18 February 2023• 8 min read
Best Practices in Less Than Truckload
LTL shipping is a cost-effective way for direct-to-consumer firms to move inventory so that orders may be filled quickly.
Palletized cargo is typically shipped using the LTL shipping technique from a distribution centre to any nearby terminal.
The way LTL shipping operates could be compared to a hub and spoke scheme. Local terminals would be the "spokes" in this model, while the bigger centralised terminals, also known as distribution centres, would be the "hubs."
It generally boils down to weight if you're not sure whether to send by LTL or package. Parcel may be a preferable option if you're transporting very little or lightweight freight in a small amount.
How does LTL shipping work?
Many factors might affect LTL shipping rates and whether or not choosing this shipment method is economically wise. These elements comprise:
a) Type of cargo: Higher costs will be incurred if a shipment needs special handling or equipment. This is typically true for companies that produce or market perishables, delicate goods, and potentially dangerous goods.
b) Dimensions of the cargo: The "freight class" of the freight will be determined using the dimensions of the freight and the weight of the parcels. The LTL delivery rate will be impacted by this.
c) Location: The longer the distance between the warehouse and the destination, the more expensive LTL shipping will be, as is the case with most transferring and shipping prices.
Difference Between LTL and FTL Freight Shipping
An entire semi-truck must be used for full truckload (FTL) shipping. FTL shipments often weigh from 150 and thousands of kilograms. This kind of shipping is only cost-effective if you have a sizable amount of freight to move. LTL, on the other hand, is a preferable choice if your freight weighs less than 150 kilograms.
Improve your LTL strategies with 3 Key Insights
1. Develop a small supplier base: According to MIT research, limiting the number of suppliers to a small number of results in superior performance from suppliers in terms of timely pick-up and delivery as well as better prices.
This might mean between seven and thirty vendors per site depending on your company, but your ideal number of suppliers will vary depending on your lanes, service mix, and specific business considerations.
2. The right mix of top-performing suppliers is key: In addition to reducing the number of suppliers you utilise, your success will depend on the suppliers you select. Better performance results from matching your service corridors with the strengths of your providers. Considering that providers naturally invest more in some lanes than others and concentrate their efforts in a more constrained geographic area.
This rule also holds true for larger suppliers with a broader geographic reach. In some lane types, they develop into regional leaders, making them a wise strategic decision. Based on the characteristics of the freight, the location, and the routes, top performing shippers engage providers who fit into distinct roles.
To maximise service levels while meeting demand from various geographic locations, top-performing shippers also work with suppliers who are suited for particular strategic tasks. By combining asset and brokerage, concentrate on high-quality service providers and respect the characteristics of your portfolio segments. You can add some elasticity to your plan to help handle demand variations within a lane by selectively involving a mix of asset and non-asset suppliers and using fewer suppliers per origin.
Approximately 80% of a shipper's loads are in 20% of the lanes, and 20% of their shipments are in 80% of the lanes, according to an acceptable market representation. 80% of the loads that are in 20% of the lanes often have characteristics that support route guide obligations. A route guidance plan with more carriers and/or a 3PL may be necessary for the 20% of shipments in the 80% of the routes. A 3PL can assist in aggregating the market and locating suppliers with short lead times who match the characteristics of each type of load. This strategy frequently offers genuine value for fluctuating demand.
3. Always plan for the LTL market: Shippers, particularly those using LTL freight, have been compelled to transmit smaller, more frequent orders with shorter deadlines and smaller quantities due to changing consumer expectations. No matter the market circumstances, it is crucial to plan and analyse the variables that affect your LTL performance.
The last several years have seen some volatility in the transportation sector. There has never been a greater need to boost efficiency and manage spending without compromising speed.