Our Webinar discusses the typical LTL network and differentiates between less-than-truckload (LTL) and full truckload and the factors companies should consider when deciding which alternative is best for a particular shipment.

In our Webinar “Driving Down Supply Chain Costs with Mode Optimization,” Brian Blalock, Senior Manager of Sourcing Strategy at BlueGrace, discusses the typical LTL network and differentiates between less-than-truckload (LTL) and full truckload and the factors companies should consider when deciding which alternative is best for a particular shipment. Both have their advantages and weaknesses, but one may suit the business better depending on the kind of freight being transported, the location or origin and destination. While the decision is sometimes considered arbitrary, in order to optimize your operation, i.e. lower cost and maximize profit, it is crucial to consider the following factors.

LTL vs. Full Truckload

LTL shipments must be 12 linear feet or less, usually 5000 pounds or less, and are “typically consolidated with other freight from other shippers,” Blalock said, continuing that they are identified by class and that the structure, and that pricing can be very complex because it is determined by product class, distance and weight. Typically, it costs less than a full truckload, an obvious appeal to any shipper. 

Fewer claims of damage occur with truckloads than with LTLs. “Why?” One might ask. It’s simple. Blalock uses the example of witnessing luggage being boarded into the belly of an aircraft; people rarely handle a stranger’s items as gently as they would their own. In conclusion, the “less handling of freight, the less damage to the freight,” Blalock says. Since LTLs require more stops and handling, more damage is incurred to LTL freight than full truckload on average. 

When shipping a full truckload, your freight is the only thing on the trailer, so transit time is only contingent upon the required breaks for drivers and the time between pickup and delivery locations. The freight never has to leave the truck because it travels directly to its destination, so truckload shipments tend to arrive faster than LTL shipments, while at the same time, incurring less damage. 

When to Not Ship LTL?

LTL loads should be the choice for shippers dealing in smaller quantities at a time as carriers charge by weight and volume, but may not be the optimal choice at every juncture. In order to determine which mode is right for your operation, create business and shipping rules around factors like weight, volume, time constraints, and cargo sensitivity of your shipments. You need to consider the rate at which damage may occur in your LTL shipments. How much does it really end up costing you at the end of the day? In knowing this information, you will be better able to decide in which case you need to opt for a full truckload, and which you are able to go with an LTL.

Another key is understanding how business decisions affect OTIF (on time in full). “If you ship to Walmart you can’t show up late, you can’t show up early, and you can’t show up incomplete,” Blalock said. “Any of those that you do, typically, [are] about a 3% ding to the cost of the entire invoice.” If the margins are tight on your product, the last thing you want is another cost eating away at your bottom line. “Likewise, if you continue to not hit your dates, you’ll find that you can lose valuable shelf position, and you won’t be shipping to Walmart anymore.” Blalock says to consider using different carriers for different shippers to this end: “The choices that you build into your business rules include choosing the right type of carrier every time,” he said.  

Supply Chain Engineering

“Understand that we are following the linear rules of the carriers,” Blalock says. “Build the rules of your freight around your tariffs.” Blanket rate pricing main type associated with the LTL market. Customer specific pricing is negotiated on your behalf when all of your capacity is going to a single provider, which is typically preferred for shippers with a larger freight spend. BlueGrace negotiates specifically customer-by-customer to determine which suites the customer better. “If you’re in Montana or the upper peninsula of Michigan, sometimes you may just want to pay the more expensive LTL cost,” he said, due to the fact that market is more remote, and competition between carriers is less apparent.

 and learn more about tariffs and fuel surcharges associated with costs. If you would like to speak to one of our freight experts, contact us at 800.MYSHIPPING or fill out the form below.