Freight shipping is one of the biggest industries in the world. Unless you are using products bought in your immediate area, then freight shipping has probably touched your life, either as a consumer or a business. In the world of shipping and logistics there are two primary terms you will hear repeatedly – LTL and FTL- Less Than Truck Load and Full Truck Load.
For the purposes of this post we are discussing freight, types of freight shipping, costs, a few hidden fees you might not know about and also benefits of the different types of shipping.
What exactly is freight? Freight refers to larger quantities of goods that exceed the normal parcel size, or weight, handled by common carriers. Goods are ordered into boxes, loaded on pallets, and moved using various modes of transportation. By contrast, parcels are small, lightweight individual shipments that can be handled by common carriers like the UPS, FedEx, Canada Post or US Parcel Service.
Truckload freight includes all freight shipments that occupy a trailer. These are large volume or weight shipments from point to point. Weight limits depend on the weight of the vehicle and local laws, but typically are around 34,000 – 45,000 lbs. in the US. The most typical truckload shipments are transported via dry van, flatbed, and refrigerated trailers.
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The terms themselves are relatively self-explanatory.
Less Than Truck Load is a freight term meaning the shipment will not take up the entire space inside the truck, leaving some portion of the truck space unused.
Full Truck Load means the opposite. The truck space is maximized by the shipment. All the space is used efficiently.
Beyond those two mainstays there are also couriers, UPS and other providers mostly used for ecommerce shipping and shipping small parcels.
There are clear benefits to both major types of over the road shipping.
First, let’s discuss LTL.
The pros and cons of Less Than Truck Load have been written about quite frequently. But this post strives to be a comprehensive, current resource on LTL and FTL freight shipping.
Basically, LTL is a carrier mode which bridges the gap between Full Truck Load (or FTL, such as semi trucks), and the last-mile parcel delivery carriers like UPS, FedEx, DHL, and your postal service. Typically LTL shipments serve a shorter range than long-haul semi truck lines, and are also commonly the final shipping step between distribution centers and retail locations.
The Facts About LTL
LTL is a necessity for many manufacturers and retailers. In fact a majority of shipments that go out are LTL. The sole aim of LTL shipping is to provide an optimal balance between speed, efficiency, and cost for mid-sized shipments.
What are the Benefits of LTL?
Quite simply LTL can save you money. How? Well, because many consignments of multiple users can be shipped in one vehicle in Less Than Truck Load shipping, freight charges can be shared for similar destinations. Full Truck Load is exclusive, meaning one shipment takes up the entire truck and it travels from A to B directly.
If you have a large vehicle and your consignments are small, you can club these with others. The type of shipment, fragility, chemical reactivity etc., must be considered while bundling up the different consignments.
What Challenges Can You Expect with LTL?
Transit time for LTL takes longer than Full Truck Load. Less Than Truck Load carries multiple shipments and the loading and unloading of each shipment requires time. If time is an issue LTL can be challenging because of the number of variables involved in Less Than Truck Load. Your delivery window can be missed. However, if savings are significant enough, extra time taken for delivery might be a trade off worth making.
LTL freight is more of a hub and spoke system. There might be one or two skids picked up and often the price differential is worth it but you can’t discard potential for damage. Another factor you need to consider is service area of the shipping company. Because there are multiple stops and the truck space is being shared there’s also more handling involved and potential for damage to product. Less Than Truck Load mode is more vulnerable to theft as well. This is due to multiple handling and multiple stops for loading and unloading.
However, as already mentioned, with LTL you can get a lot of cost savings, especially when you’re shipping less than six skids. However, if you’re shipping more than that, it makes more sense to go with a different arrangement with the carrier, maybe that’s a full truckload.
While businesses might want to ship via LTL in order to save money they need to also keep in mind the service area. For instance, some carriers don’t go to Western Canada or even Northern Ontario areas. Other factors to ask about include the equipment type. Service via a flatbed truck or a straight truck can change the delivery process and also complicate unloading.
