What Is LTL Freight? Pros, Cons & Optimization Strategies
Explore LTL freight, its advantages and challenges, and strategies to optimize your shipping. Dive into the world of less-than-truckload logistics.
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Ever wondered why some online orders arrive faster than you expected while others seem to take forever? It’s all about how items are shipped.
How can you make shipping work for you and your customers?
One smart option to consider is less-than-truckload (LTL) freight shipping. It’s a cost-effective way to send your goods and keep your customers happy.
In less-than-truckload shipping, multiple shippers share the same truck space, offering flexibility and lower costs.
In this guide, we’ll cover what you need to know about LTL shipping, why it might be the right choice for you, and tips to get the most out of it.
- LTL stands for “less-than-truckload,” a shipping method where multiple smaller shipments share space on the same truck, providing a cost-effective option for smaller loads.
- Be proactive about combining smaller shipments into larger hauls and negotiating rates with carriers to minimize expenses. Make sure to accurately define your shipment’s freight class, weight, and dimensions to avoid unexpected charges.
- Not all LTL carriers offer the same services or reliability. Building a good relationship with a trustworthy carrier can include benefits like real-time tracking and specialized handling, which can save you time and money.
- Plan ahead, especially during peak seasons, to secure your spot with your chosen carrier. Open communication lines help make sure your delivery timelines are met.
- Utilize the National Motor Freight Classification (NMFC) system to correctly classify your goods. This can help you avoid extra fees and make sure your shipment is treated appropriately during transit.
- Your shipping practices benefit from regular audits. Stay up to date with industry trends and review your shipping invoices and contracts to find areas for potential savings or improvement.
What is less-than-truckload freight?
Less-than-truckload (LTL) is a shipping method where multiple shippers share space on the same truck to transport smaller shipments. You might not have enough goods to fill an entire truck but still need a reliable and economical way to get your items from point A to point B.
What sets LTL apart is its flexibility.
Let’s say you run a boutique gift shop and need to send out a couple of pallets of specialty candles to a retailer in another state. It wouldn’t make financial sense to rent an entire 18-wheeler for that small shipment.
That’s where LTL comes in. Your candles might share the truck with a local brewery sending kegs to the same region or a craftsperson shipping handmade tables.
And each shipper pays only for the space they use.
Once you’ve contracted with an LTL carrier, they’ll pick up your goods and take them to a local terminal or distribution center. There, they’re sorted and grouped with other shipments heading in the same direction. This way, each truck is optimized for space and fuel efficiency, making it cost-effective and more sustainable.
Difference between LTL and FTL freight
LTL and full-truckload (FTL) are two distinct shipping methods.
LTL shipping is good for when you have a smaller shipment that doesn’t need an entire truck trailer space. Your goods share the ride with other shipments, making it a budget-friendly option.
FTL is the opposite. When you opt for FTL, you’re essentially booking the entire truck for your goods. This method is like hiring a private charter bus — no sharing, no multiple stops. It’s just your truckload shipment from the point of origin to the destination.
What sets these two shipping methods apart?
- Shipment size. When you ship LTL freight, your goods are essentially hitching a ride with other shipments. Conversely, FTL is when you have enough goods to fill an entire truck.
- Cost. LTL is generally cheaper because you only pay for a portion of the trailer space. Full truckload freight might be pricier upfront, but you’re paying for exclusivity and potentially quicker delivery.
- Transit time. LTL usually involves multiple pickups and drop-offs, so it might take longer. With FTL, it’s a straight shot from your loading dock to the destination, often making it quicker. This can be especially important for time-sensitive goods like perishable items.
- Flexibility vs. predictability. LTL gives you more flexibility with shipment sizes but at the cost of less predictable transit times. FTL offers more predictability in timing but needs a larger load to be cost-effective.
- Risk of damage. LTL involves multiple stops, which could pose a higher risk of damage to fragile items. FTL is generally safer because your goods remain undisturbed throughout the journey.
Benefits of LTL freight
LTL freight offers many advantages that might make it the best choice for your business. Here are some to consider:
- Cost savings. LTL shipping can help you save money. You only pay for the portion of the truck that you use. Picture it like renting a storage unit — why pay for a full 10-by-10 space when your items only need a 5-by-5 area? For small businesses or those that ship goods in lower volumes and need competitive rates, LTL is often more cost-effective than booking an entire trailer through FTL shipping.
- Flexibility in shipping options. One size doesn’t fit all in the shipping world. That’s where the versatility of LTL comes in handy. Need a delivery within a specific time window? LTL can do that. Do you require special handling like a liftgate for bulky items? That’s a service option too. From the size and type of your goods to how often you need to send out shipments, LTL freight shipments offer choices tailored to fit diverse business needs.
- Ability to track shipments in real time. Have you ever spent a day reloading the tracking page anxiously waiting for an update on your shipped goods? Many LTL freight services allow you to track your shipment in real time, offering peace of mind for you and your customers. Immediate notifications can keep everyone in the loop if delays occur or once the shipment arrives at its destination.
