Less than truckload vs full truckload is a choice shippers have to make every day in their operation. Choosing the right (or wrong) shipping method can significantly impact a business's efficiency, customer growth and bottom line.
In this article we'll compare Less Than Truckload vs Full Truckload and provide shipping tips on best practices. Both shipping methods present two fundamentally different approaches to transporting goods, each with its own set of freight shipment advantages.
The Basics of LTL and FTL
Grasping the core variances between Less Than Truckload and Full Truckload freight options is vital for companies aiming to fine-tune their cargo transportation strategies to ship freight for their businesses.
In the world of logistics, these two land transportation modes offer a different value proposition to shippers by fulfilling unique demands tied to the volume, value, liability, shipping costs and freight characteristics of to the cargo being shipped.
LTL vs FTL Defined
LTL, also known as less-than-truckload, is exactly as it sounds. Shippers use LTL when they cannot fill a full tractor trailer with their product.
On the other hand, FTL (full truckload) - also known without the 'F' as TL (for Truckload) - is a freight service where the shipper utilizes the full weight or volume of the truck's trailer capacity.
While LTL and FTL are easily defined, the reasons for using each can sometimes confuse even the most seasoned logistics professional, so let's take a deeper dive into both freight capacity options. Also, readers will notice a lot more is said on LTL shipping and that is because it has several nuances associated with it that often trip up those using the service.
Full Truckload Freight Characteristics
Full truckload shipments, often referred to as over-the-road, cater to larger loads that require the entire trailer space for a single shipper.
The following outlines characteristics associated with truckload freight shipping:
- Direct freight routing from origin to destination where the truck will drive straight through.
- Appointed pick-up and delivery times with time constraints.
- The freight moving is often time sensitive.
- Large amounts of product where total shipments weigh more than 15,000 pounds or the volume of the product is greater than LTL can accommodate.
- Maximum legal cargo weight of product loaded into a 53' truckload trailer is 45,000 pounds.
Advantages of Full Truckload Shipping
By shipping FTL, businesses can leverage the strategic advantages that come from dedicating an entire trailer to their goods alone.
One of the biggest differences between LTL and FTL is the transit time. FTL shipments typically move directly from pickup to final destination without any stops in between. This direct route not only ensures faster transit times, but also reduces the risk of damage since there are fewer handling points along the way - something that is characteristic of an LTL hub-and-spoke network.
The other advantage of using FTL is the entire capacity of the trucking trailer is dedicated to a single shipper versus sharing the space with multiple companies. It offers a level of security and privacy not available in LTL shipping.
In terms of cost-effectiveness for larger loads, while it might seem counterintuitive at first blush, utilizing a dedicated truck can be more economical on a cost per pound basis versus that of LTL where a shipper is dividing shipments into smaller parcels across several trucks.
LTL Freight Characteristics
LTL freight is ideal for shipments that do not require the entire space of a truck, but are larger than what parcel carriers service.
The essence of less than truckload involves an LTL freight carrier consolidating multiple customers with similar origins and destinations to fill a trailer to allow for it to optimize its hub and spoke operating network.
The decision between using less than truckload vs full truckload services boils down primarily to shipment size and frequency. Often, smaller enterprises lean towards LTL transport due to its adaptability in handling varying cargo volumes and the financial benefits it offers in these cases. A notable advantage is that since you're only paying for the portion of trailer space your goods occupy, you avoid overspending on unutilized capacity typical with FTL shipments.
Characteristics Typical of LTL Shipments:
- Freight weighs more than 150 pounds, but less than 15,000 pounds.
- Shipments do not require the entire trailer.
- Can be used for residential pickup or delivery.
- Pickup or delivery locations need a liftgate for loading/unloading freight for the customer.
- Pricing is by National Motor Freight Traffic Association (NMFTA) freight class, which is based on space shipment will occupy in a trailer, distance and value of the product.
- More flexibility for businesses with smaller shipments, allowing them to ship goods without waiting to accumulate enough for a full truckload.
Items to Watch Out for When Shipping LTL Freight:
- More susceptible to damage and freight claims due to being handled multiple times through the hub and spoke operating model.
- LTL generally has more accessorial freight charges.
- Freight class determines pricing and liability coverage.
- Rates for different commodities can vary quite a bit, even in the same lane with the same number of pallets.
- To categorize commodities and determine pricing, all LTL carriers use a freight classification system standardized by the NMFTA.
- There are 18 different National Motor Freight Classifications (NMFC), ranging from Class 50 (least expensive) to Class 500 (most expensive).
- Imperative to apply the right class, weight and dimensions.
- Transit is longer and not guaranteed.
- Appointment windows are not standard for LTL, unlike FTL.
- Drivers are almost always completing multiple pick-ups and/or deliveries per run, so flexibility is important.
- Two hour (or more) first-come-first-serve windows (FCFS) are the industry standard, and pick-ups are not guaranteed.
- LTL trailers typically have roll doors with a lower clearance.
