Consolidated Shipping vs Hub and Spoke LTL
Do you have Less Than Truckload shipping needs, but don’t know what method to use? Should you consider the tried and true hub and spoke LTL system? Or maybe consolidated shipping might be sufficient for your needs? Maybe you aren’t even sure of what the differences between these two are.
In this article, we will review what these two methods of shipping are, their advantages, disadvantages and when to use them. Let’s dive in!
Hub and Spoke LTL
The hub and spoke system is the traditional way to ship LTL. Overall, shipping LTL takes longer than full-truckload freight shipping due to having to make multiple stops. But, when your shipments are only taking up a portion of a trailer, you don’t want to pay for that unused space. With LTL, you only pay for the space that your freight takes up. With hub and spoke, your freight is picked up and taken to the local “hub” or origin terminal. At the hub, the freight is then mixed up and put on another truck headed in the direction if its final destination. It continues to do this at different terminals until it reaches its final “hub” or destination terminal. Then it is sent out for its final delivery.
There are many advantages to this hub and spoke system of shipping LTL.
• Cost Effective – Pricing agreements can be negotiated on an annual basis and offer accurate forecasting based on shipping trends.
• Faster Pick Up Times – Typical LTL shipments can be picked-up on the same day or next day, sometimes within just two hours, your shipment could be picked up. This is perfect for just-in-time manufacturers.
• Transit Times – LTL allows for cross-country moves in less than a week. Nationally-based carriers have the ability to cover the majority of the United States in three transit days or less.
Due to freight being handled several times throughout the shipping process, this increase in handling can lead to freight damages if the product is not well packaged. Working with an experienced 3PL partner can help you with this issue through working directly with the carriers to rectify the problems, as well as full managing your freight claims.
When to Use Hub and Spoke
So, when should you use Hub and Spoke LTL shipping? This is the typical go-to for most LTL shippers. If you are processing orders regularly for customers, you want to get the product to them as quickly as possible. With the hub and spoke system pick-up times are quick and transit times are short. This is the most efficient way to ship freight that can not be shipped via full-truckload.
First, let’s take a look at how Consolidated Shipping works. Consolidated Shipping takes place exactly where you would expect, a consolidation warehouse. In the consolidation warehouse, multiple LTL shipments from various shippers that are going to similar locations are combined and loaded into the same truck. From there, they remain on that same truck until they reach their final destination. Consolidated shipping is a way of taking LTL shipments and turning them into a multi-stop truckload shipment.
This method of consolidating LTL shipments into full-truckloads comes with some great advantages for shippers.
• Cost Effective – As with the hub and spoke system, contracts can be negotiated with the carriers, and you only pay for the space that you take up on the trailer.
• Reduced damage risk – damages can be a big issue for some shippers, especially shipping LTL. Consolidated shipping considerably reduces the onloading and offloading handling of the product. The freight is unloaded and loaded at the consolidation center and then not unloaded again until at the consignee’s location.
Oftentimes, it can be difficult to find a carrier that does consolidated shipping. Because of the added complexity of multiple loads in the same truck, some carriers shy away from the method. Even if you are able to find a carrier that is willing to handle your consolidated shipments, be careful to be on top of the reliability of this carrier, and that pricing is being handled correctly.
When to use Consolidated
When and why should you use consolidated shipping? If you have a few regular shipments that are headed in the same direction that are but are say 20-miles apart, it behooves you to use consolidated shipping. It may take a little longer for those shipments to arrive, but this is the most cost-effective method for those shipments.
If your freight is fragile, then consolidated shipping is also a great method to use. With less handling of your goods, there is less chance of damage. Since the freight is loaded with other freight traveling to a similar destination, there is no need to unload it until it reaches the final destination.
Whether you know which method you would like to use, or you’re still unsure, partnering with a reputable LTL Freight Management Partner is the best way to go. Here at LTX, we have over 100 years of experience on our staff and board. We will be able to work with you to find the best and most cost-effective way to get your shipments to their final destination quickly, and at the best cost possible. Contact us today to chat freight!