Less than truckload

It is more and more common that customers request several pallets a couple times a week rather than a full load of product once every couple weeks. Product is fresher for better end-user experience as well as space is saved with leaner inventory.

 

There are benefits for both shipper and receiver to use Less than Truckload (LTL) transportation.

 

What is it?

 

LTL stands for Less Than Truckload, or in even more simple terms, not enough product to fill a truck whether by weight or space. Typically there are carriers that specialize in this type of business as they need to have a lot of smaller shipments to make up one shipment.

 

Advantages

 

Cost-Effective - the most straight forward of advantages: cost. Contracting a full truck to ship less than a truckload of product increases cost per case which can eat into or eliminate profits on that shipment. Sending that product with other shippers’ product going to the same area can greatly decrease your cost per case to almost the same as filling a truck.

 

Effective Inventory Control - for those receiving product, managing inventory and space can be a challenge. If it is possible to bring in only what is needed to fulfill orders and keep production running smoothly, a lot of time and headaches can be saved.

 

Disadvantages

 

Increased Logistics Planning - due to LTL being more complicated than a full truckload, there is more time and planning that goes into this. If you have a good carrier partner you will not have to worry about this much. But be aware that it will reflect in a slight charge.

 

Increased risk of Product Damage or Loss - since product is moving on and off the trailer more than once, typically at a terminal where the product is re-organized for appropriate deliveries, there is increased risk of damage or even product being misplaced.

 

Increased Shipping Times - because of all the additional stops and possible re-arrangement at a terminal, the shipping times can be up to twice or three times as long than a dedicated truck.

 

Possible Delays - if your product is crossing a border, LTL can have a lot of delays; instead of one clearance there are multiples on a truck. There is always a chance that something may not clear as quickly as your product and in turn will cause delays.

 

Working together for success

 

As weird as it sounds, this is a time to embrace your neighbours and “competitors” alike. Odds are that if during a particular season you are shipping a few pallets to Florida, for example, so are other people in your area. Some people have concerns about having their product on a truck with others, but most of the time those concerns are baseless.  Working together can help everyone be successful and decrease rates as you are not competing over full trucks that cannot be filled anyway.

 

Temperature-controlled items

 

The characteristics that make LTL so great are also the reason that it makes things complicated. Blending together multiple companies freight seamlessly is challenging to begin with, but add in a temperature requirement and you have compounded an already complex load. Typically LTL carriers run three temperatures; frozen (approx. -10°F), fresh (approx. 34°F) and ambient. 

 

If your freight requires temperatures outside these options, you have a few courses of action. First, you can use wrapping or blankets to protect your product from chill --  usually effective on short runs, typically under two days. Second, as stated above, look to businesses in your area that you can partner with. It will take more work but you will ensure that you get to dictate the temperature of the trailer.

 

Cost structures

 

LTL is costed out mostly by weight. The heavier your product the more you are paying, however, should you have product that is irregularly shaped or packaged, costs will be affected.  Also be aware that different types of product will cost more. Should something be more volatile or sensitive, the charges will be higher. Location will also play a role in the rate. If you are in a high traffic area, such as warehouse areas near an airport, cost will be more economical than if you were in a small town that is not near anything else.

 

Possible additional fees

 

Fuel Surcharge - Fuel surcharge as we have discussed in previous articles is a pass- through cost to pay for adjustment to the cost of fuel.

 

Appointment Required Fees - most LTL is assumed to be set on a first-come, first-serve basis for pick-up and delivery. Should you require specific appointment times, you will likely see an additional and sometimes hefty charge.

 

Special Requirements (specific door type or loading/unloading) - Some receivers and shippers require things such as roll-up doors or even a lift-deck (if there is no proper dock). These requirements will also have additional charges.

 

Less than TruckLoad can be an excellent option for smaller orders if it is managed properly. This management can be time-consuming. Make sure you look to your carriers and brokers to help organize the best options. Do you think that LTL can be helpful with your business?

Publish date: 
Friday, December 21, 2018

Comments (1)

  • anon
    Marcia Woods (not verified)

    You hit the nail on the head with this article but even LTL can't fully address the challenges that small to mid-size suppliers have in accessing the wholesale market as even conventional LTL adds too much time and cost to the cost of goods sold. As a result, local food is not competitive putting our SME suppliers at a disadvantage and limiting consumers' access to fresh, local food. That's why FreshSpoke was launched; to provide a much needed local food logistics platform and with most commercial trucks run at about 40% unused capacity, it only made sense to use technology to tap into their excess, giving them opportunities to earn more income and offset costs. FreshSpoke now operates in Ontario and Ohio with 300+ wholesale buyers and 180 suppliers using the platform.

    Jan 10, 2019

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