- Reduced carbon footprint. If you’re conscious about your environmental impact, LTL shipping might align with your values. By sharing truck space with other shippers, fewer trucks are on the road overall. This can lead to less fuel consumption and lower carbon emissions.
Challenges associated with LTL freight
Here are some key issues you may encounter with LTL freight:
- Unpredictability of transit times. While LTL is often cost-effective, its multiple-stop model can lead to fluctuating delivery times. If your business relies on punctual deliveries, these unpredictable schedules could potentially be a bottleneck. This is less than ideal for perishables, medications, and other goods with a time-sensitive delivery date.
- Complexities of freight classification. The devil is in the details when it comes to properly classifying your freight class. An incorrect classification could lead to a higher shipping rate and create issues with the carrier, including disputes over misquoted prices.
- Potential costs of accessories and special services. LTL shipping offers various additional services like liftgate delivery or inside delivery, but these may come at an extra cost. Failing to anticipate accessorial charges can inflate your shipping bill, turning a seemingly affordable option into an expensive ordeal if you have special shipping needs.
- Risk of damage during transit. The journey your goods take in an LTL shipments model involves more handling due to the multiple stops and load adjustments. With each additional touch point, the risk of damage or loss to your items increases.
- Limited capacity during peak seasons. During the high-demand shipping seasons, LTL carriers can fill up quickly, leaving you with fewer options. This limited capacity in the supply chain can result in delays and even higher shipping rates. Book space well in advance and have a contingency plan.
Factors that determine LTL shipping rates
When it comes to LTL shipping, different factors can determine the rates you’ll be charged. From industry tariffs to the weight and dimensions of your shipment, it’s important to understand how these elements can influence your shipping costs.
One of the foundational elements that determine your shipping rates is the National Motor Freight Classification (NMFC). This system classifies goods based on their transportability, including factors like density, stowability, and liability.
The bill of lading that accompanies truckload shipments shows the official freight class. For instance, shipping a pallet of metal bolts, which are dense and easy to stow, would likely be cheaper than shipping a fragile glass sculpture.
Dimensions and weight
The size and weight of your shipment are critical factors in LTL shipping, where space is premium. The larger and heavier your shipment, the more of the truck’s valuable space it will occupy, which typically translates to a higher cost.
For example, shipping 10 pallets of lightweight foam will generally be less expensive than 10 pallets of heavy machinery parts, assuming the dimensions are the same.
The farther your goods have to travel, the higher your shipping cost is likely to be. Long-haul shipments can be particularly expensive, as they often involve multiple carriers or extensive logistics.
For example, shipping a few pallets from New York to California will typically cost more than sending the same load from New York to New Jersey.
Each LTL carrier has its own base rate, which can vary significantly depending on the carrier’s reputation, service quality, and other operational costs.
A carrier known for exceptional service and fast delivery times might charge a premium compared to another service with less stellar reviews.
The most competitive rate doesn’t always equal the best service. For instance, Carrier A might offer a base rate of $100 for a specific route, while Carrier B offers a base rate of $85 for the same route but has a lower service rating.
Accessorial and special services
Additional services like liftgate usage, inside delivery, or residential pickups can incur extra charges, sometimes significantly increasing the overall shipping cost. For example, requiring a liftgate service for heavy items could add an extra $50 to $100 to your shipping quote.
Due to the fluctuating price of fuel, carriers often include a fuel surcharge as a percentage of the base rate.
In other words — when gas costs go up, your LTL freight carrier costs go up.
This surcharge adjusts to changes in fuel prices. For example, if you were quoted a rate of $200 for a shipment and the current fuel surcharge is 10%, you would pay an additional $20 for fuel.
During peak shipping seasons like the holidays, demand surges and carrier capacities can max out, leading to higher shipping rates.
For example, you might usually pay $200 to ship a particular load, but due to high demand during the holiday season, that same shipment could cost you $250 or more.
6 optimization strategies for LTL freight
If you’re using LTL shipping, the goal is to get your stuff where it needs to go without breaking the bank or pulling out your hair. Here are some straightforward tips to make LTL shipping easier and more cost-effective for you.
1. Maximize cost savings
Shipping costs can be a drain on your budget if you’re not careful. But there are ways to cut those costs down.
Consider bundling your smaller shipments into one larger haul. This can help reduce the overall number of shipments you need to make, which generally translates to lower fees. Carriers often give better rates for larger shipments.
If you’re a frequent shipper or you’re moving a lot of items at once, don’t hesitate to negotiate. Carriers are often willing to cut you a deal if they know they’ll get steady business from you.
Extra shipping fees can surprise you if you’re not prepared. The best way to avoid them is to be clear about what you’re shipping. Know its freight class, weight, and dimensions. The more accurate you are, the less likely you’ll get hit with unexpected charges.
It’s easy to tick off the box for extra services like “inside delivery,” “liftgate,” or “residential pickup,” but those services usually come with a price tag. Think about whether you need these additional services or if you can manage without them.
2. Leverage LTL shipping services effectively
If you’re dipping your toes into LTL shipping, remember that not all carriers are created equal. Building a good relationship with a dependable carrier can be like finding a trusty mechanic — it can save you headaches down the line.
