What is LTL Shipping?
December 7, 2015
The U.S. transportation system ships a reported daily average of 54 million tons of freight worth almost $48 billion each day or about 63 tons of goods per person per year - a total expected to grow. While the transportation world is picking up steam, we take a deeper look into one mode moving the industry, LTL shipping.
We've put together a full LTL shipping guide, covering everything from the basic definition and history to benefits, common questions and LTL shipping rate calculation.
What is LTL shipping?
The term less than truckload is the basis for LTL, the acronym that serves as the common moniker of this freight mode. At the most basic level, LTL shipping is the transportation of freight that occupies only a portion of an entire trailer. Multiple shippers share space on the same truck only paying for their portion, making LTL a cost efficient method of shipping freight.
What are the benefits of LTL shipping?
LTL offers you benefits beyond decreased shipping costs:
LTL not only cuts down cost, but also the carbon footprint by sharing space with other shippers on the same truck.
Extra service options.
Those who ship LTL have access to extended services like inside pickup and delivery, liftgates, non-commercial delivery and notification options.
Freight services generally provide an estimate of transit days and track shipments in real time. Shippers gain access by referring to the bill of lading number, PRO number, PO number or shipment reference number.
LTL shipping FAQs.
Here's a look at some of the commonly asked questions surrounding LTL shipping:
What's the difference between LTL and TL?
They each have benefits, but one is better suited depending on the freight details - mainly weight and size, but distance too. Typically, you may consider full truckload when freight exceeds 15,000 pounds or when more than 24 feet of trailer space is required. If the distance to deliver is less than 500 miles, truckload may be a fit even for shipments under 15,000 pounds and occupying less than 24 feet. Truckload is also an option when goods are time-sensitive since it can move from shipper to consignee without offloading and reloading at terminals along the way.
How does LTL work?
LTL shipping operates on a hub and spoke model where local terminals are the spokes and larger central terminals are the hubs or distribution centers. Spoke terminals gather local freight from various shippers and combine that freight into outbound trailers. Goods then move to the hub terminal where freight is either sorted and delivered or consolidated for further transportation.
Who uses LTL?
When a company has a relatively small load of freight, they often choose an LTL carrier to transport their goods. These carriers are accustomed to moving palletized freight that can be broken down into smaller units. They also transport drums and freight that is properly crated, bundled or bagged.
Calculating LTL shipping rates.
Shippers must weigh several factors to generate the most accurate rates:
Pickup and delivery.Fuel usage affects shipping costs. The further the distance to deliver the goods - the higher the rate will be. Shippers should also consider a carrier's primary region, since shipments outside of their area will typically make final delivery with a second carrier, impacting transit time and rates.
Shipment specs.These numbers are important. LTL carriers rely on dimensions and weight to determine how much freight can fit on a truck. Freight class calculation can be connected to shipment specs as well and that is a big factor here since the class influences rates. Generally, lower classes refer to a higher density and lower carrier liability, and that results in lower rates.
Special requirements.When freight requires unique handling for things like oversized items, hazardous materials and residential pickups, there is extra cost added to the base freight rate.
How did LTL shipping came come about?
Regulation of the trucking industry came with the Motor Carrier Act passing in 1935. The act ushered in freight-hauling rate regulations, limited the number of hours truckers could drive and monitored trucking companies' range.
The industry took a turn in 1948 when Congress permitted carriers to fix prices and be exempt from any anti-trust legislation. Competition was almost non-existent as the ICC denied applications from new carriers for the next 30 years.
The Nixon, Ford and Carter administrations in the early 1970s put into effect a number of acts that deregulated the industry and brought down price fixing and collective vendor pricing. The final phase of deregulation was the Motor Carrier Act of 1980 - which significantly impacted the industry. The new law drove intense price competition and lower profit margins with thousands of new low-cost, non-union carriers entering the market between 1977 and 1982.
At this point, the average LTL rate fell by up to 20% and the number of carriers doubled between 1980 and 1990. Changes in the law opened up the industry to competition and increased the number of carriers.
Depending on your freight and delivery requirements, LTL shipping could be the best alternative for your freight that does not require a whole trailer. Use this breakdown to guide your decisions when considering LTL as a choice for your freight shipping.
Whether you choose LTL or another method, rely on Freightquote's patented technology to generate instant and free shipping rates.
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