Less_than_truckload_shipping

Less than truckload shipping

Less-Than-Truckload (LTL) shipping is the transportation of relatively small freight. The alternatives to LTL carriers are parcel carriers or full truckload carriers. Parcel carriers usually handle small packages and freight that can be broken down in to units less than 150 US pounds. Full truckload carriers move freight that is loaded into a semi trailer. Semi trailers are typically between 26 and 53 US feet and thereby require a substantial amount of freight to make such transportation economical.

Less Than Truckload carrier operations versus Full Truckload operations

Full Truckload (FTL)

Full truckload carriers normally deliver a semi trailer to a shipper who will fill the trailer with freight for one destination. After the trailer is loaded, the driver returns to the shipper to collect the required paperwork (i.e. Bill of lading, Invoice, and Customs paperwork) and depart with the trailer containing freight. In most cases the driver then proceeds directly to the consignee and delivers the freight him or herself. Occasionally, a driver will transfer the trailer to another driver who will drive the freight the rest of the way. Full Truckload (FTL) transit times are normally constrained by the driver's availability according to Hours of Service regulations and distance. It is normally accepted that Full Truckload drivers will transport freight at an average rate of 47 miles per hour (including traffic jams or queues at intersections).

One advantage Full Truckload carriers have over Less than Truckload carriers is that the freight is never handled en route, whereas an LTL shipment will typically be transported on several different trailers

Less than Truckload (LTL)

What is LTL Freight?

LTL shipments typically weigh between 100 and 10,000 lbs. Less than truckload carriers collect freight from various shippers and consolidate that freight onto enclosed trailers for linehaul to the delivering terminal or to a hub terminal where the freight will be further sorted and consolidated for additional linehauls. In most cases, drivers start the day by loading up and heading out to make deliveries first, then begin making pickups once the trailer has been emptied for return to the terminal for sorting and delivery next day; thus, most pickups are made in the afternoon and most deliveries are performed in the morning. *

How does the LTL model work?

Pickup/delivery drivers usually have set routes which they travel every day or several times a week, so the driver has an opportunity to develop a rapport with his customers. Once the driver has filled his trailer or completed his assigned route, he returns to his terminal for unloading. The trailer is unloaded and the individual shipments are then weighed and inspected to verify their conformity to the description contained in the accompanying paperwork. All LTL freight is subject to inspection for this purpose, though not all freight is inspected. Next, the freight is loaded onto an outbound trailer which will forward the freight to a breakbulk, a connection, or to the delivering terminal. An LTL shipment may be handled only once while in transit, or it may be handled multiple times before final delivery is accomplished.

Transit times for LTL freight are longer than for FTL. LTL transit times are not directly related only to the distance between shipper and consignee. Instead, LTL transit times are dependent upon the makeup of the network of Terminals and Breakbulks that are operated by a given carrier and that carrier's beyond agents and interline partners. For example, if a shipment is picked up and delivered by the same freight terminal, or if the freight must be sorted and routed only once while in transit, the freight will likely be delivered on the next business day after pickup. If the freight must be sorted and routed more than once, or if more than one linehaul is required for transportation to the delivering terminal, then the transit time will be longer. Also, delivery to beyond points or remote areas will almost always add days to the transit time.

The main advantage to using an LTL carrier is that a shipment may be transported for a fraction of the cost of hiring an entire truck and trailer for an exclusive shipment. Also, a number of accessorial services are available from LTL carriers, which are not typically offered by FTL carriers. These optional services include liftgate service at pickup or delivery, residential (also known as "non-commercial") service at pickup or delivery, inside delivery, notification prior to delivery, freeze protection, and others. These services are usually billed at a predetermined flat fee or for a weight based surcharge calculated as a rate per pound or per hundredweight.

Volume Pricing

Volume pricing is available from some carriers for shipments which exceed the size parameters for which they are willing to offer standard Tariff-based LTL pricing. These parameters vary by carrier, and not all carriers are willing to offer volume pricing. Volume rates are typically offered on a spot-quote basis, and take into account the weight and dimensions of the items being shipped, as well as the amount of unused space the carrier has or expects to have in the lane where the freight is to travel. Most directly, the carrier is basing their rate on the capacity of trailer to be used for the transportation of the specific move being quoted. A general rule of thumb might state that volume pricing is generally applicable for shipments that occupy six or more pallet spots and which weigh 7000 or more pounds.

Integrating FTL and LTL carriers for shipper cost savings

Shippers with enough volume of LTL freight may choose to use a Full Truckload Carrier to move the freight directly to a break-bulk facility of an LTL carrier. For example, if a North Carolina shipper has a large quantity of shipments for Western US States such as CA, NV, OR, WA, and ID then the shipper can realize significant cost savings by having an FTL carrier, known as a Linehaul carrier, transport the freight to a breakbulk facility nearest the center of such shipments in terms of the carriers network. In this case the shipper may choose to send the freight to a break-bulk in CA. The use of an FTL carrier to transport this freight is a cost savings because the freight will travel fewer miles in the LTL carrier's network, and a further benefit is realized because the freight will not be unloaded and reloaded as many times. This reduces the incidence of loss and damage in transit.

Less Than Truckload operations versus parcel carrier operations

Parcel carrier operations

A parcel carrier traditionally only handles pieces weighing less than approximately 150 US Pounds. Parcel carriers typically still compete with LTL carriers by convincing shippers to break larger shipments down to smaller packages. Parcel carriers typically refer to multipiece shipments as "Hundredweight" shipments as the rating is based on 100 US Pounds. The Hundredweight rate is multiplied by the shipment's weight and then divided by 100 and then rounded up to the nearest hundred.

