Your Guide to LTL Freight

The basics of what LTL freight is

Less than truckload (LTL) freight is usually classified as shipments that weigh between 150 and 20,000 lbs. or when freight won’t fill an entire trailer. Simplified, LTL is usually perfect if your shipment is too big for parcel, but would waste space taking up an entire truckload. With LTL you only pay for space in the truck your freight is taking up and this is why you often can save significantly on the cost of shipping your freight.

In the past, the majority of LTL freight was predominantly in the industrial and manufacturing industry, but recently other industries — especially eCommerce and retail — have realized the benefits of utilizing this mode.

“Retail has become a bigger percentage [of LTL shipping] in the last five years. A lot of retail was truckload freight. . . now it’s become LTL” said Satish Jindel, president of a transportation research firm. This is because shippers are realizing that LTL can be a cost-efficient and flexible option that can meet their needs.

The benefits of using LTL Freight

LTL has become a more attractive option recently in part because providers have made major technology improvements to become more efficient, safer, and better equipped to handle shipper’s and customer’s needs. A large number of LTL providers have become problem solvers and utilize technology that allows for more flexibility and efficiency when shippers work with them.

For shippers, choosing LTL can lead to significant financial savings, reduce your carbon footprint, and achieve faster door-to-door delivery. Another benefit of LTL is the multiple service and capability options LTL carriers include like expedited services, lift gates, inside pickup and delivery, hazmat, volume LTL, and consolidation.

An example of LTL carriers making changes to improve service include A. Duie Pyle. Randy Swart, chief operating officer at A. Duie Pyle explained their offerings to meet the demands for smaller shippers in a Inbound Logistics article: “We have added a substantial number of smaller trucks to our fleet with lift gates to handle the increase in smaller shipments to customers without docks and in more congested areas. As a regional carrier, our freight does not go through any breakbulk facilities; it goes directly from the pickup service center to the delivery center, which reduces time and handlings. It also allows us to select the proper vehicle for the shipment size and delivery area because of our service density in the region.”

Getting started shipping LTL

When it comes down to booking a shipment with a software service, like a TMS, you’ll have multiple rates to choose between. The two main variables to look at when comparing rates and carriers are time and money.

  1. Transit time. How fast will your shipment get there is usually a key part of picking a carrier. Regional and multi-regional carriers will often have much better transit times and prices for your regional shipments. National LTL carriers will have better rates for long-haul lanes. Understanding and having multiple carrier relationships with both regional and national carriers will give you options and the ability to easily compare geographical differences in cost and time.
  2. Pricing Factors. Of course, price is always a major factor when comparing and choosing a carrier. Many shippers don’t utilize LTL enough because pricing and contracts can involve a ton of nuances. But while LTL can seem more complex than other mode options, you can ensure you get better pricing by understanding these key factors:
    • Base rates & percentage discounts: When establishing LTL carrier relationships, the carrier will provide you base rates and then discounts off of those rates. Each carrier’s base rates and discounts vary so you’ll ultimately want to compare what is your net price. For instance, Carrier A could give you a 70% discount but could be more expensive than Carrier B who gave you a 50% discount, because Carrier A’s base rates are more. By compare the net price, you’ll have a better picture of what you’ll actually be paying.
    • Absolute Minimum Charges (AMC): The AMC is the minimum cost a carrier will charge and is often not met until the shipment exceeds a certain weight – usually 250 lbs. This plays a part of freight classifications which we will cover next. Overall remember AMC is why shipping LTL is usually for freight that weighs more than 250lbs.
    • Freight class: There are 18 different freight classes ranging from 50 to 500. The 18 classes are based on the density, value, stowability, handling and liability of the product. The classes are determined by the National Motor Freight Classification (NMFC). As the class increases from 50 to 500, the cost per hundred weight also increases to accommodate the more challenging freight products. Class 50 is a low class and describes very dense freight (heavy and compact) that is difficult to damage and easy to handle. A pallet of bricks for example would be class 50. Lower classes have lower freight rates. Higher classes represent lighter and less dense freight that take up more space and is more likely to be damaged. Examples of class 500 would be ping-pong balls. Higher classes will have higher freight rates. Always avoid guessing your freight class. If you guess or estimate incorrectly the shipment will have a steep reclassification charge added when it’s reweighed by the carrier.
    • FAK: FAK (Freight all Kinds) is a pricing mechanism that groups multiple classes of freight into a single class. Savvy shippers negotiate FAK provisions that allow shippers to ship their products that has multiple classes all under one freight classification. While FAK can be misidentified as just a means to cut costs, it is especially helpful for easier rating, and reduces re-classification and billing errors for companies that ship a wide range of products.
    • Accessorials: One of the reasons many eCommerce shippers are turning to LTL are the additional services LTL carriers provide. These include indoor delivery, residential delivery, lift gates, and more. But, there can be a catch, and that’s accessorial fees for those services. Ensure your TMS allows you to select any and all accessorials your shipment needs and then compare your rates. If you don’t add accessorials to your BOL, you could select a carrier and then later be hit with costs you weren’t prepared for. By comparing carriers with accessorials selected you’ll be able to accurately compare rates and won’t be later charged more than you were expecting.

