We continue our series on less than truckload shipping with our second post. At Cerasis, LTL is our core specialty as it 95% of our business, therefore it is our goal to educate not only our customers but the general public on what is LTL shipping, and after the information below which will give you 4 benefits of shipping via less than truckload, we will talk about tips on how to further save on LTL shipping by explaining what goes into the rates and how you can best prepare those factors to get a great rate, and then will conclude talking about how a transportation management system and an attention to carrier relations will help you mitigate further LTL shipping costs. However, do know that less than truckload shipping is not about the freight rate, it’s about creating a long term partnership based on your unique needs to continually improve and increase customer satisfaction, improve process, and mitigate risk by either knowing how to ship LTL effectively or working with a provider who can help you in the management of your LTL freight.
The main advantage to using a less than truckload carrier is that a shipment may be transported for a fraction of the cost of hiring an entire truck and trailer for an exclusive shipment. Since the carrier is moving multiple freight shipments from multiple shippers, the freight carrier pools all the shipments onto a single freight truck. Therefore, each shipper pays a fraction of the cost of utilizing the truck or trailer. LTL carriers normally offer better rates than parcel carriers for competitive reasons and economies of scale. Also, a number of accessory services are available from less than truckload carriers, which are not typically offered by FTL carriers. These optional services include liftgate service at pickup or delivery, residential (also known as “non-commercial”) service at pickup or delivery, inside delivery, notification prior to delivery, freeze protection, and others. These services are usually billed at a predetermined flat fee or for a weight based surcharge calculated as a rate per pound or per hundredweight. Since 2012 billing has started shiftin to dimensional weight (or “cube weight”) measurements to increase efficiency of loading less than truckload trucks.
Truckloads are often considered the optimum way to go, but only if the volume is there and this can be a big if. If the volume is not there, an alternative is often to put together multiple stop truckloads.
There are clear opportunities where multiple stop truckloads are appropriate but if the details of an individual situation aren’t considered you may get burned financially. In addition, putting together the right multiple stop truckloads can be challenging.
To make multiple stop truckloads work economically, certain factors have to come together. Orders, receivers, distances and miles must align properly.
Besides the economics of the load itself, there are important human and coordination factors to take into consideration. The time, energy and people required to manage the details and evaluate the costs should be considered. If there are few patterns to the orders coming in, each week can be a new beginning. Problems in scheduling and delays can create major hurdles.
For all that is done, there may be other hidden costs. Shipments still can “waste” capacity due to low load factors. Last minute order additions or subtractions can throw the whole plan off. Additional orders can mean that LTL is never eliminated. Also, most truckload carriers don’t like doing the extra stops and can charge a premium. Many drivers are not well trained to handle these kinds of loads, preferring the simple, one pick/one drop runs.
Thankfully, there are other alternatives to the rigors of multiple stop truckloads. Pool distribution and pool consolidation can be a better alternative when you consistently have multiple loads of many small shipments.
Pool distribution is picking up one or more truckloads of LTL shipments at an origination, taking it to a staging area or cross dock facility and reassembling the shipments on multiple trucks for distribution. Pool consolidation is the opposite. Pool consolidation picks up multiple LTL shipments from multiple locations, brings the shipments to a central staging area for customer pickup or loading it onto a truck for line haul. We do both for many customers.
By their nature pool programs have clear benefits.
Does pool distribution or pool consolidation fit in your situation? Once again it will depend on origin, destinations, type of freight, volume, timing, etc.
When you have small, less than truckload shipments being shipped to many locations spread throughout a region or throughout the country, less than truckload shipping provides some of the greatest flexibility. Generally, the trade off is timing. A little more time is needed to bring other freight together.
Generally, if you have several less than truckload shipments going to similar places, less than truckload carriers allow you can help drive down costs by consolidating multiple shipments from multiple customers to create loads. Many transportation management systems also provide pool point distribution options to maximize your costs savings and offer this great flexibility. This requires sending out multiple trucks to pick up the shipments, bringing them to a central staging area, then assembling these shipments into specific loads going out to different parts of the country.
Specific service schedules are available either within a third party logistic providers’ transportation management system, or from the less than truckload carrier themselves.
In today’s interconnected world, success can come suddenly. As online shopping from the consumer world grows, to keep up with the expectation of consumers, there is an increase of manufacturers offering e-commerce options to distributors and end customers, thus needing to take a very close look at e-commerce freight shipping. Then, to keep the e-commerce chain going, distributors are increasing e-commerce options as a channel to get product to customers. The New York Times stated that the rise of e-commerce and the growing of freight expenditures often forces small business owners to reconsider their shipping strategies. These organizations need to somehow meet customer expectations set by larger online retailers like Amazon. Businesses that don’t offer features like free returns or next-day deliver will face difficulty remaining profitable.
The New York Times when onto suggest that using a reliable transportation partner could help small businesses scale their operations successfully. In most cases, developing companies may benefit from less-than-truckload services. Less than truckload shipping provides flexibility for organizations moving smaller quantities of materials, and trucking companies are able to offer lower costs per item because they increase truck capacity by moving a lot of small shipments to the same general area. The strategy gives those shipping online more control over costs as they continue to grow. Shipments can be adjusted based on demand and scale of operations, and as businesses expand, this could save them thousands of dollars each year.
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