Inventory Management: Practical Tips for Warehouses
LTL shipping is typically referred to as the neglected child of the logistics supply chain. While most shippers prefer to ship full truckloads (FTL) whenever possible, the truth is that less than truckload is just a way of life. If you are new to shipping or a seasoned veteran, another reality is that there is a lot of misleading or inaccurate information about LTL shipping. Working with an experienced transportation management partner can help you navigate these challenges.
In this blog post, we've outlined 5 common myths about LTL shipping to help you make an informed decision on how to plan LTL shipping and whether this resource is the right option for your company.
Explaining Less Than Truckload Shipping
As the name implies, a less than truckload or LTL shipment is used when you don't have enough freight to fill a standard truck container (usually 48 feet long). The LTL shipment is also commonly used when you have multiple stops across a wide geographic area. Companies that offer LTL typically utilize freight terminals to distribute freight along multiple routes. This is not only efficient for the carrier but can save the shipper money by "piggybacking" your shipments with others.
The LTL shipment is a good solution for many companies who need to distribute their freight to multiple locations. However, there are a few misconceptions about LTL shipments that need to be clarified, so you can make informed decisions as to when and how to use this method best.
Myth 1 – Delivery Times are Guaranteed – FALSE
This is the leading myth about LTL shipping, and it can cost shippers a lot of business by misleading their customers. The truth is that LTL carriers simply can't guarantee pickup and delivery times. They will provide you with an estimated transit time based on the carrier's lanes of delivery, available routes, and your location – and that of your customer. The most important thing to remember about planning an LTL shipment is to never choose this option if you are pressed for time – and need an expedited delivery.
Myth 2 – Scheduling an LTL Shipment is Difficult and Time-Consuming – FALSE
On the contrary, an LTL shipment is arguably the most flexible way of shipping products. In fact, most LTL carriers operate dedicated pick-up routes based on geographic planning and can typically pick up a shipment from you within a few hours lead time. The important item to remember is that effective route planning, especially with an LTL shipment, can save you a ton of money, while improving your communication with the customer and provide better-estimated delivery times.
Myth 3 – Shippers Can't Negotiate Fuel Surcharges with LTL Shipments – NOT ENTIRELY ACCURATE
Sometimes a myth is not entirely accurate. Such is the case with myth number three. While several shippers negotiate discounts on rates with carriers, it's not commonly known that fuel surcharge for LTL is also negotiable. The problem here is that many carriers are not all that interested in negotiating fuel surcharges (especially for shippers who only use their services sporadically). If you are a frequent user of LTL shipments, it might be worth your while to contact your carriers to ask them about reducing fuel surcharges or setting up a negotiated cost.
Myth 4 – The Base Rate is Not as Important as a Carrier Discount – FALSE
With LTL pricing, the base rate is the most important aspect. While discounts are fine and dandy, the truth is that if the base rate is exceptionally high, then your discounts will not have much of a financial impact. This is what many shippers refer to as the Costco rule. You can purchase a case of soda for $4.50 at Costco for no discount or (2) 12 packs at the local grocery store for $3.00 per 12-pack with a 10% discount. In the end, you're still paying more at the local grocery store. For shippers, the important detail to remember is to consider the overall price of shipping, and include every surcharge, tax, or discount to determine the total cost.
Myth 5 – LTL Freight Classifications Don't Change – FALSE
What's commonly not known about LTL freight classifications is that the LTL carrier usually has no role in determining your classification. This is set forth by the National Motor Freight Classification Board (NMFC). This organization meets twice per year to revise classifications – and typically does so with every meeting.
It's important to ask your carrier or to work with an experienced partner who can help you with not only your freight classifications but other ways they can save you money on shipments. A Modern 4PL partner like Redwood has the experience and most importantly, relationships with LTL carriers to help you streamline these shipments; saving you time, money, and providing better service for your customers.a0See how companies have achieved these results in our case studies.
Final Thoughts
Understanding these common LTL shipping myths can help you make better decisions for your supply chain. By working with the right logistics partner, you can optimize your LTL shipments for cost and efficiency.
FAQs
What is LTL shipping, and when should you use it?
LTL shipping, or less-than-truckload shipping, is used when your freight does not fill a standard truck trailer, usually about 48 feet long. It is also a practical option when shipments need to move to multiple stops across a wide geographic area. Carriers consolidate freight through terminals, which can lower cost by combining your shipment with others.
Are LTL delivery times guaranteed?
No, LTL delivery times are not guaranteed. Carriers provide estimated transit times based on lanes, available routes, and the shipper’s and customer’s locations. If a shipment is time-sensitive or needs expedited delivery, LTL is usually not the safest choice because transit timing can vary.
How hard is it to schedule an LTL shipment?
Scheduling an LTL shipment is usually flexible rather than difficult. Many LTL carriers run dedicated pickup routes and can often collect freight within a few hours of lead time. Good route planning also improves customer communication and helps set better estimated delivery times.
Can you negotiate fuel surcharges on LTL freight?
Yes, fuel surcharges on LTL freight can sometimes be negotiated, although carriers may be less willing to do so for shippers with sporadic volume. Frequent LTL shippers are more likely to have leverage when asking for reduced fuel surcharges or a negotiated cost structure.
Why does the base rate matter more than the carrier discount in LTL pricing?
The base rate matters more because a large discount on an inflated rate may still leave you paying too much. In LTL pricing, you should look at the full landed cost, including base rate, surcharges, taxes, and discounts. The real measure is the total cost, not the discount percentage alone.
Do LTL freight classifications change over time?
Yes, LTL freight classifications can change over time. They are set by the National Motor Freight Classification Board (NMFC), which meets twice per year and typically revises classifications at each meeting. Because of that, shippers should monitor classification changes closely to avoid pricing or billing issues.
Who determines LTL freight classification: the carrier or the NMFC?
The NMFC determines LTL freight classification, not the carrier. Carriers generally apply the classification, but the standards themselves come from the National Motor Freight Classification Board. That is why shippers often rely on experienced logistics partners to help verify classifications and reduce the risk of costly errors.
