When it comes to shipping cargo larger than parcel size, a company will likely need to choose between less than truckload (LTL) and full truckload (FTL) shipping. Knowing when each option is best can save the shipper money and optimize the delivery timing as well.
But a shipper has to understand the various factors that go into making that decision of LTL vs FTL. Sometimes the decisions need to be made on a per cargo shipment basis, as each shipment may have unique requirements and customer needs.
What does LTL mean in logistics?
An LTL shipment typically includes freight that only requires a partial truckload. The LTL freight usually weighs 150 and 15,000 pounds to be seen as the partial truckload. However, different sources have various definitions for what the top number would be. Some consider the upper limit to be as low as 2,000 or rising to 10,000 pounds. But 15,000 is typically the most you’d want to send as LTL freight.
With an LTL freight shipment, your company’s freight would go on the same truckload as other shippers’ freight. You would basically share the truck, though you don’t have to coordinate the various shippers. A freight broker or freight consolidator can do that, or you could reach out to the LTL trucking company on your own, and they will put the truckload together.
By using less than truckload shipping, the cost is usually less than if your cargo uses the entire truck. Each shipper using LTL freight shipping pays less overall, and the LTL freight carrier has enough cargo and revenue to make the trip worthwhile.
The LTL carrier uses a hub and spoke model. The freight starts at a hub and then moves to the next destination or spokes in the model. This is different from an FTL shipment which goes to its destination without stopping to drop off or pick up other cargo.
As a result, the LTL trucks may change which goods it carries, and multiple trucks might be used to bring your freight to its destination. The cargo may be handled several times as a result, rather than sitting in place in the truck for the entire journey. As expected, the LTL freight carrier may take more time to bring your goods to the destination, but you likely will pay less for the service than you would using FTL shipping.
What does FTL mean in trucking?
FTL shipping is full truckload shipping, which means reserving and paying for the entire truck capacity. You don’t have to fill the truck with a large shipment, but you are responsible for paying for the entire cost. As a shipping company, your FTL freight may use up the available weight or space limit, or you may have a small shipment with sensitive cargo, and you want to ensure it gets the right attention.
FTL truckload carriers load the pallets at their origin, and then the cargo stays on the truck the entire time. The cargo does not get moved onto different trucks during the transportation, as the truck is reserved for that cargo alone. FLT deliveries usually arrive more quickly than their LTL counterparts, as they go directly and do not use the same hub and spoke model.
This means it uses a less complex logistics model. This freight shipping method is preferable for freight or TL shipments that are either a larger size or need faster delivery. The option allows for better timing, cost, and available controls.
How many pallets are considered LTL?
One way to determine if cargo should go via LTL carriers or FTL carriers is by looking at the pallet number. A partial truckload shipment can involve 1 to 6 pallets, and some define LTL freight shipping as reaching as many as 14 pallets.
A freight carrier may also determine LTL status by looking at how many linear feet would be used in the truck. Consider 12-14 linear feet as a good LTL measure. A smaller shipment meeting LTL standards can also be measured in weight. This TL shipping method is appropriate for ground freight starting at 150 pounds, up to maybe 15,000 pounds.
How to make the most of your shipping budget
The first consideration is whether to send your cargo via parcel service. LTL may be preferable if the goods are more than 150 pounds per box.
How to choose between LTL vs FTL
When deciding LTL vs FTL, there are a number of factors to consider
- How many pallets, pounds, or linear feet you might have.
If the parcels are all going the same general direction and you have the luxury of a little more time, as the shipper, you can use an LTL shipping method to bundle the parcels or heavier boxes together on a pallet. You can also shrink wrap the goods, so they stay together during the shipment. This not only reduces the chances of damage to the parcels, but decreases the opportunity they’ll be lost in transit.
- Delivery timing
Be sure to schedule your LTL or FTL deliveries properly. Check the estimated delivery date, shipping date, and shipping duration. If you’re able to wait a little longer, LTL can save money while still providing great service. Since the cargo may get transferred to a different LTL transport along the route, you’ll have to ensure the pallets are packaged well to avoid any damage.
- Freight Class
Consider the freight class used as part of the decision process, in terms of how that will affect the FTL and LTL quotes as well.
