO number, and PO number.
Increased security
Palletized shipments in LTL shipping are more secure than individual parcel shipping. Using pallets protects goods from damage during transit and handling, reducing the risk of loss or theft. This increased security is particularly valuable for businesses shipping fragile or high-value items.
Potential drawbacks of LTL shipping
While LTL shipping offers many benefits, it also presents a few drawbacks.
Longer transit times
Due to the consolidation process, transit times can be longer, which may not be suitable for time-sensitive or very large shipments.
More expensive per unit than FTL
From a carrier’s perspective, LTL shipping is less cost-efficient compared to full truckload shipping (FTL). It requires multiple stops, increasing fuel consumption and driver pay. These added costs are typically passed on to the shipper and can potentially offset savings.
Higher risk of damage
Goods are handled more frequently in LTL shipping, which increases the chance of accidental damage.
When to use LTL shipments
LTL shipping is particularly advantageous in certain scenarios:
- Small shipments that don’t fill an entire truck
- Shipments with flexible delivery timing
- Local or regional moves
- Loads with limited storage space
- Shipments prioritizing cost savings over speed
- Cargo that’s easily handled or non-fragile
LTL vs. other shipping methods
Understanding the differences between various freight shipping methods can help you make the best choice for your business.
LTL vs. FTL
Let’s start by comparing LTL shipping to one of its main alternatives: Full Truckload (FTL) shipping.
| LTL | FTL | |
|---|---|---|
| Capacity and usage | Multiple shippers share trailer space. More cost-effective for smaller shipments. | Shipments fill an entire trailer, either by volume or weight. A more economic option for shipments exceeding 12 pallets. |
| Weight thresholds | Loads less than 15,000 lbs | Loads over 15,000 lbs |
| Transit time and handling | Multiple stops and handling for multiple shipments. | Faster transit time. Travels directly to delivery location. |
| Pricing structure | Per-pallet pricing | Per-mile pricing |
| Cost-sharing benefits | Cost-sharing among multiple shippers | No cost-sharing benefits |
LTL vs. Parcel Shipping
The other main alternative to LTL is parcel shipping.
| LTL | Parcel Shipping | |
|---|---|---|
| Weight thresholds | Shipments over 150 lbs | Shipments under 150 lbs |
| Expertise and handling | Tailored solutions to store, transport, and lift heavier deliveries | Better for small, residential deliveries |
| Cost considerations | As weight of shipment increases, cost per pound decreases | Ideal for small, light items |
| Delivery time and tracking | Slower ship times due to multiple delivery stops | Faster delivery times and more detailed tracking |
Factors determining LTL shipping rates
Several factors affect LTL shipping rates.
Delivery and pickup locations
The distance between pickup and delivery locations plays a significant role in determining LTL shipping rates. Generally, longer distances mean higher costs due to increased fuel consumption, driver time, and potential additional handling.
The relationship between distance and cost is not always linear, however, as carriers often have established routes and networks that can affect pricing.
Dimensions and weight
Accurate measurements of your shipment’s dimensions and weight are crucial for obtaining precise quotes in LTL shipping. The dimensions of your shipment directly affect the space it occupies in the trailer, which is a key factor in pricing.
Weight is equally important, as it impacts fuel consumption and handling requirements. Carriers use a combination of actual weight and dimensional weight—calculated based on the shipment’s volume—to determine shipping costs, ensuring they price large but light items fairly based on the space they occupy.
Freight classification
Freight classification is a critical factor in determining LTL shipping rates. The National Motor Freight Traffic Association (NMFTA) has established 18 freight classes, numbered from 50 to 500. Lower classes are generally easier and less expensive to ship.
LTL freight is categorized into classes based on several factors:
- Weight: Ranging from 150 to 15,000 pounds.
- Density: The weight per unit of volume.
- Stowability: The amount of space required to store the shipment.
- Handling ease: How easily shippers can load and unload the freight.
- Liability: How prone a shipment is to damage, theft, breakability, or spoilage.
These classifications are typically shown on the bill of lading. To determine your classification, use a freight classification calculator.
Additional factors
Several other factors can influence LTL shipping rates:
- Special handling requirements for items such as perishables or fragile goods often incur additional costs.
- Equipment needs, such as the use of a liftgate, can also affect pricing.
- Service options like expedited shipping naturally come at a premium.
- The complexity of driver tasks, such as collecting digital proof of delivery, may impact the rate.
- The carrier’s base rate, route distance, and current fuel costs can also affect final pricing.
Essential tips for optimizing LTL shipping
Employ these best practices to optimize your LTL shipping process:
Accurate measurement
Accurate measurements are crucial for optimizing LTL shipping.
Use a calibrated scale to measure weight accurately. When measuring your shipment dimensions, round up to the next inch to avoid discrepancies.