Have a mix of regional and national LTL carrier relationships

Another factor of pricing is the distance the shipment is traveling. Regional carriers offer very competitive rates with faster delivery times within their specialized lanes. And if you are consistently shipping volume in a specific lane you can probably negotiate even better rates.

By establishing and having multiple carrier relationships with both regional and national carriers will give you more options and the ability to compare.

For reference here are the 2018 Quest for Quality Winners Regional LTL Carriers by Logistics Management:

For national and multi-regional carriers the 2018 Quest for Quality Winners were:

These are just a few of the carriers you can work with to find the best rates and transit times.


Double-check your documentation

With your shipment it is really important to get your bill of lading (BOL) information completely accurate. A BOL is legally binding document and serves as a receipt and contract between the shipper and the carrier. Provide the BOL to the carrier and attach a second copy to the freight with these details correctly filled out:

  • Full origin and destination addresses
  • Name and contact information of both the shipper and recipient
  • Product description of goods
  • Total weight and dimensions of the shipment (when measuring round up to nearest inch)
  • Total number of items
  • Packaging type (pallets, crates, drums, and/or cartons)
  • Freight class
  • Any accessorials and services (this will prevent any surprise fees)
  • Special handling instructions
  • If applicable hazmat indicated (you can learn more about shipping hazmat with the transportation.gov guide)

With Propel’s software solution your BOL is automatically created when you set up your shipment. By creating and storing the BOL with the shipment details you can always access it again within our system at any time. This ensures you aren’t missing any required information and enhances your business efficiencies by keeping your documents online and always easy to find. No more need for filing cabinets!


In conclusion

Although LTL shipping is especially advantageous for small businesses looking for savings. Recent trends of Amazon and other big companies have shown that there is room for more companies to take advantage of LTL for eCommerce, retail, and home delivery shipments. When incorporated effectively into a shipping strategy, LTL can help you meet your customer’s expectations and achieve your business goals for shipping.


Taking the Guesswork out of LTL Shipping

 

What is LTL Shipping?

Your company has lots of shipping costs. Freight shipping has been the primary way of shipping things since shipping existed. But what happens when your company doesn’t need to ship a full truckload of product. In the past, parcel shipping would have been your only option. However, parcel shipping is neither convenient nor cost effective. When your company needs a middle of the road option, LTL is the way to go.

LTL stands for “Less than Truckload.” It is the middle option for shipping by weight, between 150-15,000 pounds. The function of LTL is to ship products that don’t fill a full truckload. Most LTL shipments are between 1 pallet and 7 pallets. By only renting part of a truckload, you can potentially save a lot of money. The problem with LTL is the guesswork involved in determining the final cost. LTL can easily become a spending hole without the proper knowledge. In order to use LTL correctly, you must understand the pros and cons of using this method of shipping.

