For businesses that often ship large, singular items or don’t fill full truckloads (FTL) with regularity, less than truckload (LTL) shipping is an essential transportation method. Consolidating smaller shipments with other companies’ cargo achieves shorter delivery times and reduces transportation costs.
However, businesses considering this freight-moving method and looking for pricing will find it challenging to answer, “How much does LTL shipping cost?” This is because multiple variables determine what carriers charge, causing prices to fluctuate.
So, we’ll add some much–needed transparency to LTL freight shipping in this article and help you narrow your cost estimates.
How are LTL Shipping Costs Calculated?
With the various benefits of LTL shipping, you may be looking to use it but wondering how the cost will be calculated. Like other types of shipment, different factors can influence LTL freight rate. As many as eight inputs will affect the LTL shipping costs for a given delivery, four of which will always factor into the price. Whether the remainder contributes to additional costs depends on the shipped items and any special delivery considerations.
Although these eight inputs remain consistent across LTL shippers, each carrier will use its own formula to determine the final cost of moving freight.
1. NMFC Standards
The National Motor Freight Traffic Association (NMFTA) developed an 18-classification standard for cargo to establish industry oversight and pricing regularity.
Designations for each National Motor Freight Classification (NMFC) start at “50” and end at “500,” with lower numbers indicating easier shipments for carriers to transport. As a result, the higher the classification, the more shipping will cost.
Crucially, “easier to ship” does not always correlate to lighter loads. In fact, lighter shipments may be more vulnerable to damage during transport, which raises their classification and cost.
Which classification your LTL freight shipment falls into depends on four characteristics:1
- Density – Determined by the items’ weight-to-volume ratio, less dense items will require more space within the truck for their weight (and may indicate a greater damage risk), so they’re generally more expensive to ship.
- Handling – Assessed by how difficult it will be to load and unload the transported cargo.
- Stowability – Considers how easy it will be for shippers to pack your items into the truck according to their dimensions. Square and stackable shipments will provide the best stowability.
- Liability – Accounts for your cargo’s replacement value, should any items be damaged during transit.
Businesses should note that the NMFC standard does not establish pricing but provides consistency for contract negotiations of freight rates.
2. Total Shipment Weight
Although weight is factored into the NMFC standard via density, your LTL shipment’s gross total weight will still affect pricing. Generally, prices increase within each NMFC grouping “per hundred pounds” as a directly correlating relationship—the more your cargo weighs, the more transportation will cost. However, the cost associated with a given weight will vary by carrier.
3. Travel Distance
Much like total shipment weight, the distance your shipment travels directly correlates to your costs—the further away your destination is, the more expensive it will be to send it there.
Again, the travel distance’s effect on costs will vary by carrier, but this may also change per shipment because of route optimization and the stops already scheduled. For example, if the truck’s other cargo is already headed to a nearby destination, your costs won’t rise as much compared to sending drivers 50 miles away from the existing route.
4. Fuel Surcharges
Carriers utilize a variable charge to account for constant fuel cost fluctuations. Fuel surcharges are generally adjusted according to national pricing averages for diesel but will also relate to a given freight shipment’s base cost.
5. Minimum Shipment Costs
To account for overhead and to ensure they break even on shipments, carriers will have established price floors that every delivery will cost at a minimum. So, for example, if your cargo costs only $50 to deliver according to a carrier’s pricing model but their minimum shipment price is $60, you’ll be charged $60.
6. “Over-Length” Charges and Freight Floor Space
Based on your cargo’s dimensions, the floor space it fills within the truck can add charges if you exceed carrier-defined limits or signed agreements. However, this additional freight cost should be generally avoidable.
You’ll negotiate a standard allotment in your contract or provide an estimate of the area your items will cover before the cargo is ever picked up. So long as your provided information is accurate and unchanged, you’ll avoid “over-length” charges.
7. Accessorial Charges
Known as “accessorial charges,” fees are assessed whenever your shipment requires additional effort or special considerations to deliver. They cover situations such as:
- Pickup or delivery at residential locations or inside of buildings
- If trucks with lift gates must be used
- If your cargo requires special handling considerations (e.g., refrigerated trucks, hazardous or flammable materials)
If your LTL shipment requires more than straightforward pickup and delivery at commercial locations, you’ll likely have accessorial charges added to your pricing.
8. Your LTL Contract
The most important price factor for businesses regularly using LTL freight shipping is your contract. LTL shipping costs are probably higher than they should be if you aren’t negotiating with carriers for the best rates.
Nearly every cost factor that determines final LTL shipping prices is negotiable, and leveraging contract optimization software and expert insight—like those provided by Shipware—will help identify where savings can be achieved.
Additional Savings on LTL Shipping
Beyond the primary factors influencing LTL shipping costs, there are two steps you can take to realize further—and substantial—savings:
- Modal optimization – Since carriers’ LTL freight costs will often differ for your shipments, implementing a platform that compares available shipping options will help you identify the best price.
- Invoice auditing and recovery – If you experience service failures (e.g., damaged cargo, late shipment arrival), you should qualify for refunds. Particularly for businesses that regularly rely on LTL shipping, this can help achieve up to 1% – 10% freight cost reductions annually.
LTL shipping costs may seem difficult to decipher, but there are consistent inputs, and you can always achieve better pricing with knowledgeable advocates and sophisticated software platforms on your side. Now that you know how to calculate shipping costs, and how to save, you can integrate this into your business.
Get the Best LTL Shipping Rates with Shipware
Ready to reduce your LTL cost? Shipware provides both freight logistics consultancy and a platform that enables you to find the best LTL shipping rates for every contract and individual cargo load.
Our team is comprised of logistics professionals with a wealth of industry experience to help you negotiate long-term contracts and establish fair and consistent pricing. And our software solution will facilitate better per-shipment service selection with modal optimization.
Should anything go wrong with your delivery, our software also catalogs and begins processing refunds automatically to achieve further savings.
Book a demo with us today to start discussing how you can ship better with Shipware.
- NMFTA. The National Motor Freight Classification. https://www.nmfta.org/pages/nmfc?AspxAutoDetectCookieSupport=1