What is LTL freight and how can it save you money?

Do you find that your company often can't fill an entire full truck shipment when shipping freight? Or are you finding it challenging to find affordable and reliable capacity with your regular Full Truckload (FTL) carriers? If you answered yes to either of these questions, then it's likely time to consider LTL freight shipping.

What is LTL freight?

LTL stands for Less Than Truckload, and is used for the transportation of small freight or when a shipment does not require a full 48' or 53' trailer. These shipments can weigh between 100 and 10,000 pounds and must come in at no bigger than 12 linear feet — meaning six 4×4' pallets max.

Important to keep in mind however is that just because you can’t fill a full truckload doesn’t mean it qualifies for LTL freight shipping. To ship LTL freight your product has to be in a crate or on a pallet for fast loading, unloading, and space efficiency.

LTL freight shipments are usually combined in transportation hubs, facilities, or distribution centers, and are unloaded in special terminals, where receivers can either track shipments or pick up order fulfillment of their orders. LTL freight shipments can also be handled multiple times while in transit. This means that it's the most cost-efficient way to ship your larger-than-parcel items without the cost of an entire trailer. The remaining space is then filled by other shippers, with each paying only for the portion of the trailer being used for the transportation of their own load.

We’ve supported thousands of LTL loads for our Shipwell users, and frequently hear questions from our community about LTL logistics. It’s an emerging mode of freight, and we’re here to help make sense of it all.

For those who might not be too familiar with this option, we made a list of some things you might not know about the world of LTL. Keep reading to learn more, and start booking LTL with Shipwell to save time, money, and resources.

How are LTL shipment prices calculated?

Shipping LTL freight does have a cost, and it often includes freight billing terms that require payment for services not included in the initial price.

These fees, or “accessorial charges,” are added when additional services are requested beyond the standard procedure. These services include lift gates, inside delivery or pick up, residential service, collect on delivery, fuel surcharges, arrival notification, and insurance.

Additionally, there are a few things in LTL freight shipping that are estimated and not guaranteed. Most freight carriers do not work on weekends, which could affect transit time, pickup, and delivery.

Due to the process of LTL freight shipping, trucks have to go to terminals and unload their cargo first. Workers then stage the products and move them into trucks going into those regions, where they could end up at another terminal. The entire process could happen several times in one shipment.

Factors that go into LTL freight pricing:

Location: As with most freight, the distance between your shipping and receiving points is factored into pricing, with longer distances resulting in higher LTL shipping rates. When shipping long distances your freight may also need to be transferred from one truckload shipping to another along the route, which could also factor into the final price.

Total weight: LTL shipping rates are based on the weight of the shipment, or the number of pallets it’s shipped on. Weight-based rates are generally priced at a “rate per hundred,” meaning that the more a load weighs the less you pay per hundred pounds. 

Density: For density-based rates, prices are determined according to the cubic size of a shipment and/or the number of pallets or crates in the load. Lower-density shipments have a higher space-to-weight ratio, so even though they are lighter, they fill space on the truck that could otherwise be utilized for other shipments and are therefore more expensive to ship. The cheapest products to ship are dense, fit on a standard 4×4 pallet, and can be stacked. Think flat-pack Ikea vs an antique living room set — both have similar weights, but one can fit on a single pallet while the other will take up half a full truckload freight there.

Freight class: Freight class is another important consideration in LTL freight, and is defined by a variety of factors around the weight and densityof your shipment. Freight that is heavy, dense, and difficult to break is placed at a lower class, making it the least expensive freight class to ship as it is easy to handle. Lighter shipments that are less dense are typically more fragile and difficult to handle, making them a more expensive high freight class. 

Additional services: As highlighted above, special requests such as residential pickups/deliveries or liftgates to load/offload the shipment are billed on top of the initial price as accessorial charges.

How can you save money with LTL freight shipping?

When you choose LTL shipping options, you can avoid paying for unused space on a truck for smaller loads, allowing other shippers to fill the remainder of the truck with their own shipments destined for areas along the shipping route. Likewise, for larger loads, you can split the shipment into multiple loads to take advantage of extra space on trucks headed in the right direction.

But whatever the reason for choosing to ship via LTL freight is to save money, how can you leverage your transportation management system (TMS) to ensure that you are getting the most value out of your shipment?

Maximize density

As already mentioned, density is one of the biggest factors that go into LTL pricing, with LTL carriers make their profit by fitting the largest number of LTL shipments into a single trailer as possible. The more space a shipment takes up, the higher your quote is going to be. 

While you may not have much control over how much your shipment weighs, a well-stacked pallet can greatly impact its density.  By utilizing a TMS or other shipping software to optimize your shipment's volume and ensure that no space is wasted, you can effectively increase the density of your load and reduce freight costs. Eliminate dead space wherever possible, utilize pallets that can be stacked easily, and stack an extra row of product on your pallet rather than using a new one. Anything you can do to increase density and get more weight into the same space can help to bring costs down.

