Less than truckload (LTL) and full truckload shipping make up to of the dominant types of over the road shipping options. LTL shipping is reserved for shipments that are too large to be considered small packages, but they do not make up a full truckload. According to PNG Logistics, full truckloads accommodate 24 pallets or 42,500 pounds, so shippers with less freight to ship often turn to LTL shipping as the go-to mode. While LTL is generally more expensive than full truckload, explains Catapult, a company shipping a high-volume of LTL freight may receive a discounted rate. The question becomes, “When does that make sense to use LTL vs. full truckload as the mode of choice?”
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The Problem: Small and Mid-Sized Shippers May Lack Volume to Justify Full Truckload Freight Spend
LTL versus full truckload is a complex decision. As explained by PLS Logistics, full truckload opens the door to carriers that specialize in a certain type of delivery, such as refrigerated cargo or backhauls. The problem remains; small and mid -sized shippers may simply not have enough freight to justify full truckload use. However, there are plenty of times when a full truckload may be the more cost-effective option.
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The Solution: Technology to Consolidate Freight and Better Predict Demand Allows for Better Use of Full Truckload
LTL shipping is also known as partial truckload. This derives from its average volume and weight, but shippers can combine partial truckloads to create a full truckload. This is known as freight consolidation. Freight consolidation combines parcel and LTL shipments to save time and money, provided freight is headed to the same destination. This boils down to the backhaul opportunity present for drivers heading to high-volume destinations. The driver is more likely to secure a backhaul load in high-volume destinations, and so shippers can use full truckload through freight consolidation to manage freight spend proactively. Similarly, full truckload may cost more than LTL for low-volume destinations, but if backhauls are likely, even a spot backhaul, drivers will likely charge less.
Implementing a freight consolidation program has roots in using robust technologies for freight management including a transportation management system (TMS). Freight scheduling within a TMS allows shippers to use full truckload regardless of shrinking lead times. Since retailers are more reactive to changes in product demand in modernity, lead times are inherently short.
Freight consolidation combines more than a single shippers freight, so the technology deployed in a TMS must combine information from multiple shippers. However, retailers must still look out for their own enterprises, avoiding partnerships with direct competitors. Working with an outside entity eliminates this worry and is why most freight consolidation programs involve a third-party logistics provider (3PL).
The Reward: A Healthy Combination of Full Truckload and LTL Freight Is Essential to Saving Money and Improving Customer Service Levels
Shippers considering LTL vs. full truckload can reduce risk by opting for the mode with the fewest stops and touch points. Products traveling in truckload are less likely to be damaged, so purchasing cargo insurance may be less costly than a similar, limited liability purchase for an LTL shipment. Of course, choosing a TMS that combines LTL and full truckload freight scheduling in one platform can help, and the process is even simpler when shippers can add on cargo insurance or other protections too.
Another silver lining surroundings the use of full truckload over LTL for shipping. Full truckload shipments require less fuel due to their continuous journey to the destination. In LTL shipping, a single delivery truck may make 100+ stops a day, and even if the engine is left running, it still uses more gas as a stop-and-go vehicle. This makes full truckload a sustainable alternative for companies seeking to reduce their carbon footprint. Also, freight consolidated into full truckloads less miles traveled overall. As a result, fuel costs for full truckload shipping may be lower than LTL shipping, depending on local, regional and domestic differences in oil prices.
Using a TMS, shippers can realize the rewards from the moment they access the system. When using the cloud-based TMS, shippers have access to real-time pricing, capacity across multiple carriers, and actionable insights derived from analytics, reports Supply Chain 24/7. This information can be used for continuous improvement and benchmarking of company key performance indicators (KPIs) against industry averages.
The Big Picture: In the LTL vs Truckload Debate, Both Are Integral to Your Bottom Line
Knowing when to use LTL vs. full truckload increases productivity, reduces freight spend, and streamlines freight shipping. Before pledging freight to one mode, shippers should always consider the potential costs versus savings of LTL and full truckload. Fortunately, a modern, dedicated TMS, like the makes this possible, and outsourcing freight management to a 3PL will only strengthen freight allocation and ensure decision-makers use data, not assumption, to provide the best customer service possible. Everything is about getting freight to the destination faster and at a lower overall cost.
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