- Cost
Cost is obviously a consideration. Since a partial truckload uses less space, it would usually be a lower cost overall than an FTL shipment. But freight classification can make a difference in the cost, as can any additional needs, like cooling, guaranteed delivery time, insurance, and services like inside delivery and lift gates. As the carrier, you’ll need to balance out your needs and LTL shipping rates with the delivery options. In some cases, it makes sense to use an FTL carrier even if you don’t actually need the entire truck space.
If you’re able to wait a little longer, LTL can save money while still providing great service. Since the cargo may get transferred to a different truck along the route, you’ll have to ensure the pallets are packaged well to avoid any damage. Consider the freight class used as part of the decision process, in terms of how that will affect the FTL and LTL quotes as well.
LTL shipments may offer additional service options. That can include:
- inside or residential delivery and pickup
- freeze protection for sensitive cargo
- liftgate access.
This will be included in the quote, but if the carrier doesn’t realize they will be needed until after the cargo is en route, the additional charges can be added on later. Not all FTL carriers offer these services, so it’s something to think about if you need it. Both types of services should give you a delivery notification as well as tracking, whether by shipment reference numbers, the bill of lading, or additional methods.
Cost is obviously a consideration. Since a partial truckload uses less space, it would be usually be lower cost overall than an FTL shipment. But freight classification can make a difference in the cost, as can any additional needs, like cooling, guaranteed delivery time, insurance, and services like inside delivery and lift gates. As the carrier you’ll need to balance out your needs and costs with the delivery options. In some cases, it makes sense to use an FTL carrier even if you don’t actually need the entire truck space.
Only you, as the shipper, would know whether the tradeoff between delivery time and cost, and the other factors, makes it worthwhile to ship LTL. Shippers that have the luxury of time and flexibility may benefit the most from using LTL shipping.
Lowering the cost of LTL and FTL shipping
Lowering freight costs is important to keep your bottom line healthy. There are ways to negotiate prices to your advantage.
Contract optimization
If you are going to ship a lot of LTL or FTL freight, develop a relationship with carriers, who may be willing to provide lower costs for guaranteed volume. You can use professional negotiators to help optimize your contracts.
The good news is you can do this with more than one carrier. With different carriers specializing in different regions, and given the truck driver shortage, it pays to have relationships with multiple carriers with different carriers specializing in different regions, given the truck driver shortage.
Negotiations would include the base rates in addition to accessorial charges, for both LTL and FTL. An expert negotiator understands what carrier charges are up for negotiation and the scope of options. Shipware’s experts offer contract optimization solutions for larger freight like LTL and FTL, and also for parcel service. Our experts come from the carrier side, where they were executives negotiating on behalf of the carriers. Because of this background and expertise, they understand what the carriers can negotiate and the best strategies to use.
The Shipware experts can analyze your current LTL or FTL freight shipping profiles to develop a plan and drive the negotiation process. Shipware uses proprietary benchmarked data compared to your company’s unique shipping data. This allows Shipware to understand your shipping characteristics, and the individualized guidance they give can save you up to 30% on your total shipping invoices.
Invoice audit recovery
You can also save on FTL and LTL shipping through invoice audit recovery. Shipware developed a tool to home in on carrier service failures and billing errors. Once errors are identified, the program applies for credit on behalf of the shipper, and any exceptions or questions are handled by Shipware billing experts.
These carrier credits are then automatically applied to the shipper’s account, with no effort needed from the shipper. Shipware’s clients see savings of 1% to 9% of total invoicing fees with this tool, in most cases.
The proprietary software runs in the background, and after a quick and easy connection, clients do nothing more than see the credits applied to their account. There are no up-front fees or costs. The Shipware fees are a portion of the savings recovered, so there are never out-of-pocket costs for this service. If there are no savings, there are no costs.
Using one or both of these services, contract optimization, and invoice audit recovery, shippers can lower logistics costs. Taking advantage of minor pricing errors the carriers make, and ensuring the best LTL and FTL contracts with carriers, adds up and makes a huge difference to shippers.
Please contact Shipware to learn how your company can save money on LTL and FLT shipping. You can reach us at (858) 879-2020.
