Choosing the Shipping Mode Is Not Black or White . . . How to Decide Between LTL and TL
By improving how shipping mode choice is selected shippers can lower logistics costs. For most companies, the majority of shipments are clearly best routed as either truckload (TL) or less-than-truckload (LTL), so there is no decision to be made. But mode is still an important consideration because it does not take many poor choices on the borderline shipments to significantly negatively impact margins.
The good news is there’s usually a “right” answer, even if it takes some effort (and even a little help from technology or a partner) to figure out. This makes understanding your rates and service requirements extremely important. So, how does a shipper make the best decision for routing a shipment LTL or TL?
When to Choose LTL
As its name implies, LTL is usually the mode best suited to shipments that require less space than an entire trailer. LTL freight is often palletized and weighs between about 100 and 10,000 lbs. The shipper only pays for the weight or space used on the truck, which makes LTL a great choice for small businesses that do not ship large quantities.
LTL carriers often provide higher-touch delivery services, so oversized or oddly shaped items, or shipments requiring extra handling at destination are often best suited for LTL. TL carriers are generally not equipped for special delivery requirements like a lift gate or certain docks as LTL carriers are.
LTL is also often a good solution for parcel shippers with a high volume of packages going to the same destination. Many companies overlook this, but it is often a cost-effective choice, since packages can be combined onto pallets and shipped all together for less than the packages would cost to ship on their own with UPS or FedEx.
At the same time, there are costs associated with LTL shipping that do not exist with truckload. Be sure to understand the accessorial fees that might be associated with the shipment (residential delivery or pick up, lift gate requirements, limited access, etc.). There might also be additional charges depending on the dimensional weight (DIM) of a shipment. The LTL industry is following the lead of small parcel in this regard. With many carriers, items light in weight, but large in size, equate to higher shipping costs.
When TL Is the Best Bet
Full truckload (TL) should be the choice for very large shipments that can take up most of a semi-trailer. A general rule of thumb for using TL is when a shipment consists of ten or more pallets. But note, shipments around this size can go either way.
TL freight is typically contracted to one carrier and does not make as many stops or ever off-load, as is the norm with LTL freight. Because TL is delivered more directly, service times are often faster for the same amount of freight. Also, less damage tends to occur since there is less movement of pallets on or off the truck, or through cross-docks, than there is for LTL.
Full TL offers a more predictable price (usually a fixed or per-mile rate) compared to more complex LTL rates made up of a tariff plus other hard-to-calculate factors. However, the service TL carriers provide is more rigid due to equipment size, as there are constraints for where 48’ and 53’ trailers can unload.
LTL and TL both have benefits and each is suited for specific situations. The hard part for shippers is figuring out the edge cases in which costs and service need to be balanced. There is a point when the LTL cost of a shipment will be higher than the cost to pay for a whole truck. There is no standard rule or equation because every company’s rates and service requirements are different.
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