Consolidate your shipments

What’s better than saving money on an LTL freight shipment? Eliminating a shipment altogether. Through consolidation, shipments that are all heading to the same terminal over a period of time can be combined into one truckload shipment. If shipments aren’t time sensitive you can send more products in a single shipment, but less often. With it being significantly cheaper to ship nine pallets once a week than it is to ship three pallets three times a week, as well as the reduction to handling, transit times and other charges, consolidation has great potential to reduce costs.

What's more, consolidating LTL shipments creates the potential to transition multiple LTL shipments into a single FTL shipment, reducing costs even further. And while all of this can be done manually, leveraging a transport management system that’s capable of identifying these savings opportunities can eliminate much of the guesswork involved.

Take advantage of zone skipping

When consolidating parcel shipments, LTL freight savings can be increased even further through zone skipping. Zone skipping is an industry technique that lets shippers combine many individual packages that would otherwise be sent individually across long distances into a single shipment. These packages are then sent via an LTL freight service across multiple zones — like from the East Coast to the West Coast — where they arrive at a sorting facility before completing their journey to their final destination. This technique allows shippers to take advantage of local rather than national freight rates. So instead of charging rates for each parcel over every zone, you are charged for the pallet at a lower LTL freight rate, and then a more affordable parcel rate during the last-mile phase.

Zone skipping also carries additional benefits like fewer transit and sorting related damages, more predictable timelines and improved tracking for customers, and in many cases, faster transit times than sending each parcel individually.

Negotiate with carriers

The best LTL freight rates are often the result of savvy negotiation, even during the current market volatility. For shippers who ship via LTL freight frequently, make sure you look at the overall cost when negotiating, not just the base rate. In addition to the base rate, the carrier will most likely have a number of accessorial charges like waiting time, storage, packing and fuel, all which can often be reduced or even waived for regular customers. 

You may also be able to negotiate a FAK, which stands for ‘Freight All Kinds.’ This is an agreement between a carrier and a shipper that enables multiple items of different classes to be shipped and billed at the same freight class. Getting a rate for each class can be time-consuming and complicated for both parties, so when shipping items of multiple classes, this can simplify the process for the carrier while offering you cost savings.

Beyond these options, carriers typically have the upper hand in negotiations since they already know precisely what their costs are and what other shippers are paying for similar shipments, but with access to the right data and analytics tools, you can gain an advantage. Consider investing in transportation management software that can provide you true market cost data and insight to analyze rates and bring your LTL freight shipping negotiations to the next level.

Provide accurate information

With the rates for shipping LTL freight being highly dependant on size and weight, many shippers may be tempted to slightly underestimate these figures in the hopes that it will result in a slightly lower shipping cost.  While it may be tempting to believe that a carrier won’t notice some slight “adjustments,” we cannot stress enough how bad an idea this is. No amount of savings is worth the risk of not only having your shipment cost raised but also being charged an inspection fee and a fine. Not only this, but you may find yourself red-flagged, meaning that each and every shipment you send will be subjected to an inspection every time you ever ship freight with that carrier in the future. By ensuring that all the information you provide is accurate, you won’t have to worry about being charged extra fees for your shipment.

Likewise, it is important to ensure that all address information on your bill of lading (BoL) is correct. The bill of lading is the most important document in the shipping process. So, it is crucial to provide accurate, exact information, and avoid mistakes. Ensure that the document is correct before turning it over to your carrier.

How do I get started with LTL shipping?

Above all, shippers want a solution that saves them time and money, and when the bottom line is the dollar sign, LTL is excellent for companies who have a few pallets and need their shipments on the road fast. For them, LTL can provide incredible value, and it’s faster than ever to get rates from a carrier for your LTL freight.

With direct access to over 100 LTL carriers, Shipwell provides access to instant LTL rate quotes for freight in just a few clicks on our platform. Simply start by filling out details of your LTL freight, view instant quotes from the carrier network, and book your freight in minutes.

Of course, LTL freight shipping can be logistically challenging, but when it comes to our shippers and their products, nothing is impossible. With Shipwell’s centralized platform and game-changing features like AI check calls, dock scheduling and instant rates, the process is a breeze.

Our fully connected supply chain offers access to trusted capacity at the best price and our advanced technology, backed by Shipwell’s team of experts in LTL freight services means you are supported on every shipment  – from booking to settlement.

To learn more about how Shipwel can help you to maximize the value of your LTL shipments, download our guide on The Future of LTL Freight to gain access to pro tips and insights to start making LTL a critical part of your supply chain. Even if you already ship LTL, this guide will help you master this unique mode of freight.

Ready to get your products on an LTL carrier today? Contact Shipwell to learn how our premium capacity network, knowledgeable freight experts, our transportation management system, and powerful data and analytics can start you on the road to success.

Book LTL freight here