Tavis Valentine spent 8 years as the Director of Sales and Marketing for Kingsway Transport, one of the leading carriers in Canada. In 2013 Tavis started his own firm (Valentine International), where he offers his expertise and knowledge to businesses with logistical and supply chain challenge. Valentine advises that knowing your own freight characteristics, needs and limitations is important.
Multimodal shipments are as they sound, those that involve multiple different types of freight providers. That can come into play where geographic restrictions are a factor. So, if a company providing LTL shipping can only deliver part of the distance and the remainder has to go by train. That’s multi-modal shipping.
Questions you need to ask yourself:
Beyond the basics of time and distance and cost there are often other factors and variables to consider when choosing how to ship freight and which company to trust the job to, according to Valentine.
What is the corporate culture and mandate? How important is the environmental footprint to the company shipping? While it might be slower to ship by rail, if the freight delivery would take 200 truckloads then the environmental footprint would be lower using the train.
Shipper’s responsibilities with LTL
Well before a shipment is loaded onto a truck and sent to its destination, it must be prepared for shipment. That’s the shipper’s job. Failure to consider best practices can result in bottlenecks, which could cost your business money. Measure the length, width and height of your shipment. Accurately measurements are helpful to carriers and this allows for a more accurate freight quote.
LTL freight dimensions are used to maximize capacity. It is one of the most important factors used to determine how much freight will fit on the truck.
Freight is often handled many times with LTL shipping. Properly packaged goods can be protected from bumps, drops and the adjacent freight along the way. Shippers load their goods onto pallets or crates and heavier items are placed on the bottom. Heavier items go on the bottom of the pallets or crates and lighter on the top. Properly packaged goods are protected goods.
Proper labels need to go on the shipment so handlers know how to treat the shipment. If it can’t be stacked label with: “Do Not Stack,” “Fragile.” Accurate labels can help your shipment reach its destination in tact.
LTL shippers should also have documentation and dimensions in hand once their shipments are properly packaged and labeled for the carrier.
The vast majority of manufacturers use a combination of delivery modes, and are constantly refining and auditing their shipping logistics. Virtually all LTL carriers charge fees similarly to FTL carriers; the best rates will be offered to shipments of the highest density (weight per volume) and lowest susceptibility to damage and theft.
The benefits of Full Truckload are also clear. When a full truckload is being shipped to one single destination the timing can be narrowed down with a higher degree of accuracy. Shipping time doesn’t take as long and there is lower likelihood of damage as there’s less handling of the products being shipped. The cost of a Full Truckload shipment can be higher than LTL.
Other Factors to Consider:
If your freight is delicate, large in size and you need a quick delivery then FTL is your most suitable method of transit. If your freight is limited or pocket sized, robust and you are not bound by time limits then LTL makes more sense as the mode of transit.
A number of accessory services are available from LTL carriers, which are not typically offered by FTL carriers. For instance, optional services can include: lift-gate service at pickup or delivery; residential (also known as “non-commercial”); service at pickup or delivery, inside delivery, notification prior to delivery, freeze protection, and others.
Parcel pricing is determined by dimensional weight or the actual weight. Typically parcels are picked up daily. FedEx and UPS limit parcel shipments to 150 lbs. and 165″ in length plus girth. Anything larger becomes a freight shipment.
We’ve already established that the main advantage to using an LTL carrier is cost. Freight that shares a truck with other shipments can be transported for a fraction of the cost of hiring an entire truck and trailer for FTL. But how is cost calculated and what factors impact that fee?
Freight pricing is determined by a number of factors including route distance, fuel costs, density, weight, freight class, special handling requirements, timeframe, and lane balances as well as numerous other factors. Shipments are arranged with a carrier. Arrangements include how the freight is to be loaded, how long it will take in transport, if a lift gate is needed, and other necessary pieces of information to facilitate the delivery.
