What Small Businesses Need to Know About LTL Shipping

Understanding LTL Shipping

LTL shipping is a method of transportation that combines shipments from multiple businesses into a single truck. This approach allows companies to share the cost of shipping, making it more affordable for those with smaller loads. Typically, LTL shipments weigh between 150 and 15,000 pounds. This range provides flexibility for businesses that need to ship less than a full truckload but more than what would be practical to send via parcel shipping.

Small manufacturing businesses often face unique challenges in the logistics of shipping and receiving merchandise. Unlike larger companies with the volume to fill an entire truck, many small manufacturers do not require a full truckload of shipping space. This situation leads to the necessity of utilizing “less-than-truckload” (LTL) shipping—a service designed to accommodate smaller shipments by consolidating them with other freight.

One of the primary advantages of LTL shipping is its cost-effectiveness. By sharing truck space with other shippers, businesses can reduce their transportation expenses. Moreover, LTL shipping offers additional services such as liftgate delivery, inside pickup, and delivery, which can be particularly beneficial for small businesses without dedicated shipping and receiving docks.

How LTL Rates Are Determined

Several factors determine the rates for LTL shipping, and understanding these can help small businesses make more informed decisions. The key elements include:

1. Freight Classification: The National Motor Freight Classification (NMFC) system categorizes freight into different classes based on density, stowability, handling, and liability. Lower-class numbers indicate denser and easier-to-handle items, leading to lower rates.

2. Distance: The distance between the pickup and delivery locations significantly impacts the cost. Longer distances generally result in higher shipping rates.

3. Weight: LTL rates are also affected by the shipment’s weight. Heavier shipments may qualify for discounts on a per-pound basis, but the overall cost will increase.

4. Dimensions: The dimensions of the freight—specifically its volume—also play a role in pricing. Larger shipments that take up more space on the truck may incur higher costs.

5. Accessorial Charges: Additional services, such as residential delivery, liftgate service, or inside delivery, can add to the overall cost of LTL shipping.

6. Fuel Surcharges: These surcharges fluctuate based on the cost of fuel and are typically added to the base rate of the shipment.

Minimum Costs for Shipping a Single Pallet

When shipping a single pallet, small businesses must consider both the base rate and any additional charges. The minimum cost for sending a single pallet typically ranges from $150 to $300, depending on factors such as the shipment’s distance, weight, and freight class. It is important to note that these rates can vary significantly based on the carrier and the specific requirements of the shipment.

For businesses that frequently ship single pallets, it may be advantageous to establish a relationship with a specific carrier or logistics provider. By doing so, they may benefit from negotiated rates or discounts based on volume or frequency of shipments.

Cost Comparison: Single Pallet vs. Multiple Pallets

Shipping multiple pallets at once can lead to significant cost savings compared to sending them individually. When consolidating multiple pallets into a single shipment, the overall cost per pallet typically decreases. This reduction is due to the fact that certain fixed costs—such as fuel surcharges and minimum charges—are spread across multiple pallets, rather than being applied to each one individually.

For example, if the cost to ship a single pallet is $200, the cost to ship five pallets might only be $800, resulting in a per-pallet cost of $160. This scenario highlights the potential savings that can be achieved through consolidation.

However, businesses should carefully consider their shipping needs before opting to consolidate multiple pallets. Factors such as inventory management, delivery timelines, and customer expectations must all be taken into account.

LTL Logistics Platforms and Consolidated Shipping Carriers

Numerous logistics platforms offer LTL shipping services, each with its own advantages and limitations. These platforms often work with a network of carriers, allowing small businesses to compare rates and services to find the best fit for their needs. Some of the most popular LTL logistics platforms include:

1. Freightquote: This platform provides instant quotes from multiple carriers, allowing businesses to compare prices and services. Freightquote also offers additional services such as freight tracking and insurance options.

2. RXO:  For more than a decade, RXO has been a leader in brokered transportation. We’re the original disruptors in our industry, bringing seasoned transportation professionals and master technologists together to help shippers and carriers move freight efficiently. Year after year, our largest customers choose to stay with us thanks to expert service, massive capacity and fast-paced innovation.

3. Coyote Logistics: Known for its comprehensive network of carriers, Coyote Logistics offers LTL shipping with a focus on transparency and reliability. The platform provides detailed tracking and reporting, which can be beneficial for businesses looking to maintain control over their shipments.

4. Echo Global Logistics: Echo offers LTL shipping with a focus on technology-driven solutions. Their platform provides real-time visibility and analytics, helping businesses make data-driven decisions about their shipping strategies.

5. CH Robinson: As one of the largest logistics companies globally, CH Robinson offers extensive LTL shipping options. Their platform is known for its robust carrier network and advanced technology, which enables efficient and cost-effective shipping solutions.

By leveraging these platforms, small businesses can access a wide range of carriers and shipping options, making it easier to find the most cost-effective and reliable solution for their LTL shipping needs.

Top 10 Money-Saving Tips When Shipping LTL

Shipping LTL can be a significant expense for small businesses, but there are ways to minimize costs. Here are ten tips to help save money on LTL shipping:

1. Consolidate Shipments: Whenever possible, combine multiple pallets into a single shipment to take advantage of lower per-pallet costs.

2. Negotiate Rates: Establish a relationship with carriers or logistics providers to negotiate better rates based on volume or frequency of shipments.

3. Use a Freight Class That Reflects the Shipment: Ensure the correct freight class is used to avoid overpaying for your shipment. Misclassification can lead to higher rates.

4. Optimize Packaging: Reduce the size and weight of your shipments by optimizing packaging. This strategy can lower costs by reducing the freight class and dimensional weight.

5. Plan Shipments in Advance: Planning your shipments ahead of time can help you avoid rush charges and take advantage of lower rates.

6. Consider Regional Carriers: Regional carriers often offer more competitive rates than national carriers, especially for short-haul shipments.

7. Leverage Technology: Use logistics platforms that provide real-time quotes and analytics to find the most cost-effective shipping options.

8. Avoid Accessorial Charges: Minimize additional services, such as liftgate delivery or residential delivery, unless absolutely necessary.

9. Track and Audit Shipments: Regularly track and audit your shipments to ensure accuracy and avoid unnecessary charges.

10. Utilize Freight Insurance Wisely: Only purchase insurance when necessary, and consider using third-party insurance providers for better rates.

The Takeaway on LTL

LTL shipping offers small manufacturing businesses a cost-effective solution for transporting goods that do not require a full truckload. By understanding how LTL rates are determined, businesses can make more informed decisions and potentially reduce their shipping costs. Additionally, utilizing logistics platforms and following money-saving tips can further optimize the shipping process, allowing small businesses to focus on their core operations while maintaining efficient and cost-effective logistics.

In conclusion, while LTL shipping presents a practical solution for small businesses, careful planning and strategic decision-making are essential to maximize cost savings and ensure timely delivery of goods. By staying informed and leveraging the right tools and resources, small manufacturing businesses can navigate the complexities of LTL shipping and improve their overall logistics strategy.