When companies need to safely transport their products, they turn to less than truckload shipping to optimize costs for large palletized shipments or transport light, bulky items requiring more space. LTL shipping is ideal for companies who do not have enough freight to fill an entire truck but still need to haul a freight shipment. Let’s break down in detail what is LTL shipping and how does LTL shipping work.
What Is LTL Shipping?
So, what is LTL? LTL is an acronym for less-than-truckload. And, what is LTL freight? Basically, it means that a company’s freight will not take up the entire space of a truck, providing room to accommodate other smaller shipments. For LTL freight, shipping companies combine LTL shipments from different customers with multiple stops to save time and money.
LTL loads typically weigh between 150 - 15,000 pounds, and customers only pay for the portion of the standard truck trailer occupied by their freight. Although companies save on shipping costs compared to a full truckload, there is a chance their shipments will take longer because LTL carriers make several stops, which needs to be accommodated in supply chain schedules.
How Does LTL Freight Work?
The LTL transportation industry works on a spoke-hub model. With this type of model, freight brokers organize routes as a series of “spokes” that connect outlying points to a central “hub.” Local terminals are considered “spokes,” and larger terminals, i.e., distribution centers, are “hubs.” With LTL, this method saves the carrier and shipper substantial money and expedites the transit of commodities while improving efficiency.
Whether to ship something via LTL or as a parcel is dependent on the freight’s weight. If freight is over 150 pounds but not enough for a full truckload, then LTL is a suitable solution. On the other hand, for lightweight freight that is of a minimal volume, a parcel shipment is better.
Additional LTL Services
Additional LTL freight shipping services can be customized to suit particular needs. However, this will often incur additional costs.
- Inside pickup and delivery: If a driver needs to enter a building to pick up or drop off freight, then this service needs to be requested.
- Expedited: Sometimes freight needs to be delivered as soon and as fast as possible, which can easily be arranged.
- Limited access: This is for freight that needs to be delivered to destinations that are not easily accessible such as rural areas, mountainous places, construction sites, and strip malls.
- Liftgate: If cargo weighs more than 100lbs and the pickup or delivery location doesn’t have a loading bay, then this requires an additional liftgate service.
Benefits of LTL
For companies, LTL shipping has many advantages beyond delivering freight on time and improving their bottom line.
With LTL shipping, companies only pay for the portion of the trailer or truck that they use. While the lowest rates are usually reserved for bulk shipments, companies can still get excellent rates if they work through a freight consolidator.
Easy to Track
LTL shippers tend to use top-of-the-line tracking systems so they and their customers can monitor freight 24/7. Consignments are usually “marked” several times throughout their journey before arriving at their final destination.
LTL shipping limits the number of empty miles for carriers as trucks and trailers are packed to maximum capacity, reducing trips and unhealthy fuel emissions. This minimizes carbon footprints and is better for the environment.
Just because it’s LTL doesn’t mean services are limited. Small shipments still have access to premium fleet and additional LTL services like liftgate, expedited, inside pick and delivery, as well as limited access.
Shipping Small Quantities
One of LTL’s pros is smaller companies don’t have to wait for massive production outputs to start doing business. Business begins as soon as they have small quantities to ship to customers.
How Is LTL Freight Calculated?
Wondering how to calculate LTL rates? Less than truckload rates are dependent on many factors, as shipments vary greatly from industry to industry and client to client.
- Mode: Customized and additional LTL services like expedited freight include supplementary costs.
- Dimension: Size and weight are the biggest determining factor in less than truckload rates. Oversized and heavy loads will naturally cost more, especially if special permits are required.
- Type: Fragile, perishable, and hazardous freight is more expensive to ship due to its delicate nature and potential risks.
- Destination: The further freight travels, the more it costs.
What Is The LTL Freight Class?
Freight class is a standardized shipping industry pricing classification used to establish uniform parameters for commerce. There are 18 different classes, ranging from 50 to 500.