Proper packaging
Proper packaging is key to protecting your goods during LTL shipping. Load goods onto pallets to condense shipments and provide an extra layer of protection.
When palletizing, place heavier items on the bottom to ensure stability. For added security, consider placing pallets inside wooden crates or packing them in shipping containers.
PRO TIP: If it’s safe, you should try to stack more on a single pallet. This strategy can help you avoid the additional height (typically 6-8″) of extra pallet bases.
And don’t forget to use sturdy packaging materials to pack your goods:
- Wooden shipping crates
- Corrugated cardboard boxes
- Shipping pallets with shrink wrap
- Drums or barrels for liquids
Correct documentation and labeling
Accurate documentation and clear labeling are essential for smooth LTL shipping.
Complete the bill of lading (BOL) accurately and provide it to the carrier upon arrival. This document serves as a contract between you and the carrier, so ensure all details are correct.
Place labels on the side of pallets or crates where they are easily visible. Clear and accurate labeling helps prevent misrouting and ensures your shipment reaches its intended destination efficiently.
Proper documentation and labeling facilitate smoother shipping processes and help avoid potential delays or additional charges.
Additional cost-saving and efficiency tips
Use these extra nuggets to streamline your LTL shipping process, reduce costs, and improve overall efficiency.
- Compare carrier options regularly. Different freight companies and brokers offer varying discounts on specific routes. These discounts fluctuate based on current freight volumes, so it’s worth checking rates frequently, even daily.
- To prevent stacking, apply “Do Not Stack” stickers to your pallets instead of no-stack cones. This avoids discrepancies in height measurements, as some carriers include cone height while others don’t.
- Choose the smallest suitable pallet. Density calculations are based on dimensions, so an oversized pallet can unnecessarily increase your freight class and rates.
- Focus on the cost per pound of shipping LTL freight to ensure you’re getting the best value for your money.
- Monitor carrier performance. Important metrics include on-time delivery rate, freight damage rate, and billing accuracy.
- Explore third-party insurance options. These are often more cost-effective than carrier-provided insurance. Also, check if your company’s existing insurance policies cover freight – you might not need to purchase additional coverage.
How does LTL freight shipping work?
If you decide to use LTL freight, here’s how it works on an operational level:
1. Pickup
The LTL journey begins with pickup. A truck is dispatched to collect LTL shipments from multiple businesses in a local area. Carriers operate on a strict schedule, often making 5–15 stops per day.
2. Initial consolidation
As the truck moves from one pickup location to another, it gradually fills its cargo space with shipments. This is the first stage of consolidation, where each shipper pays only for the portion of the truck their freight occupies.
3. Transport to local terminal
After completing all scheduled pickups, the LTL truck transports collected shipments to a local terminal, often called a “spoke.” These spokes, typically located in or near major cities, serve as initial consolidation points in the LTL network’s “hub-and-spoke” model.
From these local terminals, freight moves to larger central hubs strategically positioned in major cities and regions. For instance, Philadelphia might serve as a hub for the Northeast, while Houston could be a hub for the Southwest.
This network structure enables efficient long-distance freight movement, connecting local pickups to a broader transportation system.
4. Freight consolidation at hub
At the hub, freight is unloaded and sorted. Shipments are consolidated with others going in the same direction.
This process is vital for maximizing truck capacity and the overall efficiency of the LTL system. Trucks leaving the hub are packed as full as possible, keeping costs down for all shippers involved.
5. Long-distance transport
Once consolidated, freight is loaded onto trucks for long-distance transport. These trucks move between major hubs, carrying multiple shipments from various origins, all with an end destination in the same general direction. This leg of the journey is where the economies of scale in LTL really come into play.
6. De-consolidation and local delivery
Upon reaching the destination hub, the process works in reverse. Freight is again sorted, this time for distribution to local terminals near the final destinations. From these local spokes, trucks make final deliveries to multiple recipients in the area.
7. Final delivery
The last step in the LTL process is the final delivery. A local truck delivers the shipment to its ultimate destination.
Depending on the service level chosen, this step might include additional options like liftgate service for businesses without loading docks, or inside delivery for shipments that need to be placed in a specific location within a building.
Maximizing efficiency with LTL shipping
Integrating LTL into your shipping mix can provide the flexibility and scalability needed to meet changing demands and maintain market competitiveness.
While you consider how to best leverage LTL shipping for your operations, remember that Red Stag Fulfillment has a team of experts who can support your overall fulfillment strategy.
Our logistics pros can provide insights on optimizing your entire shipping approach, including how LTL fits into the broader picture. Whether you’re handling LTL independently or seeking a comprehensive fulfillment solution, we can help you navigate your options and make informed decisions.
Contact Red Stag Fulfillment today to explore how our fulfillment expertise can benefit your business.
