How Less Than Truckload Creates Cost-Avoidance Opportunities

The logistics industry thrives on efficiency and flexibility, but with mounting demands and changing customer buying habits, the age-old standards of freight management fall short. Rather than continuing to buy and pay for all the space on a truck when it’s unnecessary, more shippers are turning to LTL to source capacity without incurring the costs of a full truckload. Let’s take a closer look at the value of LTL, the LTL freight meaning, and how to maximize your use of less-than-truckload shipping rates. 

What Is Less Than Truckload (LTL) Freight?

LTL freight is an efficient shipping method combining partial loads from multiple customers to create full multi-stop truckloads. This consolidation is the cornerstone of LTL’s efficiency, ensuring each truck carries a full load and optimizing the use of space and resources. The cost of shipping LTL freight is determined by several factors: the space used within the truck, the classified items (based on factors like density, handling, and liability), and the distance between pickup and destination locations.

However, it can be challenging to identify the exact benefits offered by going LTL over another mode. Some of the top benefits of LTL include:

  • The primary advantage of LTL freight is its cost-effectiveness. Since shipments from different customers share the space in a single truck, you only pay for the portion of the car your shipment occupies. This approach significantly reduces shipping costs compared to paying for an entire truckload, which is especially beneficial for smaller shipments.
  • LTL freight aligns perfectly with e-commerce needs by eliminating the requirement for each shipment to occupy a whole truckload. This improves delivery speeds and ensures that products are delivered precisely when and where needed, a crucial factor in the fast-paced world of online retail.
  • LTL shipping is particularly advantageous for small businesses. Typically, these businesses have less frequent and smaller shipments compared to more giant corporations. LTL shipping allows them to access professional shipping services without paying for space they don’t need, thus aligning with their scale and budget.
  • LTL shipping reduces the total number of trucks required on the road. This results in lower emissions and a reduced carbon footprint, making LTL freight a more environmentally friendly choice. Reducing road traffic also contributes to decreased congestion and wear on transportation infrastructure.

Potential Challenges of Going by LTL

LTL shipping, while cost-effective, often presents logistical complexities due to its multi-client consolidation nature. Successfully navigating its intricate network of routes and delivery schedules requires precise coordination and planning. Shippers frequently encounter challenges in balancing LTL’s efficiency with their shipments’ specific needs, necessitating expert guidance and flexible solutions. However, there are additional challenges in going by LTL, including:

  • Managing diverse shipment schedules and delivery timelines.
  • Coordinating with multiple shippers to consolidate loads.
  • Accurately predicting costs and dealing with variable pricing structures.
  • Ensuring shipment safety and minimizing damage risks.
  • Adapting to varying capacity and space availability.
  • Navigating fees for accessorial services, such as liftgate or residential delivery.
  • Tracking and maintaining visibility across multi-stop routes.
  • Aligning LTL shipping processes with environmental sustainability goals.
  • Negotiating favorable rates and terms with carriers.
  • Differing freight classification and changing standards for LTL rating, i.e., DIM weight.

Strategies for Maximizing Cost Savings in LTL Shipping

The value of LTL is obvious, but apparent benefits do not always equate to a clear strategy for use. To truly capitalize on these benefits, it’s essential to employ intelligent strategies and best practices, including:

  • Streamline your packaging to use space more efficiently. This minimizes the dimensional weight charges, a key factor in LTL shipping costs.
  • Build strong relationships with carriers and regularly negotiate rates. Leveraging your shipping volume and frequency can lead to better discounts.
  • Not all LTL carriers are the same. Select carriers that specialize in your shipping lanes or have a reputation for reliability and cost-effectiveness.
  • Implement a TMS to optimize route planning, leverage intermodal where possible, track shipments, and analyze transportation data for better decision-making.
  • Plan shipments to avoid the need for expedited shipping, which is significantly more expensive than standard LTL shipping.
  • Be aware of additional fees associated with LTL that wouldn’t occur in FTL. 
  • Regularly review your shipping history to identify patterns and make adjustments that can lead to cost savings, such as shifting delivery days or consolidating routes.
  • Stay informed about industry trends and new technologies. Regularly reassess your LTL shipping strategies to ensure they remain efficient and cost-effective.

Improve Use of LTL Shipping With LOTTE Global Logistics

The costs associated with today’s level of trade will always be in flux. The trick to successful logistics management rests in moving beyond the traditional standards in freight, and that implies a need to grow more strategically. Shippers need to know the truth about how LTL can lower freight spend and take the right steps to maximize its use. Learn more about improving these goals by connecting with LOTTE Global Logistics now.