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negotiating ltl pricing

A Comprehensive Guide to Understanding and Negotiating LTL Pricing to Lower Costs with a 3PL or Freight Broker Partner

Nathan McGuire
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January 16, 2023
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A Comprehensive Guide to Understanding and Negotiating LTL Pricing to Lower Costs with a 3PL or Freight Broker Partner
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Less than truckload (LTL) shipping is an excellent and cost-effective way to move cargo for businesses that need to ship lower volumes. When you can’t fill an entire truck, negotiating the less-than-truckload pricing has the potential to result in considerable savings. The pricing of LTL considers the size, weight, shipping distance, and freight classification. Other factors that affect your costs could be special services required, such as special handling, insurance, or expedited delivery. 

Getting your freight where it needs to be and at a lower cost makes all the difference to profitability. Your LTL quote is contingent on the information you provide, so knowing how to properly and comprehensively approach LTL pricing is a business opportunity that deserves your attention. So, how does LTL pricing work? Read on to transform how you are moving freight.

How LTL Pricing Works

Quite a few factors comprise LTL freight pricing, and knowing them before calling for a quote can save you substantial money. Before the call, plan on knowing the following: 

  • The shipment size and weight
  • Shipping distance
  • Freight classification
  • Additional services like insurance, special handling, or expedited delivery

Other factors potentially included in the LTL price would be specific to the carrier’s pricing model, such as discounts, surcharges, and accessorials. 

Commonly Used Pricing Models

When pricing LTL, the most common models in the LTL pricing structure include the base rate, accessorials, carrier discounts, and surcharges. To define each term: 

  • Base rate – The minimum LTL cost of shipping based on the size, weight, and shipping distance.
  • Accessorials – These are additional services and fees associated with the shipment, such as special handling, insurance, or expedited delivery.
  • Discounts – Negotiated with the carrier to reduce costs.
  • Surcharges – Additional charges are applied when certain conditions are met.

Understanding the Different Accessorials and Fees

Accessorials and fees make all of the difference in driving LTL costs. Understanding the fees, anticipating your needs, and working with the carrier present the most significant potential to save money.

Accessorials can be beneficial and include many necessary services, but they often result from shipper errors like the need for reclassification, reassignment, or service needs not initially considered.

Different accessorials and fees include:

  • Fuel surcharges – An additional fee as a percentage of the base rate charged to cover the fluctuating costs of fuel.
  • Detention – If the truck has to wait longer than usual for the shipment to be loaded or unloaded, detention fees could result.
  • Stop-off – Every additional stop you add to a load has an additional charge, often ranging from $50 to $100.
  • Reconsignment – If your shipment is refused for delivery and must be returned to its original pick-up point, a reconsignment charge will apply. These charges can vary widely per carrier.
  • Over dimensional – Typically levied in tiers, this charge often begins once the freight takes up more than 8 feet of trailer space. Shippers may expect to pay more for every additional 4 feet of space.
  • Inside delivery – If the destination does not have a loading dock, the driver must move the shipment inside or leave it at the curb or driveway if the destination is a residence.
  • Liftgate service – Depending on the carrier, truck type, and cargo to be loaded or unloaded, the liftgate fee will typically be $100 to $250.
  • Limited access – When the LTL carrier needs to spend additional time at a pick-up or delivery location or other equipment or procedures are required for the pick-up or delivery, these charges will apply.
  • Residential delivery – Residential delivery presents challenges for LTL carriers due to navigating residential streets in a large truck and residences not having a dock. Residential delivery charges reflect these factors and compensate the carrier for the additional difficulty.
  • Additional handling – Unexpected additional handling, whether due to the package or delivery location, will mean additional charges.
  • Insurance – Freight insurance is very worthwhile to protect your cargo for its total value in case of damage during transport. Most carriers will offer some standard of insurance, but it might not cover the total value of your freight.
  • Expedited delivery – If it needs to be there fast and guaranteed, there will always be an additional charge.

This is just a partial list. A tremendous amount of situations and extra charges may apply to LTL, and some planning and knowledge go a long way to ensure your freight is delivered cost-efficiently.

Gather Data and Insights To Negotiate LTL Pricing

LTL knowledge goes a long way regarding shipping your goods and keeping expenses down. Arming yourself with the proper knowledge will set you up for LTL success.

Leverage Data and Insights to Improve Negotiations

Going into LTL negotiations, having detailed data and insights on the factors influencing shipping costs will give you an edge. Know the particulars of your shipment, including the size, weight, and distance of the shipment. Does the delivery location have a dock? Is it a residential or commercial delivery? The more you can convey about the load, the better.

Shippers should know the pricing models used by the different LTL carriers, including all potential accessorials, LTL cost per pound, discounts, and surcharges. The more you know and weigh in advance, the more you stand to save.

Strategically Analyze LTL Rates and Accessorials

When shipping LTL, it is crucial to strategically analyze the rates and accessorials to identify areas for improvement. Constantly evaluate the following:

  • Current fuel surcharges
  • Detention fees
  • Stop-off fees
  • Reconsignment fees
  • Over-dimensional fees
  • Inside delivery fees
  • Liftgate services
  • Residential delivery
  • Additional handling charges
  • Insurance costs
  • Expedited delivery

When you know the fees and how they apply and then factor them into your LTL strategy, you go into negotiations with an excellent chance for success.

Develop Custom Pricing Strategies

Once you have accumulated all of the data and insights that impact pricing for your LTL carriers, you can develop custom pricing strategies that optimize your costs. Research and identify the different carriers, learn their pricing structure to identify the most cost-effective companies, negotiate better rates, and leverage the different accessorials to reduce costs.

Another route is to consider working with a third-party logistics provider (3PL) that has already cultivated relationships with LTL carriers, knows their intricacies, and negotiates more favorable rates based on their volumes.

Benefits of Partnering With a 3PL or Freight Broker for Lower LTL Costs

Working with a 3PL or freight broker can save you big on LTL costs, and there is no need to learn the rates and nuances of each carrier. People with the right connections, knowledge, and past negotiating success will account for all variables, customize your strategy, and save money.

A 3PL partner will open up access to a wide range of carriers and utilize those that best fit your shipping goals. Even better, they’ll guarantee capacity and ensure your freight gets to where it needs to be on time.

Wicker Park Logistics Gets You the Best LTL Rates

Wicker Park Logistics offers access to LTL marketplace rates through a dashboard via a  strategic partnership. Your company has access to shipping experts, a customized shipping portal, and complete visibility of your freight.

Contact us today, and an expert will show you how we get your LTL shipments there faster and for less money.

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