LTL, or ‘less than truckload’ shipping, generally refers to palletised and oversized parcel shipments that do not fill a carrier’s truck. LTL consignments are usually packed on wrapped pallets or in large containers – the carrier then pools multiple customers’ freight together to fill a truck for shipping. LTL operators essentially occupy the space between full truckload shipping (FTL), on one hand, and parcel carriers on the other.
How is LTL pricing determined?
LTL freight rates are typically a function of several factors including weight, size, route and distance, level of service and the freight class. The relevance of weight and size is obvious; heavier shipments will increase fuel consumption and larger shipments will occupy more space in the trailer. Longer distances are typically more expensive to ship although, interestingly, rates along shipping lanes to closer destinations can sometimes be more expensive.
Service level essentially refers to delivery timeframes. Each LTL operator will have their own service standards, although they can typically be broken down into three categories:
- Standard freight
- Express freight, which has a shorter delivery target
- Guaranteed freight, where the carrier agrees to deliver your freight by a specified time.
Although determining the specific freight class of a shipment can be difficult, freight class essentially comes down to the characteristics of the goods being shipped, the density (size and weight) of the shipment or some combination of the two. Goods-based classing involves assigning higher prices to freight that is fragile, dangerous or otherwise more difficult to ship.
Is LTL freight cheaper?
Although FTL has price advantages for large, regular deliveries, LTL typically works out cheaper than hiring an entire truck and trailer for infrequent deliveries or partial shipments. Parcel carriers often compete with LTL carriers at the lower end, encouraging businesses to break shipments down into smaller units. That said, LTL is usually a better option than parcel carriers as businesses can reduce handling and benefit from economies of scale.
It is a good idea to work with a freight broker, at least initially, to identify which LTL operators can meet your preferred service standard for the lowest price. Freight brokers can also assist you to determine the most advantageous freight class available and to advise on off-peak or backhaul options.
Preparing an LTL shipment
Unlike FTL freight, LTL shipments are handled multiple times while being transported – often by busy carriers. Although LTL operators typically take a reasonable degree of care to avoid breakages and spoilage, it is still important to use sturdy packaging to protect stock from dropping, crushing and scuffing. Because LTL freight does not move directly from point to point, it is important to manage humidity and condensation if relevant. Pallets, wooden crates and corrugated fibreboard boxes are good options.
Like parcel shipments, LTL freight is somewhat vulnerable to being misrouted or lost. Although in theory LTL freight travels as one consignment, it is important to label each piece of freight (boxes or pallets) to minimise the risk that some of the shipment will go missing.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.