LTL carrier operation

LTL carriers prefer to handle shipments with the least amount of handling units possible. LTL carriers prefer a shipment of 1 pallet containing 100 boxes shrinkwrapped to form one piece than 100 individual pieces. This reduces handling costs and the risk of damage during transit. Typically the rates of LTL carriers per pound is less than the rate of parcel carriers.

Similarities

Both LTL carriers and parcel carriers are similar in the fact that they both use a network of hubs and terminals to deliver freight. Delivery times by both types of service providers are not directly dependent upon the distance between shipper and consingee. Also, using an LTL carrier is very similar to that of using a parcel carrier. The shipper often has a regular, if not daily, pickup schedule and can log onto the carriers homepage to schedule pickups, track shipments, print paperwork, and manage billing information.

Integrating LTL and parcel carrier for shipper cost savings

If an LTL carrier transport the parcels to a parcel carrier's hub near the destinations.

An example of this is a shipper in NC that has 500 parcels destined for CA, 250 destined for NY, and 250 destined for IN. The shipper will segregate the parcels by their destination. All the Southern . The parcel carrier will take the parcels off of the skid and inject them into the parcel distribution system and deliver them to their final destination.

Another name for this operation using both LTL and Parcel carriers is known as zone skipping. The LTL carrier is being used to skip several parcel zones as the costs of using a parcel carrier solely for long distance transportation of parcels is more costly per pound than an LTL carrier.

Many shippers prefer to not use such methods as they prefer to only contract with one service provider. Using an LTL carrier and a parcel carrier does add another point of failure for the shipper's operations.

Preparing shipments for LTL carriers

Since freight sent via LTL carriers must be handled several times during transit it must be packaged to protect it from scuffing, crushing, or dropping due to carelessness or inattentiveness by dockworkers. Thus it is normally good practice to load freight onto pallets or package freight into crates. Sturdy cardboard boxes are normally acceptable as well.

Packaging freight in this manner serves several purposes:

  • It protects the freight from damage.
  • It protects other freight from being damaged by your freight.
  • It helps to avoid loss situations; situations in which some of your freight is separated from the rest and lost in transit.

Since freight sent via LTL carriers is subject to misrouting or misloading it is a good practice to put the Tracking number on each side of each piece of freight. If the Destination State and Zipcode are affixed to each side as well misloading is less likely to occur. Even though it is not required it is good practice to affix a relatively large label including four letter Carrier Code, Tracking Number, Destination Station, and Destination Zipcode of the shipment (i.e. ABFS123456789 GA 30301). The easier it is for dockworkers to identify an individual shipment the less likely it is to be put in the wrong place. If the only piece of identification is the tracking number the dockworker will have a harder time identifying the shipments pieces and as such the chances of freight being loaded onto the wrong trailer is greater thereby increasing the transit time and also increasing the chances of the shipment being lost.

Factors of LTL operation

Factors relating to profit margin

LTL shipping is a thin-margined business, so costs must be minimized. Two of the biggest costs for LTL carriers are fuel and labor. As many LTL carriers have unionized labor, labor costs are relatively fixed, so minimizing fuel usage is a significant goal. This translates to maximizing the utilization of every trailer for every mile driven - ideally, every trailer carrying freight would contain a maximum level of freight by both weight and volume. The weight and volume characteristics of a set of freight is referred to as "freight mix".

Density of freight/freight mix

To achieve a good freight mix on average, one method employed by the industry is the use of a two-tiered transportation network involving a clique of large freight way-stations (called "breakbulks", for example), with smaller freight "terminals" fanning out from each breakbulk facility.

The philosophy behind the "breakbulk approach" is that by consolidating a large amount of freight from dispersed locations (i.e. from the connected terminals), a larger and more diverse pool of freight is available to choose from so as to achieve better freight mix for the long haul between breakbulks. For example, the freight coming from one terminal location may be relatively light and bulky, whereas the freight from another terminal location may tend to be much denser. Some freight may be irregular in shape. By consolidating the freight originating from multiple terminals in one location, there is a wider range of freight to choose from, so as to efficiently pack each trailer for the long inter-breakbulk journey.

In this terminal-breakbulk network, a typical shipment would first be picked-up from a customer location and dropped off at the local terminal. It would then be trucked a relatively short distance (a couple hundred miles, for example) to the terminal's associated breakbulk. From there, the shipment would be trucked a relatively long distance to the breakbulk associated with the destination terminal, and then finally trucked to the destination terminal, to be delivered to the customer. The continual goal in this network is, however, to minimize transfers of freight. Ideally, only one or even no break bulks are involved in the process.

Intermodal transportation of LTL freight

Not all LTL shipments travel by truck solely. LTL carriers rely on rail or air to forward some freight toward its destination. LTL carriers are normally able to deal with railroads more effectively than small shippers are able to as LTL carriers typically send a large volume of freight each and every day. LTL carriers are able to monitor railroad performance to ensure delivery of freight within the specified delivery window. An Intermodal freight transport shipment employs several methods of transporting goods from start to finish. For instance, one shipment will start out on the railroad, then be transferred to an ocean carrier, and end up on a truck before delivery.

Intermodal shipping is considered advantageous by some shippers because there is no handling of the freight when it changes from one carrier to the next. Pallets are used to consolidate many things into one easy-to-move container. Because handling is reduced, it also reduces damage and loss, increases security, and allows the items to be transported more quickly.

LTL carriers

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