As the logistics market scales, companies dependent on it are faced with dilemmas about how exactly to use transport capacity.
- On the one hand, a particular seller or manufacturer can postpone the shipment of products until a sufficient quantity of them is accumulated. On the other hand, in this case, they sacrifice the timeliness of the arrival of goods units to distribution points, thereby causing some additional risks.
Less than truckload is a freight transportation model based on the consolidation of various cargoes. In fact, this is one of the best ways to deliver goods from different suppliers to different distribution points at the same time.
- At the same time, the model is not beneficial for the carriers, as it increases the prime cost of services. However, it compensates for the potential downtime of carriers’ resources if they focus more on FTL.
Today, we will talk about the features of LTL, the advantages and disadvantages of this type of transportation, and how the model is beneficial for users end consumers.
What Does Less Than Truckload (LTL) Mean in Freight Shipping?
LTL industry is a subtype of freight transportation, when instead of being fully loaded, the vehicle leaves with a conditional pallet of goods and consolidates the cargo along the route. The market for this service, according to the forecasts of Verified Market Research analysts, will be estimated at more than $250 billion already by 2030.
For freight, LTL is the magic tool that allows you to:
- Minimize vehicle parking. Instead of waiting for a supplier to prepare a batch of goods for FTL, you can contract with several distributors and increase the flow of orders.
- Update products on time. When you work with a logistics provider based on the LTL model, you can transport goods to the points of sale faster, regardless of their actual volume.
- Improve relations with partners. LTL allows you to share costs between numerous customers, which serves as a positive factor for the formation of long-term working relationships.
- Reach a larger audience. Quite a few companies do not need permanent FTL services due to the relatively low turnover of goods. Therefore, LTL can become an ideal model for business cooperation.
- Increase the profitability of the company. And while the cost of shipping with LTL increases slightly, so do the profits due to the number of loads delivered to different customers.
That is, formally, LTL imposes some inconvenience on the carrier (more on that later), but instead compensates for its potential downtime, which improves business profitability.
Why Use LTL?
The less than truck load model is increasingly becoming the new market standard. While corporations use the maximum capacity of logistics providers to transport their goods, smaller businesses are looking for compromises, one of which is LTL.
Here are a few cases when you should still use LTL:
- Your load is smaller than the carrier can handle. Conditionally, when you need to transport a pallet to one of the stores, you do not want to spend money on renting a separate car.
- You have several warehouses from which you need to pick up products. You can take a pallet from the initial hub and load numerous additional ones at the other warehouses.
- You need to deliver limited batches of goods to different points. Imagine that you have a chain of stores to which you need to transport assembled pellets with goods.
- You want to reduce logistics costs. Consolidation of cargo is the division of the bill for services between all those who use them within the framework of cooperation with a logistics provider.
- You need a specific transportation route. Sometimes it doesn’t make sense to use last mile shipping, instead LTL will allow you to cover your logistics requires without extra costs.
However, LTL should not be perceived as a panacea for solving the problem of freight transportation. The model has both advantages and disadvantages. About this and other things later.
Pros and Cons of LTL
Well, let’s briefly look at the advantages and disadvantages of LTL in the context of business cooperation with logistics providers. And let’s start with the positive points:
- Saving. You may save money compared to hiring a truck just for your purposes, depending on the kind and amount of the goods.
- Flexibility. If specific routes or shipping conditions are required, the LTL provider can serve them for you for an additional fee.
- Coating. As a rule, LTL carriers deliver goods even to residential areas; that is, you do not need to hire additional last-mile logisticians, couriers, etc.
Disadvantages of less than load:
- Delays. The car will not start until it is 100% loaded. That is, you should understand that you potentially lose the dynamics of order delivery.
- Delivery time. The more complex and branched the route, the longer it can take for your shipped goods to reach their destination.
- Complexities of the organization. You must provide the carrier with a full set of supporting documents to avoid processing and delivery errors, to eliminate the human factor from the risks.
The balance between positive and negative is determined by the specifics of this type of transportation. So let’s consider it in more detail.
How Does LTL Work?
While FTL is a fully loaded truck moving from point A to point B, LTL is a slightly different model. Less than load shipping is primarily about the fact that your cargo is part of the loading of the vehicle. Let’s try to visualize this concept:
- You give your cargo to the carrier. Conventionally, this is a pallet or even a smaller quantity of products (usually from 250 to 15,000 pounds) with appropriate documents.
- A partially loaded car goes to the next hub. An additional pallet or other type of cargo packaging from a third-party client is loaded there.
- If the car is still not full, then it moves on until it contains the maximum possible amount of cargo, the destination of which is in one direction.
- When the car is full, it starts moving to its destination. Along the way, goods are unloaded in the specified hubs (and loads as needed).
- Upon reaching the end point of the route, the process is repeated and the truck leaves for the base location, along the way delivering goods to one or several customers.
Please note: the model described above is purely demonstrative, and the actual algorithm may differ significantly depending on the specific situation.
Can I Ship Anywhere Using LTL?
Another important advantage of less than truckload (LTL) is a virtual unlimited number of cargo delivery routes. Yes, a number of carriers refuse to deliver to the client’s address, as it is quite difficult for trucks to maneuver between residential buildings, etc. However, this is more the exception to the rule.
You can usually order transportation regardless of the final destination, for example:
- To logistics hubs. For example, to warehouses of 3PL providers, or to last-mile delivery logistics.
- To commercial hubs. For example, central regional warehouses of supermarket chains, postal providers, etc.
- To shops or supermarkets. Directly to the unloading platforms of regional branches and points of sale.
- To the production area. Equipment and materials can be delivered to the customer directly in the enterprise’s territory or directly to one of its warehouses.
- Directly to consumers. Address delivery, even in LTL, is extremely rare and is used only in cases where oversized cargo is transported.
Therefore, it can be stated that LTL is an adaptable and more convenient way of delivering goods and products virtually anywhere.
How Are LTL Rates Calculated?
Usually, two factors affect the cost of transportation by the less than full truck load model: weight and number of loads.
In the first case, pounds are calculated, and the price of the service is calculated based on them. In the second, the pallets and their share of volume from the full load of the car are counted.
In any case, the price of transportation will be lower since the cost will be shared among all whose cargoes will be consolidated.
LTL Freight Shipping With Hugo Hunter
Less than truckload shipping is a convenient and fairly affordable way of moving goods for business. Yes, the model is potentially slower than FTL or last mile delivery, but it lowers costs by consolidating loads from different customers.
Hugo Hunter is your trusted LTL provider. Cooperating with our team, you will get:
- Adaptive transportation conditions.
- Wide geographical coverage of services.
- Loyal and personalized tariffs.
- Guarantee of timely delivery.
- Door-to-door service.
So don’t delay. Contact the Hugo Hunter manager to order a car and start long-term cooperation!