Everything You Need to Know About Less-Than-Truckload (LTL) Shipping

When it comes to shipping, businesses often face challenges in determining the most cost-effective and efficient way to transport goods. For companies that don’t need an entire truck for their shipments, Less-Than-Truckload (LTL) shipping offers a practical and economical solution. This article provides a comprehensive look into what LTL shipping is, why businesses use it, and how it works.

What is Less-Than-Truckload (LTL) Shipping?

LTL shipping refers to a freight service where multiple businesses share space in a single truck. Instead of hiring a full truckload, companies pay only for the portion of the truck they use. It is an ideal solution for shipments weighing between 150 and 15,000 pounds, making it a cost-effective option for smaller loads.

To ensure security, shipments are consolidated into palletized containers or shrink-wrapped boxes. This method reduces the risk of damage and maximizes efficiency.

Why Use LTL Shipping?

Less-Than-Truckload (LTL) shipping is a strategic choice for businesses that regularly ship smaller quantities of goods but do not require the space of a full truckload. Its advantages make it an efficient, cost-effective, and environmentally friendly solution. Here’s why LTL shipping is a preferred option:

Cost Efficiency

LTL shipping allows multiple shippers to share the space and cost of a single truck. Instead of paying for an entire truckload, businesses are charged only for the portion of the truck their shipment occupies. This pooling of resources reduces overall shipping expenses, making LTL ideal for businesses operating on tighter budgets or with smaller freight volumes.

Flexibility for Inventory Needs

LTL shipping ensures that businesses can maintain consistent inventory levels without overstocking. It allows companies to ship smaller, more frequent loads, which is especially beneficial for meeting customer demands or replenishing inventory across various locations.

Eco-Friendly Shipping

By consolidating shipments from multiple companies into one truck, LTL shipping reduces the total number of vehicles on the road. This translates to lower fuel consumption and decreased carbon emissions, making it a more sustainable option compared to individual parcel shipments or underutilized truckloads.

Enhanced Security and Services

LTL shipments are typically packaged on pallets and secured with shrink wrap or straps. This reduces the risk of damage during transit compared to loose parcel shipping. Additionally, LTL carriers often provide extra services, such as liftgate delivery, residential delivery, and pickup/drop-off options, to cater to diverse shipping needs.

Scalable for Business Growth

LTL shipping offers scalability, allowing businesses to adjust shipping volumes as needed. Whether handling seasonal surges or expanding operations, LTL shipping ensures adaptability without committing to full truckload costs.

How Does LTL Shipping Work?

Less-than-truckload (LTL) shipping operates on a system designed to optimize space and cost by consolidating shipments from multiple businesses into one truck. This method relies on a well-coordinated process involving several key steps and elements to ensure efficiency and security.

Hub-and-Spoke Model

• LTL shipping follows a hub-and-spoke distribution system.
• Hubs: Centralized terminals act as distribution centers where freight is sorted and routed to the next destination.
• Spokes: Smaller terminals handle local deliveries and pickups.
• This structure allows for efficient routing and management of multiple shipments, ensuring goods reach their final destinations without requiring a dedicated truck.

Packaging and Consolidation

Businesses prepare their shipments by securing them on pallets or in sturdy containers. Items are typically shrink-wrapped or strapped to prevent damage during handling. These consolidated packages make loading, unloading, and transport more efficient and protect goods from damage.

Shipment Allocation and Loading

Once an order is ready, it is assigned to a carrier. The carrier optimizes space by arranging shipments strategically within the truck. Stackable and turnable goods are prioritized to maximize available space, reducing costs for all shippers involved.

Multi-Stop Transit

LTL shipments involve multiple stops as the truck picks up and delivers goods to various hubs or delivery points along its route. This multi-stop nature makes LTL slightly slower than full truckload (FTL) shipping but significantly more economical.

Final Delivery

After reaching the final hub, shipments are sorted and dispatched for local delivery. Additional services like liftgate delivery or residential drop-offs are often provided based on customer requirements.

