|LTL - Less Than Truckload Shipping Definition for the Freight Industry presented by Apparel Search|
Less-Than-Truckload (LTL) shipping is the transportation of relatively small freight. The alternatives to LTL carriers are parcel carriers or full truckload carriers. Parcel carriers usually handle small packages and freight that can be broken down in to units less than 150 US pounds. Full truckload carriers move freight that is loaded into a semi trailer. Semi trailers are typically between 26 and 52 US feet and thereby require a substantial amount of freight to make such transportation economical.
Less Than Truckload carrier operations versus Full Truckload operations
Full truckload carriers normally deliver a semi trailer to a shipper who will fill the shipment with freight for one destination. After the trailer is loaded the driver returns to the shipper to collect the required paperwork (ie Bill of lading, Invoice, Customs paperwork) and depart with trailer containing freight. In most cases the driver then proceeds directly to the consignee and delivers the freight him or herself. Occasionally, a driver will transfer the trailer to another driver who will drive the freight the rest of the way. Full Truckload transit times are normally constrained by the drivers availability according to Hours of Service regulations and distance. It is normally accepted that Full Truckload drivers will transport freight at an average rate of 47 US miles per hour (including traffic jams or queues at intersections).
One advantage Full Truckload carriers have over Less than Truckload carriers is that the freight is never handled in route whereas an LTL shipment will typically be transported on several different trailers.
Less Than Truckload
Less than truckload carriers typically have several drivers in a city where a shipper is located to collect freight from various shippers. Usually the same driver will visit the same shipper each time a shipment goes by a particular carrier. Once the driver has made several stops and has picked up enough freight to fill his trailer with either enough volume or weight then the driver returns to his terminal to have his trailer unloaded. The trailer is unloaded and the individual shipments are then weighed and rated for billing purposes. Next, the freight is then loaded onto an outbound trailer which will forward the freight to either a breakbulk or other terminal. Once the freight arrives at its next stop along its way it will be unloaded and reloaded onto another trailer and forwarded to the terminal in its destination city. Once the freight arrives at its destination city the freight will be loaded onto a trailer that will deliver it to the consignee. A shipment maybe handled 4 or more times by the carrier, not including the initial loading and unloading.
Transit times for LTL freight is much slower than for FTL. Transit times in LTL shipments are not exactly related to the direct distance from shipper to consingee. LTL transit times are solely dependent upon the makeup of the network of Terminals and Breakbulks that are operated by a carrier. For example, if a carrier offers a next day service region shipments ranging from 0 to approximately 500 miles will most likely be delivered at similar times during the next day.
The main advantage to using an LTL carrier is that a shipment may be delivered at a very small percentage of the cost if it had to be sent on a large trailer by itself. ALso, LTL carriers typically offer guarantees whereas Full Truck Load carriers normally do not.
Integrating FTL and LTL carriers for shipper cost savings
Shippers with enough volume of LTL freight may choose to use a Full Truckload Carrier to move the freight directly to a break-bulk facility of an LTL carrier. For example, if a North Carolina shipper has a large quantity of shipments for Western US States such as CA, NV, OR, WA, and ID then the shipper can realize significant cost savings by having an FTL carrier transport the freight to a breakbulk facility nearest the center of such shipments in terms of the carriers network. In this case the shipper may choose to send the freight to a break-bulk in CA. The use of an FTL carrier to transport this freight is a cost savings because the freight will not have to be unloaded and reloaded as many times.
Less Than Truckload operations versus parcel carrier operations
Parcel carrier operations
A parcel carrier traditionally only handles shipments weighing less than approximately 150 US Pounds. Parcel carriers typically still compete with LTL carriers by convincing shippers to break larger shipments down to smaller packages. Parcel carriers typically refer to multipiece shipments as "Hundredweight" shipments as the rating is based on 100 US Pounds. The Hundredweight rate is multiplied by the shipment's weight and then divided by 100 and then rounded up to the nearest hundred.
LTL carrier operation
LTL carriers prefer to handle shipments with the least amount of handling units possible. LTL carriers prefer a shipment of 1 pallet containing 100 boxes shrinkwrapped to form one piece than 100 individual pieces. This reduces handling costs and the risk of damage during transit. Typically the rates of LTL carriers per pound is less than the rate of parcel carriers.
Both LTL carriers and parcel carriers are similar in the fact that they both use a network of hubs and terminals to deliver freight. Delivery times by both types of service providers are not directly dependent upon the distance between shipper and consingee. Also, using an LTL carrier is very similar to that of using a parcel carrier. The shipper often has a regular, if not daily, pickup schedule and can log onto the carriers homepage to schedule pickups, track shipments, print paperwork, and manage billing information.