Pros and Cons of LTL Shipping

Obviously one of the biggest pros is cost savings. Because you are only renting part of a truck instead of a full truck, costs can be cheaper. Factors that will hinder your LTL savings would be:

  • Distance: the longer the distance the more expensive the shipment
  • Time-sensitive Products: expedited LTL shipping costs a premium
  • Type of Shipment: certain materials and weights will cost a premium
  • Extra fees: accessorial fees are common, as well as unloading and tracking fees. LTL shippers are notorious for nickel and diming customers.

LTL also has an advantage over parcel shipping in the area of security. Because the pallet you are shipping has been pre-packaged together, it has a much better chance of reaching its final destination intact versus shipping multiple parcel packages.  The flip side of this argument says that the shipment is less secure than a full truckload shipment because it is grouped together with other companies’ shipments. More stops along the way increases risk of damage or lost shipments. This fact is one to keep in mind when using LTL.

Another pro of LTL shipping is that it allows your company to expand its sales reach. A lot of times, LTL shipping companies are much more flexible in delivery area. This allows your company to expand its service area without much initial risk. And you don’t have to open a new distribution center. By finding a LTL carrier that has available space on demand, you can test out new markets without investing to much startup money.

How do I leverage it for my company?

LTL shipping costs can be tricky to nail down. Because there are no direct apples to apples comparisons to full truckload shipping, some companies are unable to understand whether LTL is saving or costing them money. One of the easiest ways to gain the business intelligence necessary to sort through this problem is by using a freight management system. Our freight and shipping management tools give you control to compare shipping costs between LTL and Truckload. Our quick rate module gives you the best estimate possible for your LTL shipping, including accessorial charges, equipment, and service fees.

LTL can be just one more tool in your toolbelt to save your company substantial money.

 

Keys to Your Shipper of Choice Strategy

Within the supply chain, timely shipping heavily influence the success of any business. But at the beginning of 2018, according to DAT, only one truck was available for every 12 loads that needed to be moved (the worst ratio DAT recorded since 2005). Tight capacity is a well-known issue for shippers recently. Carriers have their choice on who, what, when and where they will deliver now.

There are many reasons for the decline of truckers and the ability to retain them — and no simple solutions to the dilemma. Competing for the best freight rates, building relationships with LTL carriers and becoming efficient with automation software like a TMS takes careful planning and thought, but the extra time and effort is well worth the long-term benefits. And while the capacity problem will continue be an issue in 2019, there are other strategies to adjusting to the current industry situation and becoming a shipper of choice.

📑 Have an efficient plan

One important area to start with is identifying and fixing inefficiencies and time-wasters for drivers. Starting with drivers is key to building better relationships with carriers. Because the Hours of Service Rule (13.5 hours max) includes dock and unloading time, not just driving time, look for ways to smooth the delivery and loading process. Time spent at the dock or gate because of internal hangups influence a driver’s time capacity. While traffic and other delays can’t be planned, having a flexible pick up or delivery window allows carriers to plan better routes and optimize loads. By helping drivers maximize their time and treating them well at your facility, carriers are more likely to see your company as a reliable partner.

Bob Costello, an economist with the American Trucking Associations trade group was recently quoted saying “If shippers processed cargo more quickly, they could free up freight capacity as much as 20 percent.” If you have the resources and space, drop trailers could be a great way to speed up a driver’s time at your facility and processing loads for carriers more quickly. Bloomberg reported on Nestle improving their drop-and-hook operations by putting radio transmitters on trailers so they could be located quickly and also working on improving signage.  This helped cut loading and unloading time by 18 percent.

“If shippers processed cargo more quickly, they could free up freight capacity as much as 20 percent.”

