An effective logistics management program takes all factors into account to make the best freight shipping decision. Unfortunately, carrier programs, like parcel hundredweight programs, blur the lines between shipment types even further. Instead of choosing strict parcel or less than truckload, shippers have the option of these programs to keep costs down. Full evaluation of shipper needs and carrier options and knowing the pros and cons of these modes enhance the potential savings in shipping selection.
Why Are Parcel Hundred Weight Programs Beneficial or Problematic to Shippers?
Shippers may consider dimensional pricing models versus freight weight package rates before choosing parcel shipping. However, parcel hundredweight programs can appear to be a saving-grace for shippers trying to expand use of parcel and keep freight spend in check. Rather than getting bogged down from too much information, shippers should consider their needs and carrier options before selecting parcel hundredweight programs or less than truckload shipping for freight.
The Pros & Cons of Parcel Hundredweight Program
According to Chris Franzen of Shipware LLC as explained in Parcel MEDIA, the leading benefits of using a parcel hundredweight program include:
- Parcel Hundred Weight Programs Offer Immediate Cost Reductions.
- The Programs Handle Freight Along the Same “Line” as Normal Shipping.
- Parcel Hundredweight Programs May Have Lower Minimum Changes.
Yet, carrier parcel programs do have a few drawbacks, including:
- Parcel Hundredweight Programs Increase the Complexity of Rate Comparisons.
- Programs Have Less Competition for Shippers.
- Greater Risk for Damage When Not Properly Packaged for Consolidation as Part of a Parcel Hundredweight Program.
The Pros & Cons of LTL Freight Shipping
- LTL Liability Limits Are Higher, Resulting in Higher Costs to Purchase Freight Insurance.
- Over-Dimensional Packages Fit Better in LTL Shipments, Such as Bulky or Unusually Shaped Items, Like Furniture. Larger packages may also exceed the limits of parcel hundredweight programs.
- LTL Carries Less Risk of Damage or Loss. Since LTL shipments involve fewer touch points and stops than parcel, they are less likely to result in damage or loss.
The cons of using LTL freight shipping are not necessarily reasons to forgo LTL shipping entirely. The problems revolve around the nature of shipping more product at a single time and by an LTL carrier. Furthermore, these problems also include the effect using LTL may have on overall freight spend and access to discounted rates.
- The Entire Shipment Is at Risk. Although damage is less likely, the risk is greater. If something happens to the LTL van, the entire shipment may be damaged or lost.
- Shippers Must Increase Packaging to Protect Freight. LTL freight is subject to additional risk when moved with forklifts or stacked in pallets.
- LTL Costs May Be Excluded from Parcel-Based Incentives. Although LTL shipping may cost less than shipping by hundredweight, the charges may be excluded from parcel-based incentives. Thus, volume discounts may be lost, resulting in higher parcel spend, reports Brad Hollister via ClearView Audit.
How to Make Sure You Are Getting the Best Deal
Figuring which mode of shipping to use requires patience and analysis of the costs and savings possible between the two modes. As explained by John Haber Founder/CEO of Spend Management Experts in Parcel MEDIA, shippers seeking to make the right decision should follow these steps.
- Base Parcel Hundredweight Program Versus LTL Shipping Decisions on Total Landed Costs. Total landed cost analysis helps shippers understand how the end costs vary between LTL and hundredweight programs. However, the total landed cost should not be the only basis for a decision.
- Consider the Impact of Fuel Surcharges. Any shipping decisions should always consider fuel surcharges, which may vary by carrier and region.
- Factor Dimensional Weight as part of the Decision-Making Proce For items that are within weight limits, shippers should also factor in dimensional weight pricing models. Failure to consider dimensional weight may result in higher freight weight rate than expected.
- Remember Minimum Charges for Freight Shipping in Either Mode. Both LTL and hundredweight programs may have minimum weights and charges.
- Double Check Carrier Rate Differences. Carriers compete, and shippers can use carrier competition to make freight more attractive and increase their bargaining power when negotiating.
Evaluate Freight Spend for Cost Savings in Using LTL and Parcel Hundredweight Programs
Knowing the difference between LTL and parcel hundredweight programs can seem like an easy concept. One is strictly LTL, and the other is using freight consolidation to take advantage of LTL-like pricing for voluminous parcel shipping. However, these two types of shipping are not identical, and they carry unique advantages and disadvantages over the other. To control freight spend, shippers must evaluate freight spend, as well as each individual shipment, for its cost-effectiveness and timeliness when shipped via a hundredweight program or LTL. This is the only way to make a truly informed decision about how to ship freight.