Since 2012 billing has shifted to dimensional weight, also referred to as cube weight measurements, to increase efficiency of loading LTL trucks. Price per 100-weight is common in the LTL world. Some will charge a pallet weight if discussed.
With Full Truckload charges tend to be a per mile rate.
Is Freight a key aspect of your Logistics Management? TQS delivers logistics plans that fit the needs of businesses just like yours.
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A Few Basics Things You Need to Consider:
Travel Distance – The longer the distance, the higher the cost.
Freight Class – The higher the freight class, the higher the price per pound.
Freight Density – The higher the density, the lower the price per pound.
Travel Speed – LTL carriers offer time definite and guaranteed services and assess a premium charge for such services.
Lane Balances – LTL carriers do not necessarily operate trucks that are fully loaded in all directions.
Fuel Costs – The higher the cost of fuel, the higher the cost. This can show up as a fuel surcharge.
Shipment Weight – Price decreases to a certain point, for single pallet, but will begin to increase as you near load limits.
Timeframe – An expedited or express service will increase prices.
Special Requests – Does the shipment require a lift gate, residential delivery, or refrigeration? Is it hazardous material requiring special handling? These will all add extra fees and charges.
These are some of the factors that go into pricing, but individual carriers often have their own methods and formulas for determining pricing.
Tips From An Expert:
Other things to Consider when choosing a carrier are: Technology; Service Quality and Damage Free Records.
Valentine notes that technological capabilities are a factor for some. Some companies offer extras such as track and trace. That allows the shipper to be able to follow the shipment and see where it is at certain points. Not all have this and some companies have been late to adopt technology. But if that’s important to you know that this is often an extra.
Full Truckload pricing can fluctuate a little more, especially as the Canadian dollar falls. When the Canadian dollar is low the cost to ship to the US increases. LTL tends to be stable and pricing can be contracted for a year.
All carriers should have damage free records. You can ask to see proof of damage free records because all carriers should be keeping accurate records of damage claims made.
“If you are only looking at cost there’s something you are compromising on,” says Valentine.
Look beyond the rate sheet. It doesn’t always tell the full story, according to Valentine. Lift gate fees can be added if you don’t have access to a dock for instance. Look at the full cost.
In trucking, another way to save or make money and maximize your efficiency is doing backhaul. Backhaul is hauling cargo back from point B to the point of origin. Driving a truck back empty can cost almost as much as it would cost to run fully loaded. This helps to pay for the operating expenses for the return trip for the trucking company or trucker. Backhauls are an important part of the logistics industry because they provide a valuable service. Carriers typically call on freight brokers to provide loads back home, backhauls, in an effort to save time and money. Typically freight brokers negotiate a reduced per mile freight rate which allows brokers to earn a profit for the service. One of the best places to look for a backhaul is on a load board, or an online site/forum matching freight for backhaul with carriers.
A Shipping Challenge We Resolved
One of our clients at TQS is a great example of a shipping challenge turned success story. The client was shipping large bumpers for the trucks that were actually transporting the product. Since they were going LTL and they product was fragile, they were unfortunately also getting damaged in handling.
So what was the solution? Well, we advised them to hold their orders for a week and then every week there would be a standing appointment of a full trailer that was going to arrive and pick up the product and ship it out to the end destination. Now there was a little bit of compromise on the leadtime, but this was less important than making sure their product arrived there not damaged.
HOW TO GET STARTED WITH LTL or FTL SHIPPING
If LTL or FTL sounds like it may benefit you, the best way to get started is to consult with a shipping logistics coordinator like TQS Logistics.
Learning the complexities of shipping modes, disparate carriers, tariffs, intermodal transportation, and international shipping could be a full-time job. We work closely with you to achieve the most timely and cost-effective shipping solutions, without the headache. During your initial consultation with us, we will help you gather critical information for the optimization of your shipment. Click here to get started.