Companies will often encounter situations where their packages may not require the entire space in a shipping container. In such a scenario, hiring a full vessel or truck can prove unnecessary and economically disadvantageous. A less-than-truckload (LTL) freight is an extremely useful solution to this.
Companies will use less-than-truckload transport to avoid the risk of prospective sales loss due to a shortage of inventory for their distant consumers. Shipping prices for its items may be slightly higher, and delivery time could be longer compared to a fully dedicated truckload. However, they benefit from consistent availability of inventory in return.
What is less-than-truckload (LTL)?
Less-than-truckload or less-than-load (LTL) freight is a type of shipping service in which numerous cargoes share the same vehicle, and each firm pays for the room they occupy. It is a low-cost means of transporting smaller packages or items weighing less than 15000 pounds. To guarantee that shipments remain secure while being handled at different hubs and centers, all commodities are consolidated into tiny boxes or palletized containers.
Why is less than truckload shipping used?
LTL freight is less expensive than other modes of transportation. However, it takes longer for the products to reach their destination.
Many major parcel services, as well as specialist logistics companies, provide less-than-truckload services. Less-than-truckload shippers also provide economies of scale, lowering the freight costs of each individual shipment.
Economies of scale imply cost benefits businesses enjoy as production becomes more efficient and expenses can be distributed across a more significant number of commodities. Thus, companies are able to trade the high shipping cost for better inventory availability.
Benefits of LTL freight shipping
A less-than-truckload freight can be a superior option to full or partial truckload shipping.
● Less expensive: Since the shipper only pays for a part of the entire trip, they are responsible for only a fraction of the shipping expenses. The charges are split among the other shippers that share the truck. ● Environmentally-conscious: There are fewer emissions during LTL shipping as a result of sharing space than if a less-than-full truck is used to ship various small trucks. ● Better security: Shippers that cannot load a whole trailer sometimes use parcel services such as UPS or FedEx to convey their freight. However, this can damage the goods. Shippers using LTL are encouraged to place their products on a shrink-wrapped pallet, which keeps the goods together and safe hence limiting damage. ● Offer additional options: Some LTL carriers offer pickup and delivery, non-commercial delivery to residential areas, and liftgates. Full truckload (FTL) shippers do not provide these services. ● Simplified distribution: LTL is a more efficient alternative when shipping to retail storefronts than delivering large quantities of goods to a warehouse.
How less-than-truckload (LTL) works
The characteristics of a less-than-truckload cargo are determined by several factors. These, include the shipment's origin, destination, packing type, number of parts, weight, special handling needs, and package size.
Truck capacity varies, as do truckloads. Hence, many shippers have their own standards and restrictions for LTL freight sizes. However, LTL generally entails individual shipments weighing between 150 and 15,000 pounds.
Individual products in an LTL shipment are commonly shrink-wrapped to create one large box for optimal space and security. In addition, LTL shipping is based on the hub-and-spoke model.
● Hubs: These are bigger centralized terminals that serve as distribution centers. ● Spokes: These are smaller terminals where cargo is held for later delivery.
A carrier is allocated to an order once it has been processed and packed. The carrier subsequently consolidates the products into crates or palletized containers to ensure their safety during transportation. The parcels are then put into the truck with other cargo and delivered to several local hubs for onward transit.
How do you calculate LTL freight?
The rates for LTL freights differ based on the LTL shipper. Moreover, LTL shipping rates vary on the basis of a range of criteria. While these criteria may often point towards a much higher freight rate, businesses can keep them under control by understanding how these criteria affect pricing.
● Freight size: The size of the shipment impacts freight charges. Carriers must optimize space while ensuring that no goods are harmed. The shipping cost is coordinated based on these organizational variables.
● Freight weight: LTL freight shipments generally range from 150 to 15,000 pounds. The greater the weight of the shipment, the higher the shipping fee.
● Origin and distance: The farther a package must travel, the greater the price owing to the driver and operating costs. However, the freight's origin and destination also affect LTL freight transportation charges.
● Freight class: Freight rates in the United States are determined by the freight class established by the National Motor Freight Traffic Association. Each product is classified according to its density, value, or product characteristics, which influence its transportability.
● Additional charges: Carriers often levy accessorial charges such as the use of a residential and driver assist delivery, power tailgate, limited access sites, remote delivery, and assured or accelerated service in addition to shipping expenses.
How do stackability and turnability impact LTL rates?
The area occupied in a carrier's trailer is affected by the stackability and turnability of the goods i.e the more space occupied, the higher the rate and vice versa.
As a result, if the freight is stackable with other cargoes, carriers will get the most out of their containers. Some carriers will even grant discounts for stackable freight or charge an additional fee for non-stackable freight.
Turnability is measured in terms of occupied linear feet. For LTL shipments, shippers have limitations on maximum weight and space. Shipments exceeding their linear foot restrictions will usually incur extra charges.
What is LTL vs. TL (truckload)?
Both less-than-truckload (LTL) and full truckload (TL or FTL) shipping are viable options. Less than truckload shipping refers to the movement of freight that does not occupy a truck's entire space. On the other hand, full truckload shipments require the whole space or weight limit of a truck. Depending on the exact freight needs, one solution is likely to be more convenient than the other. However, to make TL or FTL transportation options cost-effective, the shipments require a large amount of freight.
Best practices for LTL freight shipping
Less-than-truckload shipping, like any other mode of shipment, has certain best practices. Most notably, the dimensions or sizing, relevant paperwork, and labeling require extra attention. Following these best practices can help lower the freight class and eventually help reduce shipping costs.
1. Dimensions When determining the length, height, and breadth of a single shipment's freight, enterprises must round up to the next inch or perhaps even a few inches over. Furthermore, these measurements must be precise for the transporter to make the most of their vehicle capacity while avoiding excess fees.
2. Documentation To complete the shipping transaction, businesses must file a "bill of lading." This document serves as an invoice for the items being sent. Furthermore, this document should be as precise and thorough as possible to avoid fines at offloading.
3. Labeling and packaging It is critical to ensure that the package and labeling are in good condition. The shipper should put all items into pallets to reduce the amount of space they might occupy in the truck. Similarly, they should place heavier things at the bottom of the pallets. Most importantly, all labeling should be visible on the outside of the shipping boxes.
FAQs on LTL
- What is the minimum weight for an LTL shipment? The minimum weight for an LTL shipment is 150 pounds.
- How many pallets can I ship in LTL? Businesses can ship between 1 and 6 pallets in LTL shipping.
- What are LTL tariffs? A tariff is a rate structure that specifies hundred-weight (CWT) rates and weights for all classes and zip code combinations. These tariffs are applied to all LTL shipments. Tariffs are also referred to as rate bases and are often established annually by carriers.
- Are LCL and LTL the same? In essence, both LCL (less than container load) and LTL (less-than-truckloads) mean the same thing. However, LCL refers to ocean containers, while LTL refers to truckload.
- Is LTL more expensive? Yes, LTL freight is often more expensive compared to FTL freight. However, they do come with the assurance of inventory availability. Moreover, if the goods are packed appropriately, and their freight class drops, they might cost relatively less.
- Is LTL faster than FTL? No, LTL is usually not faster than FTL. LTL freight has to make several stops during its trip to deliver other shipments occupying space on the truck.
- What are LTL freight classes? Freight classes are a defined method for calculating LTL freight pricing depending on the ease of transportation. The National Motor Freight Traffic Association establishes these rankings and classes (NMFTA).