LTL shipping can be a far more cost effective way for many people who need to send smaller shipments. If your shipment doesn’t require a full trailer, then you shouldn’t have to waste money on paying for the entire thing.
The good thing is, you’re far from alone and there are a lot of companies out there looking to share trailer space for their shipments which helps to reduce the costs for everyone involved. Cost is one of the greatest factors to consider when choosing an LTL shipping provider. Keep reading to find out what goes into determining it.
And when you’re finished reading, check out the other articles in our ‘LTL shipping’ series:
- What are the different types of LTL freight carriers?
- How is pricing determined for LTL shipping?
- What are the best LTL trucking companies?
What Is LTL Shipping?
LTL stands for less-than-truckload, and this type of shipping involves shipments that do not fill an entire truck or trailer. These shipments have between one and six pallets and weigh less than 15,000 pounds combined.
LTL shipping offers people a more cost-effective form of shipping, and it generally comes with more options as well. If you have a smaller shipment requiring special handling requirements, this type of shipping will likely be a trusted solution.
How Does LTL Shipping Work?
LTL shipping works by shipping goods on a portion of a trailer rather than taking up the entire space. The remaining space is used for other LTL shipments from other companies which helps to reduce your overall transportation costs.
Pros & Cons of LTL Shipping
LTL shipping offers many people great advantages with getting their goods where they need to be in a timely and affordable manner, but you should know about the disadvantages involved as well.
Pros
Less-than-truckload shipping offers impressive pros to consider.
- Reduced Costs: Lower shipping costs are one of the greatest appeals of LTL shipping. Because you’re sharing a trailer with other companies paying for shipments, you will pay less as you aren’t required to cover the cost of the entire trailer.
- Improved Security: LTL shipments are typically more secured as they are handled and organized into smaller loads. These smaller loads can typically stay more secure during loading, shipment, and unloading.
- Shipment Tracking: LTL carriers offer real-time tracking information so the location of your shipment is never in question.
- Special Handling Options: Smaller shipments may require the use of special equipment or handling. LTL shipments generally have access to additional handling options including the use of tailgates and liftgates, inside pick up/delivery, using pallet jacks, pallet breakdown, and the like.
Cons
- Extended Delivery Time: Because you are sharing a trailer with other companies and their shipments, your shipment time could be delayed depending on the stops ahead of yours.
- Increased Risk of Damage: Freight shipped this way is generally handled more frequently which can increase the risk of damage to your product(s).
- Decreased Area Coverage: LTL shipment options may not be available in all locations.
12 Factors That Affect the Cost of LTL Shipping
LTL shipping is a unique way to ship, and it can be highly beneficial for many companies. Be sure to consider the following factors that can affect the cost of your shipment(s).
Base Rates
LTL carriers are able to and do establish their own base rates. These rates are quoted per 100 CWT, also known as hundredweight pricing.
The carriers base their rates on shipment volume, demand, and the gross costs. All freight carriers are different. They have different trucks, a different number of trucks, and much more, so their rates will vary greatly between them.
Weight
Carriers that offer LTL shipping will often price shipments per hundred pounds. Often called hundredweight pricing, it’s a standard option for the majority of LTL shipments. Generally, the carrier will break down weight categories by class offering lower rates as the shipment weight goes up. This means that typically, the more your shipment weighs, the less you’ll pay per hundred pounds.
Distance
It’s no surprise that the further your shipment needs to travel, the higher your cost will be. The zip codes you are shipping to and from will help determine your total distance and cost. If your shipment requires a truck transfer, you’ll likely see an increased cost as well.
Density
One of the main factors in determining your shipment cost is density. Density is the space that your shipment will occupy in relation to its weight.
Density is determined by dividing the total weight of your shipment by its volume. The volume is determined by calculating the length times width times height. The density of your shipment will help determine which freight class it falls into.
Freight Class
The NMFTA, or National Motor Freight Association, has 18 freight classes which range from 50 to 500. They base these off density, but also stowability, handling, value, and liability.
The higher density your shipment is, the lower its freight class will be, meaning it’ll likely be between 50 and 85. Less dense shipments will have higher classifications from 125 to 500. Generally, dense, easily stowable shipments that do not require special handling will be the most cost effective to ship.
Minimums
The AMC, or absolute minimum charge, is considered the cost below which any carrier will not go. Carriers do not want to be stuck with excessive costs where they won’t see a profit for the shipment.
Negotiated Discounts
Third-party logistics, or 3PL, freight brokers are businesses that can assist with your operations including supply chain and logistics. These 3PL companies can typically see additional discounts if they bring in extra business for the freight carriers they are shipping with. Put simply, if you can help bring in enough additional volume for the carrier, you could see additional savings for your own shipping needs.
Freight All Kinds (FAK)
Many carriers will offer a FAK, or Freight All Kinds classification in their pricing options. This will allow varying products that hold different freight classes to be both shipped and billed at the same freight class. An example of this is:
Someone shipping multiple products with varying freight classes from 50 to 120 may negotiate with the carrier to have an FAK to allow all products to rate at the same median class of 80. While this will increase your costs on the lower class shipments, it will decrease your costs on the higher class shipments.
Accessorials
Accessorial charges may apply when your shipment requires additional handling services that are not standard. Dock-to-dock pickup and delivery are the standard for LTL shipping.
Any additional handling requirements such as liftgate services, inside pickup or delivery, pick up or delivery from other, limited locations, weekend or after hours delivery, and others will be considered accessorials and will be an additional cost.
Special Handling Charges
In addition to accessory charges, there may be other special handling charges you will need to have access to, these will also come at an added cost. If you have hazardous materials in your shipment, have a shipment requiring refrigeration, or something of the like, there will likely be added charges for these needs.
Rush Service
Sharing a trailer with other companies’ shipments is the biggest reason you’re able to reduce your shipping cost, but this also typically lengthens the time of your shipment. LTL shipping is ideal for shipments that are not time sensitive.
While carriers generally try to keep routes efficient and send shipments that are going in the same direction, added stops will increase the time your shipment is in transit. If you need rushed delivery service, it’s almost a guarantee that you will pay an extra fee for this.
Fuel Surcharges
Fuel surcharges are always a varying cost, but they will generally apply to every shipment. This cost reflects your portion of what the estimated cost of fuel is for the shipment. These will depend on what the current fuel rates are and certain states may have additional fuel taxes as well.
Pay For the Room Your Shipment Needs
LTL shipping can certainly be a way to save money, but knowing your needs, LTL shipping options, and what different carriers have to offer is key. If you don’t have a shipment that requires a full truckload, or FTL, then you will end up paying far more than you need to.
If LTL shipments are a consistent type of shipment for your company, then you should never have to pay for more room than your shipment requires. Ship efficiently with the best LTL companies today.
FAQ
The average cost for LTL shipments will vary depending on the carrier, freight class, and other factors. Many LTL shipments will cost between $0.22 and $0.42 per pound, while some will fall into a wider range of $0.10 to $0.75 per pound.
Getting the best LTL rate will require a little research before you book a shipment. Know your factors to consider, like weight, density, or distance, so you’ll have a better idea of what the cost should be.
Weight breaks in LTL shipping refer to the discount you get with an increased shipping weight. While you still need to fall in the window of the acceptable weight range, you may receive a weight break per hundred pounds on your shipment.
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