Integrating LTL and parcel carrier for shipper cost savings
If a shipper has a large number of parcels to distribute it may be able to save shipping costs by using LTL carriers to feed parcels to parcel carriers. If the shipper has a large number of parcels going to different destinations within one region then the shipper can load the parcels onto a pallet and have an LTL carrier transport the parcels to a parcel carrier's hub near the destinations.
An example of this is a shipper in NC that has 500 parcels destined for CA, 250 destined for NY, and 250 destined for IN. The shipper will segregate the parcels by their destination. All the Southern California shipments will be separated and loaded on a pallet that would be delivered to a parcel carriers hub in Los Angeles; The Northern California parcels will be loaded on a pallet for San Francisco; New York Parcels loaded on a pallet for New York City; and the Indiana parcels will be loaded for Indianapolis.
The LTL carrier will pick up the skids containing these parcels and transport them to the appropriate hub of a parcel carrier. The parcel carrier will take the parcels off of the skid and inject them into the parcel distribution system and deliver them to their final destination.
Another name for this operation using both LTL and Parcel carriers is known as zone skipping. The LTL carrier is being used to skip several parcel zones as the costs of using a parcel carrier solely for long distance transportation of parcels is more costly per pound than an LTL carrier.
Many shippers prefer to not use such methods as they prefer to only contract with one service provider. Using an LTL carrier and a parcel carrier does add another point of failure for the shipper's operations.
Preparing shipments for LTL carriers
Since freight sent via LTL carriers must be handled several times during transit it must be packaged to withstand unintentionall drops from dockworkers or forklifts. It is normally good practice to load freight onto pallets or package freight into crates. Cardboard boxes are normally acceptable as well.
Since freight sent vial LTL carriers is subject to misrouting or misloading it is a good practice to put the Tracking number on each side of each piece of freight. If the Destination State and Zipcode are affixed to each side as well misloading is less likely to occur. Even though it is not required it is good practice to affix a relatively large label including four letter Carrier Code, Tracking Number, Destination Station, and Destination Zipcode of the shipment (i.e. ABFS123456789 GA 30301). The easier it is for dockworkers to identify an individual shipment the less likely it is to put it in the wrong place. If the only piece of identification is the tracking number the dockworker will have a harder time of identifying the shipments pieces and as such the chances of freight being loaded onto the wrong trailer is greater thereby increasing the transit time and also increasing the chances of the shipment being lost.
Factors of LTL operation
Factors relating to profit margin
LTL shipping is a thin-margined business, so costs must be minimized. Two of the biggest costs for LTL shippers are fuel and labor. As many LTL shippers have unionized labor, labor costs are relatively fixed, so minimizing fuel usage is a significant goal. This translates to maximizing the utilization of every trailer for every mile driven - ideally, every trailer carrying freight would contain a maximum level of freight by both weight and volume. The weight and volume characteristics of a set of freight is referred to as "freight mix".
Density of freight/freight mix
To achieve a good freight mix on average, one method employed by the industry is the use of a two-tiered transportation network involving a clique of large freight way-stations (called "breakbulks", for example), with smaller freight "terminals" fanning out from each breakbulk facility.
The philosophy behind the "breakbulk approach" is that by consolidating a large amount of freight from dispersed locations (i.e. from the connected terminals), a larger and more diverse pool of freight is available to choose from so as to achieve better freight mix for the long haul between breakbulks. For example, the freight coming from one terminal location may be relatively light and bulky, whereas the freight fom another terminal location may tend to be much denser. Some freight may be irregular in shape. By consolidating the freight originating from multiple terminals in one location, there is a wider range of freight to choose from, so as to efficiently pack each trailer for the long inter-breakbulk journey.
In this terminal-breakbulk network, a typical shipment would first be picked-up from a customer location and dropped off at the local terminal. It would then be trucked a relatively short distance (a couple hundred miles, for example) to the terminal's associated breakbulk. From there, the shipment would be trucked a relatively long distance to the breakbulk associated with the destination terminal, and then finally trucked to the destination terminal, to be delivered to the customer. The continual goal in this network is, however, to minimize transfers of freight. Ideally, only one or even no break bulks are involved in the process.
Intermodal transportation of LTL freight
Not all LTL shipments travel by truck solely. LTL carriers rely on rail or air to forward some freight toward its destination. LTL carriers are normally able to deal with railroads more effectively than small shippers are able to as LTL carriers typically send a large volume of freight each and every day. LTL carriers are able to monitor railroad performance to ensure delivery of freight within the specified delivery window