Truckload vs. LTL

Truckload Carrier or Less-Than-Truckload Carrier….

A question a lot of traffic and shipping managers have is whether or not a shipment should go exclusively with a truckload carrier or through a less-than-truckload (LTL) carrier. The quick and easy rule of thumb is if your shipments is going to take up less than 24' of deck space (or 12 pallets), you most likely want to get a quote from both a truckload provider and a less-than-truckload provider. 24 ft orders weighing less than 20,000 lbs usually are competitive through an LTL carrier but when you start taking up more than 24' or the load starts weighing over 20-24,000, your best bet will be with a truckload carrier. Now, there are some exceptions - distance of the load, the commodity, its LTL class, etc. but you can bank on this rule of thumb for about 90% of your shipments.

Another point to watch out for depends on the LTL carrier you are set up with and the discounts that are in place - you simply might be paying too much! The fact is, a lot of traffic manager do not understand that Truckload (TL) carriers consolidate partial shipments at a price that usually beats the LTL carrier discounted rate. Truckload carriers call LTL shipments "partials" and price smaller shipments by 8' increments of deck space. You might get 8' of deck on a truckload carrier for $.35/mile! Again, depending on the shipment variables (distance, weight, commodity), it will most likely be a cheaper rate than your LTL carriers. Also, always remember that MOST truckload carriers do not touch your freight once it is loaded on the trailer - the same driver and trailer that picks up, delivers your freight. This is important for many reasons but the biggest one is customer service. Your freight arrives just like your packed it. The is not the case with LTL carriers that touch and transfer your freight, on average, two times before it gets to your customer!

In this crazy economy, it is smart for every traffic manager to consider whether it's more economical to make smaller, more frequent less-than-truckload shipments or to consolidate orders into cheaper, faster truckloads. The answer depends on a lot of factors that there's no single rule that applies to all shippers. Everything from the efficiencies of ordering multiple trucks vs. one, price, labor, commodity's weight, handling characteristics, class, location of the load, and sense of urgency to the customer enters into the final decision.

Savings by the Truckload

Since the mid-80's, more and more traffic managers control cost through the benefits of combining less-than-truckload shipments into full truckloads. Consistently consolidating shipments generates cost savings from a low 5 or 10% to a high of 40 to 50%. Also, by shipping your partial shipments via a truckload carrier, your shipments arrives, on average, 65% faster than it would via an LTL carrier.

Those savings accrue in terms of time - a team driver operation can make it coast-to-coast in just three days, as well as in packaging, handling, administrative costs, and per-unit freight costs. The cost benefits can be so significant, in fact, that some companies will even look for opportunities to consolidate their loads with those of other shippers to create a truckload.

Since the late 90's, many traffic managers have been driven off the dynamics of technology within the transportation industry. More and more shippers are using decision-support tools like transportation management systems (TMS) to spot opportunities to combine partial loads into full truckloads. "A good TMS will provide a traffic manager tools that makes it easy to consolidate multiple LTL shipments into one truckload - fast and easy," says Scott McGlon, COO of Integrated Transport Logistics, Inc., a logistics provider based in Montgomery, AL "All you need is a computer. It's just like routing a fleet of trucks the old fashioned way but 10x faster and more accurate." TMS systems do more than simply identify transportation efficiencies. For example, transportation optimizer applications, which are commonly included in TMS packages, can help traffic managers choose the most economical shipping method. "The optimizer helps you select the right mode of transportation, then it helps you build the load fast," says McGlon. "Companies will easily spend up to 50% more doing it the old fashion way with a pen, pager, mileage and routing guide."

A TMS system also introduces more flexibility because it allows traffic managers to continue collecting orders and reconfiguring loads until just prior to departure. A good package, moreover, improves customer-pleasing performance at other points in the supply chain.

Whether you choose an truckload carrier or LTL carrier, it is clear that consolidation, timing, and price are the key performance indicators that will drive efficiencies and savings into your organization.