First off, get to know your carrier’s “extras.”
Many offer value-added services that might be what you need. For example, real-time tracking lets you keep tabs on your shipment so you’re not in the dark wondering where your products are. While specialized handling could mean the difference between your fragile items arriving intact or in pieces.
Find out what your carrier offers and take advantage of what makes sense for your customers and business.
Now, let’s talk about tech. Sometimes it feels like there’s an app for everything, and shipping is no exception.
Transportation management systems (TMS) help you plan, execute, and monitor shipments all in one place. They can save you time and, more importantly, money. So, it’s worth investing in a TMS that suits your needs.
3. Guarantee timely deliveries
Nobody likes waiting, especially when it comes to important shipments. So, how do you make sure your goods get where they need to be, when they need to be there?
It takes a little planning and a lot of communication.
As we mentioned earlier, if you know the holiday rush or some other busy season is coming up, don’t wait until the last minute to schedule your shipments.
Carriers get booked up quickly, and you don’t want to be left in the lurch. Aim to plan your shipping needs well in advance to avoid the dreaded “Sorry, we're fully booked” message.
Keep the lines open with your carrier. Make sure you’re clear about when you need your shipment to arrive. The more they know, the better they can accommodate you.
4. Classify freight accurately
You have your shipment all set to go, but did you double-check the freight class? Get this wrong, and you could end up with extra fees, slower deliveries, or both.
The NMFC system is your go-to guide for classifying your freight. It’s a set of standards that helps everyone speak the same shipping language.
The NMFC categorizes goods based on factors like weight, dimensions, density, and even how easily something could be damaged. The idea is to make the shipping process smoother and more predictable for everyone involved.
Why is this important for you? The freight class determines how much you’ll pay. If you classify your goods incorrectly, you could end up getting hit with reclassification fees or even reweigh fees if the weight isn’t accurate.
Nobody likes unexpected costs.
Take a minute to look up your item in the NMFC guide. Make sure you consider all the relevant factors. Some carriers even have customer service that can help you get the classification right, so don’t hesitate to ask for help.
And remember, proper classification isn’t just about dodging extra fees. It also helps carriers handle your goods the right way.
5. Regularly review and audit shipping practices
You wouldn’t run your business without occasionally checking the books, right?
The same goes for your shipping practices.
Audits of your LTL shipping methods should be a regular occurrence. You might discover that you’re paying for services you don’t need, or maybe you could be saving money with a different carrier.
Either way, these audits help you identify areas where you might be losing money or efficiency.
Keeping tabs on the shipping industry is another smart move. Rates change. New services emerge. Fuel prices go up and down. All of these can impact your bottom line.
If you’re on top of these trends, you can adjust your shipping strategies and maybe snag some savings or efficiencies.
Set calendar reminders to review your shipping bills and contracts every couple of months. Take note of any changes in the rates you’re paying and the services you’re using. It’s also a good idea to see what’s new in the industry. Maybe there’s a new tech solution or a different type of service that could work better for your needs.
Routine reviews and audits help keep you in the driver’s seat when it comes to shipping costs and strategies. So, make it a regular habit and stay ahead of the game.
6. Consolidate shipments
Imagine you’re going grocery shopping. You wouldn’t make a separate trip for each item on your list, would you? You’d wait to have a full list and then knock it all out at once.
The same logic applies to shipping. Instead of sending out five small shipments, why not bundle them into one big one?
Consolidating shipments can help save you money. You’ll usually pay less overall for one larger shipment than for multiple smaller ones. That’s because you’re maximizing the use of truck space. In the shipping world, space is money, and the more efficiently you can use it, the better.
There’s also a reduced risk of stuff getting damaged. Each time a shipment is handled — loaded onto a truck, shifted around, etc. — there’s a chance something might get broken or misplaced.
By reducing the number of times your goods are handled, you also reduce the risk of something going wrong. Fewer shipments mean fewer opportunities for mishaps.
And don’t forget, fewer trips mean less fuel used, and that’s good for the planet.
Embrace LTL shipping with the right tools
LTL shipping is all about smart choices, whether it’s bundling shipments, building solid relationships with carriers, or keeping an eye on shipping practices.
But how do you take these best practices and put them into action? By using the right tools.
And when it comes to streamlining your LTL shipping, Circuit for Teams can help.
Imagine slashing your delivery costs by 20%. Picture optimizing your routes so well that they practically plan themselves. Want your drivers and dispatchers to be on the same page 24/7? Circuit’s got you covered.
With features like intelligent route optimization, you can make sure you’re using your vehicles as efficiently as possible, fitting with the LTL shipping strategies we discussed.
Our software doesn’t stop at planning. Drivers love the easy-to-follow app that not only saves them time but also fuel — a big deal when you’re watching those LTL shipping costs. And when your deliveries are en route, Circuit helps you keep your customers in the loop with automatic notifications, reducing the chances of failed deliveries.
Try it free for 14 days, and join the 600+ businesses that have signed up in the last 30 days.