Benefits of LTL Freight Shipping

Lower Costs: Since multiple businesses share truck space, LTL shipping is significantly cheaper than full truckload shipping. Costs are divided among all shippers, making it an economical choice.

Eco-Friendly: Fewer trucks on the road mean reduced fuel consumption and emissions. LTL shipping supports environmentally conscious business practices.

Improved Security: LTL shipments are typically consolidated into shrink-wrapped pallets, ensuring that goods are protected during transit. This method minimizes the risk of damage compared to individual parcel shipments.

Additional Services: LTL carriers often offer extra services, such as:

• Residential delivery
• Pickup and drop-off options
• Liftgate assistance
• Efficient Distribution

LTL is particularly advantageous for delivering smaller quantities of goods directly to retail stores, avoiding the need for warehouse storage.

Key Factors Influencing LTL Freight Costs

Understanding the factors that affect LTL shipping rates can help businesses control expenses:

• Shipment Size and Weight: Larger and heavier shipments occupy more space and require more handling, leading to higher costs.
• Distance and Origin: The farther the shipment needs to travel, the higher the transportation cost. Additionally, certain origin and destination zones may have varying rate structures.
• Freight Class: The National Motor Freight Traffic Association (NMFTA) assigns a freight class to every shipment based on its density, value, and handling requirements. Higher classes result in increased rates.
• Accessorial Charges: Extra services like liftgate delivery, expedited shipping, or residential delivery often come with additional fees.

How Stackability and Turnability Affect Costs

Stackability and turnability significantly impact the cost of less-than-truckload (LTL) shipping, as they determine how efficiently freight occupies space in a truck.

Stackability

Stackability refers to a shipment’s ability to be stacked on top of or underneath other freight without risk of damage. If a shipment is stackable, carriers can maximize the truck’s vertical space, fitting more goods per trip. This increased efficiency often leads to discounts or lower rates for shippers. Conversely, non-stackable freight reduces the available space for other shipments, potentially leading to higher charges to offset the lost capacity.

Turnability

Turnability measures the freight’s adaptability to fit within the truck’s layout. This is often calculated in linear feet—the length of space a shipment occupies in the truck. Freight that uses excessive linear space or is challenging to position efficiently can incur additional charges.

Carriers prioritize stackable and turnable freight to optimize capacity and minimize empty or wasted space in their trucks. Businesses that ensure their shipments meet these criteria benefit from cost savings and improved shipping rates, making stackability and turnability crucial considerations in LTL logistics.

LTL vs. FTL Shipping

The choice between Less-Than-Truckload (LTL) and Full Truckload (FTL) shipping depends on the business’s needs:

LTL Shipping

• Ideal for smaller shipments that don’t require a full truck.
• Cost-effective due to shared space.
• Longer delivery times due to multiple stops.

FTL Shipping

• Best for large shipments that fill an entire truck.
• Faster delivery with a dedicated route.
• Higher costs, but more control over transit.

Best Practices for LTL Freight Shipping

To make the most of LTL shipping, businesses should follow these best practices:

Accurate Dimensions: Measure the length, width, and height of the shipment accurately. Rounding up ensures better space utilization and avoids penalties.

Proper Documentation: Always prepare a detailed Bill of Lading (BOL), which serves as an invoice and provides essential shipment details. Inaccurate information can lead to delays or fines.

Secure Packaging and Labeling: 

• Use pallets to group items together, reducing space usage and enhancing stability.
• Place heavier items at the bottom and lighter ones on top.
• Ensure all labels are clearly visible for easy identification.

FAQs About LTL Shipping

Conclusion

Less-Than-Truckload (LTL) shipping offers businesses a flexible, affordable, and eco-friendly way to transport smaller shipments. By understanding its workings, benefits, and cost factors, companies can optimize their supply chains while reducing expenses. Whether you’re a small business owner or a logistics manager, leveraging LTL shipping can make a significant difference in your operations.

Also Read: LTL vs FTL: Which Shipping Method is Right for Your Business?