Freight class helps calculate how much transporting LTL freight will cost. The higher the class, the higher the cost for every hundred pounds shipped. An LTL classification list will take the following into consideration:
- Stow-ability: Most freight is easily transportable over land and sea. However, some cargo is regulated by carrier policies or the government, especially if it weighs more than normal load-bearing capacity or is bulky and difficult to load, secure, and stack. If freight has a low-stability ranking, it means it is a challenging load and carry.
- Density: This is the space the freight occupies in relation to its weight. Density is calculated by dividing the weight of the item in pounds by its volume in cubic feet.
- Handling: Freight that requires special packaging and handling, i.e., goods that need temperature-controlled vans, extra protection due to being hazardous or is awkward to carry, is classified under a higher freight class.
- Liability: This is the probability and risk of freight being damaged, either because it is fragile, perishable, or combustible. Freight with a high liability is assigned a value per round, which is a fraction of the carrier’s liability. When freight is classified according to liability, then density is also measured to determine the price.
How to Reduce LTL Costs?
Less than truckload rates can be reduced by avoiding accessorial charges, which are essential additional services that a carrier performs above standard shipping. There are three different types of additional charges:
- Organizational: This occurs when a carrier has to make additional appointment calls, reweigh a shipment or correct the bill of lading.
- Transportation: Any additional LTL services like liftgate or inside pick and delivery will increase costs.
- Equipment: Fuel surcharges and equipment like forklifts or specialized trailers will also incur additional costs to freight bills.
Re-evaluating package design, minimizing the cubic footprint, and shipping on low-traffic days can help reduce LTL costs to plan ahead and extend delivery lead windows.
Sometimes accessory charges are impossible to avoid, which is why it’s important to understand exactly what charges are being billed so that they can be worked into consumer shipping fees.
Partnering with a reliable 3PL provider can also help negotiate prices to get the best rate and services, especially if they’re a trusted partner and there is an ongoing relationship.
Preparing LTL Shipments
Preparing shipments properly ensures they arrive safely at their destinations without any damages during less than truckload transportation.
Packaging and Labeling
Always place freight in crates or pallets that are correctly labeled. Crates are used for smaller units, whereas palettes accommodate freight of a bigger size. Place heavier packaging at the bottom and stack lighter freight on top. Proper packing that secures the freight ensures goods won’t move or break during transit.
Calculate the height, width, and length after packaging freight and round it off to the next inch. Accurate measuring ensures that the cost of shipping is correctly calculated without adding additional fees due to incorrect measurements and reweighing charges.
A few documents are needed for each shipment, which may vary according to the freight and delivery region. However, all shipments should always contain a bill of lading from the carrier, which serves as the contract of carriage and includes all the relevant details about the shipment.
Important LTL Terminology
Less than truckload transportation has specific jargon, which is important to know when dealing with shipments and 3PLs.
- Bill of Lading (BOL): A detailed list of a ship’s cargo that acts both as a receipt and contract of carriage.
- Expedited shipping: This method fast-tracks the process and ensures freight arrives faster than regular transit times.
- Reweigh and inspection fee: When a carrier suspects a declared shipment’s freight class is inaccurate, they will automatically charge a free to reweigh it.
- Consignee: This is the person or location to whom the shipment is to be delivered.
- Shipper: The person or company sending the goods.
- Fuel Surcharge (FSC): The Energy Information Administration of the U.S. Department of Energy publishes a U.S. National Average Fuel Index every week to accommodate for the fluctuating price of fuel. Freight companies will include an FCS to the cost of moving freight based on cents per mile or line-haul amount.
- Linehaul: Linehaul refers to the transport of goods by any means over land, air, or water between two specified stations.
At Wicker Park Logistics, our cutting-edge technology helps our LTL clients find capacity matching opportunities and reduces empty miles for carriers. Our premium fleet offers a variety of solutions for LTL shipping nationwide. Click here to find out how we can help you reduce your bottom line.