☕ Enhance the driver’s experience

Make your shipping experience as smooth as possible for drivers. Provide accurate location information — bonus points for maps and extra instructions if the unloading/loading point is complicated. Drivers should know what to expect before they arrive — where they should go, what the procedure is, and any other facility information. If drivers do have to wait at your facility, have a plan for them by providing access to a place to sit, restrooms and even food options as simple as coffee and a vending machine. Being consistent with procedures is important. Building loyalty with carriers means sharing information, especially any updates. Just like customers, treat drivers with respect and care. “Greet [drivers] with a simple ‘good morning’. If the load is not ready, direct the driver to the restroom and break area,” said Jerry Hatchett, a fleet owner. “I told a large shipper if they wanted to make a good impression on the drivers, then build showers and break rooms and hold an appreciation day for drivers once a month.” Investing time into asking drivers and carriers for feedback can also give you valuable information of what can be improved or what should stay the same.

More than ever it is important to set your supply chain management plans for success by becoming a shipper of choice for carriers.

Tis The (Very Busy) Season: Tips to Prepare for The Holidays  

The month of November not only signals shorter days, falling leaves, and an influx of all things pumpkin, but it is also an important time of year as retailers and consumers alike gear up for the flurry of the holiday season.

With both in-store and online sales numbers expected to spike again in the 2018 Holiday season, the result will also be more logistics competition, tighter carrier availability and on-time delivery pressure. Deloitte is forecasting a 5% increase in retail sales this year from last season and AAA says this travel season will make for incredibly busy roads, with 54 million Americans traveling.

Here are some tips we recommend to help prepare and plan for the busiest time of the year.

Knowledge is power.

It is easy to be focus on preparing for the onslaught of holiday work that you miss taking in what has happened throughout the year. While Thanksgiving & Christmas are the peak time of the year for producers, shippers, and retailers, your company and team have been practicing on a smaller scale during other busy periods. Look at other busy times this year and how the weeks around them operated. What went right or wrong? What did you need to immediately adjust or what did your team do well? Maybe you have excellent customer service and were able to resolve questions quickly and satisfactorily. Did shipping rates increase unexpectedly? By looking at and evaluating the past few holidays and years, you can have a better idea going forward of what you’ll need to reinforce or fix in advance of Christmas orders.

Where is everyone?

Another tip is preparing internally for the holiday season. With more traveling days, vacations, Christmas parties, and other functions, your team will most likely have different schedules throughout the next few months. It can be a juggling act to match work productivity with team member schedules. The key here is to communicate and plan with your team beforehand. Know which dates staff members will not be available and know your company’s holiday policy for vacation time. Planning around those dates or prepare for absences in other ways. The point is not to restrict employees with taking time off, but to prepare for when they do. Offering incentives to hold off on holiday vacations in exchange for longer breaks during slower times of the year can be effective ways to help manage staffing needs during the winter season.

Prepare for the worst by preparing the best.

Of course anticipating for missed pickups or higher-than expected costs are unknown factors at this point. But you can be sure these problems will occur over the next month, so prepare. If you are seeing a pattern with certain carriers missing pick ups or delays, think about not choosing them – even if they are the LCP. Look back at your historical data and see who your most dependable carriers are through these months and weigh out whether dependability vs cost is more important to your company.

Another key focus is ensuring your customers are aware of when orders are being fulfilled and shipped, and then providing tracking information. Tracking data is always important throughout the year, but even more so at this time of year. In our current e-commerce-driven world, people are used to knowing exactly where their packages are at. Your businesses can show you care by also providing shipping details for orders as much as you can. Be as proactive as you can be in providing updates on any potential delays. Be honest and transparent as possible with customers if something did happen to their shipment. Plan ahead with customer service team members on how to handle and manage shipping problems.


Are there any ways you have practiced to reduce the stress of the Holidays at your company? Let us know!