What is LTL?
Less than truckload shipping (LTL) is the transportation of relatively small freight. The alternatives to LTL carriers are parcel carriers or full truckload carriers. There are several different perspectives as to what is actually considered LTL. Full truck load carriers can put anywhere from 2 to 6 different businesses’ shipments on a trailer and since each shipment is technically “less than a truckload” they would consider that to be LTL. There are also freight companies who do not specialize in truckloads, but instead, consolidate larger volume shipments from about 2 to 12 pallets – these companies also consider themselves to be LTL Carriers.
Integrating LTL carriers for shipping cost savings
There are several rates for LTL freight. Rates are determined by a combination of class, weight, pick up and drop off locations and any additional services to meet the shipper and consignee’s specifications. Discounts can be offered by carriers to shippers and brokers for freight where carriers are competing strongly for business.
For example, if a shipper wants to move their products, which are class 85 (ovens) and is negotiating his rates with a carrier, the LTL carrier may offer to move this freight at a lower class of 50 thus lowering the perceived cost. However, it is vital that shippers (or their third-party logistics outsourced provider) \ work with a carrier in order to make the best shipping choices. This involves analyzing historical freight shipping data and conducting a freight analysis. This will allow the shipper or logistics provider to best approach an LTL carrier to get the best available rates, taking into account specific shipper needs. This process will produce a more productive negotiation situation and create more of a mutually beneficial environment, ultimately allowing the shipper to save the most amount of money on their LTL shipping costs.
Another factor to consider in the cost of LTL shipping is fuel surcharges. These are fuel costs associated with the lane of a shipment and are additional to of line haul costs. Fuel is updated on a weekly basis and is often based on the national average of diesel.
Preparing shipments for LTL carriers
Freight sent via LTL carriers must be handled several times during transit, often by different carriers. Therefore it is good practice to appropriately name freight and package well. Freight must be packaged to protect freight from damage due to scuffing, vibration, crushing, dropping, humidity or condensation. Due to this risk, carriers normally require shippers to load freight onto pallets or package freight into crates. Carriers have published tariffs that provide some guidance for packaging. Packaging engineers design and test packaging to meet the specific needs of the logistics system and the product being shipped.
The better you understand what goes into LTL freight, the easier it is for your business to manage carrier expectations as well as to prepare your business’ freight shipment processes to get the best possible savings on resources and costs in your transportation department.
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.