Introduction: What is LTL Freight Shipping?
If you’ve recently started an online eCommerce, or other physical retail store business, you may be wondering what LTL freight shipping even is about. Well, let’s go over some of the basics of LTL freight shipping before delving deeper into the topic itself.
LTL (less-than-truckload) freight shipping often involves multiple sets of goods or merchandise being transported on one truck – which also doesn’t require a full truckload. LTL shipments are usually arranged on pallets and range in weights from 150 Ibs to 1,000 Ibs.
Also, as an industry standard, if you’re considering special services included with your shipment – those do cost an additional fee usually known as an accessorial fee. The upside is that these extra service handling requests include liftgate, picking up and delivering, inside picking up and delivering (even with residential delivery), and reweighing and reclassifying.
With a couple of basic information aside, let’s take a look at how the industry calculates the cost of shipments.
How the Freight Industry Calculates Cost
As previously mentioned, adding additional services known as accessorial fees is one cost every business should be aware of.
But how each freight and shipment company charges customers differs in the industry. Here are some ways that freight and logistic businesses charge their customers:
1) Location of Shipment Starting Point & Destination
When using LTL services, consider the mileage that will be traveled from the starting point to the desired destination. This knowledge will be key to keeping costs low for your business’ logistics. It’s also important to factor in any points of transfer your goods will need to make during the transportation journey.
It should go without saying that the longer the distance, the greater the payment will be needed from the customer side to get that shipment delivered. Also, you may need to consider any other potential delays that could set your shipment back a day or so.
2) Total Weight of Load(s)
With the costs of transportation steadily increasing, keeping track of the LTL shipping rates is also another factor to consider. Keep in mind that rates are usually priced at a “rate per hundred,” but could differ depending on which service you decide to go with.
Generally speaking, if the service your business goes with uses rates per hundred as a metric to calculate costs, the rule of them applies that the more a load weighs, the less you will have to pay (per hundred pounds). Also, rates are influenced mainly by the weight of the shipment or even the amount of pallets that will be shipped out.
3) Density of Load(s)
Essentially, the density of load(s) has a higher space-to-weight ratio. However, this means that even if this option appears to have a lighter overall weight metric, this option usually factors in the price of the missing-space opportunity for other loads (s) to be a part of the shipment.
For your business, this could translate to a higher total price needing to be paid. If your business decides to go down this route, you may want to consider your product itself. The denser your product is, the cheaper this option can be for your business’ bottom line – which is also assuming your dense product can fit on a standard 4×4 pallets? and can also be piled up.
4) Freight Class
When considering using LTL freight services, your business should also consider the different weights of your product(s) being shipped.
For instance, as previously mentioned in “Density of Load(s),” the denser your product(s) are for shipment, the lower the price will be for your shipment costs. However, any fragile and lightweight product(s) will be more expensive since fragile cargo is usually more difficult to handle when transporting.
Verdict on Calculations on Cost for Freight Industry
We hope that this gave you a little more insight into the major costs a business should consider when trying to get a general idea of the cost of service. Now that we have an idea of how the industry calculates costs on shipments, let’s see the advantages and disadvantages of LTL freight shipping.
Advantages & Disadvantages of LTL Freight Shipping
With LTL freight shipping, there are clear advantages and disadvantages to using it – when compared to full truckload (FTL) or airplane shipping. With that stated, let’s get into the pros and cons of using LTL freight shipping.
Advantages of LTL Freight Shipping
- Optimized for Your Small Businesses: For small businesses, you can focus on running your operations rather than stressing and worrying about the logistics behind shipping your products. Since most smaller businesses ship less product, to begin with, it makes sense to utilize the generally lower costs of LTL freight shipping compared to other forms of transportation like shipping via FTL shipping or airplane.
- Save on Your Shipping Costs: Your business is only going to be charged for the space that is used up in LTL freight shipping since your shipment only takes up half the space of an entire truckload. Economically speaking, this means your freight cost will be a fraction of what it would be if you were shipping via FTL or airplane.
- An Easier Distribution: It’s very possible that distribution can be easier on your smaller businesses if you take advantage of LTL. For example, if you’re a retailer that needs to ship out to countless stores throughout the U.S. Instead of shipping all of your goods and products to a warehouse, LTL makes it possible to ship directly to each store in a more convenient manner.
Disadvantages of LTL Freight Shipping
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- Not as Fast as FTL or Airplane: With LTL, it’s possible that it can take longer, or even face possible delays, along the route. That’s because LTL provides more opportunity for stopping at various other locations since each truck can hypothetically carry a variety of different loads from multiple different businesses. So factoring extra time of your shipments, wherever possible and feasible, can save your business down the road if there are any chances of delays in the pipeline.
- Damaged Goods and Products: Unlike FTL or airplane shipping, which has very minimal stops between the shipping point and desired destination – LTL can bring about the potential for damage being sustained to your products or goods. It all depends on the level of expertise and experience of each particular LTL freight service provider. But still, consider the reality that LTL can have multiple points of trade of your products during the transportation journey.
- Not All Carriers Provide LTL: Due to prioritization of business, not all shipping carriers will provide LTL freight servicing as a valid option. It’s very important to keep in mind that your business should take the research phase of LTL very seriously since it can save you years, or even decades-worth, of headaches down the road.
Conclusion: LTL can Help Your Business
Even as we all continue to maneuver through these newfound terrains throughout all industries, LTL freight servicing can certainly help your business find the most feasible option for your transportation needs.
At Elder Logistics, we can help you develop an action plan for safely transporting your goods if you’re looking to switch freight providers. Get in touch with one of our customer service representatives here. If you have any questions, please feel free to contact any of our management team members here, and we will be more than happy to assist you!
References:
“2022 LTL Industry Trends.” GlobalTranz, GlobalTranz, 18 Feb. 2022, https://www.globaltranz.com/ltl-industry-trends-and-tips-for-2022/.
Clifford, Jill. “How Does Less-than-Truckload Shipping Work?” Managed Transportation Solutions, FreightPlus / Aborn & Company, 25 Jan. 2020, https://www.freightplus.io/how-does-less-than-truckload-shipping-work.
“The Pros and Cons of LTL Shipping.” Direct Freight, 2 Dec. 2019, https://www.directfreight.com/blog/the-pros-and-cons-of-ltl-shipping/.
West, Greg. “What Is LTL Freight & How Can It Work for You?” C.H. Robinson Blog, C.H. Robinson Worldwide, Inc., 18 Nov. 2021, https://www.chrobinson.com/blog/what-is-ltl-freight-how-can-it-work-for-you/#:~:text=Less%20than%20truckload%20(LTL)%20freight,being%20transported%20on%20one%20truck.
Wilson, Sean. “What Is LTL Freight and How Can It Save You Money?” Shipwell, Shipwell, 28 Feb. 2022, https://shipwell.com/industry-insights/what-is-ltl-freight-and-how-can-it-save-you-money/.