LTL Volume Quotes
Volume LTL shipping quotes are used for LTL shipments that fall outside the normal less-than-truckload parameters but are not large enough for a full truckload.
LTL volume quotes bring cost savings to those shipments that are between standard LTL and truckload.
Volume LTL rate quotes require one of the following conditions to be met:
- Minimum of 5,000 pounds.
- Greater than or equal to six pallets.
- Takes up to 12 to 32 linear feet of trailer space.
Volume LTL shipment rates are spot market rates quoted at the time of shipment.
Benefits of Using Volume Shipment Quotes
- Often cheaper than other options for freight that falls between an LTL and FTL shipment.
- Freight often moves from dock-to-dock, therefore reducing the possibility of damage or loss.
- LTL carriers tend to price volume quotes aggressively.
- Does not require an NMFC, since pricing is on volume of space used in the LTL trailer.
- Often a benefit for shippers with commodities falling into the higher class NMFC LTL codes.
LTL vs Deferred LTL Services
The scope of LTL less-than-truckload transits is similar across all the national freight LTL carriers. The regional LTL carriers often do a bit better on transit because their network is dedicated to a smaller footprint.
Where things get interesting is with deferred LTL, which is the term used in the LTL freight market when the shipping requirements allow for a slower transit. While the shipment takes a bit longer, shippers not needing their shipments delivered quickly will find deferred LTL to be an excellent alternative to save on their freight spend.
The slower LTL service is accomplished by different deferred LTL carriers differently. The main difference in deferred LTL operations comes down to how the asset carrier slows down the transit.
The two schools of thought on the deferred service are:
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- Pool LTL shipments over a longer period to increase volume density in the pick-up and delivery areas.
- Convert truckload linehaul within their hub and spoke network to intermodal.
With intermodal transits typically running at truck plus a day, the deferred LTL value tends to be greater when the deferred LTL operation uses intermodal within their network versus pooling their customers' freight longer.
Cost Differences between LTL and Full Truckload
The biggest difference between full truckload and less-than-truckload shipping is how pricing is established for each service. The typical shipment characteristics come into play for both services: namely weight, pieces, origin and destination locations, and any additional shipping services. But FTL and LTL still have major differences.
Full truckload shipping doesn’t have an association regulating pricing standards, where LTL does in the NMFC system (more on that shortly). For FTL, the market sets the price. The use of freight shipping services varies from industry to industry throughout the year. In turn, this can affect supply and demand. This means that carriers may have issues filling their trucks, or they may have issues fulfilling shipping requests. This is capacity, the level at which carriers can or cannot fulfill shipments. Capacity will cause prices to fluctuate - as will the cost of fuel.
The best measure of understanding which side of the freight capacity curve the market is encountering can be traced within the truckload spot market. The freight capacity market is considered tight when the truckload spot market is rising and loose when it is falling.
An enhancement to the truckload spot market is the InTek Freight & Logistics Intermodal Spot Rate Index. A sustained increase or decrease in intermodal spot rates gives credence to the signals coming out of the truckload spot rate indexes.
Navigating Freight Classifications and Requirements
For LTL shipments, rates are regulated by the NMFTA. They issue NMFC codes to simplify the pricing process for carriers and to ensure customers receive unbiased pricing.
For anyone new to LTL, the navigation through the NMFC codes is confusing, yet incredibly important. Understanding how NMFC categories affect price and liability is critical in protecting a company's bottom line.
At its core, freight class refers to the aforementioned NMFC, which categorizes goods into 18 classes ranging from 50 to 500.
The NMFC is the standard guideline for determining the cost of moving freight based on its density, stowability, handling, and liability. Properly packaging items according to NMFTA guidelines ensures accurate classification, thus preventing unnecessary surcharges arising from misclassification disputes at later stages of the journey.
Peeling back the layers on these categories, it's crucial to grasp how they each play a role in shaping your total expenses. For instance, lower classes represent denser items that are easier and safer to transport - thereby costing less. Conversely, higher classes indicate lighter but more voluminous items leading to higher costs - primarily because they take up more space on a truck.
Properly classifying goods ensures compliance and avoids extra charges, known as accessorials, which are one of the biggest frustrations with LTL shippers. It also helps avoid surprises on a carrier’s invoice due to a re-classification of the NFMC rating on a particular shipment.
Packaging Freight Properly
Beyond just knowing your item's classification, it’s equally important to ensure it’s properly packaged. This minimizes risk, bumps up efficiency, and safeguards against potential damages during transit driven by multiple locations handling shipments within the LTL network.
For LTL shipments, packaging is paramount. By adopting an adept approach to packaging, one can ensure that items remain intact across diverse handling phases and make the most out of the available space within trailers.
In LTL packaging, shippers need to know how to best package their freight so it can cohabit on an LTL trailer with other shippers' products without being damaged or broken down in any way. This means using a stretch-wrap machine for the tightest wrap on pallets. Corner boards are also a good option for LTL packaging.
Meeting best practices in packaging out LTL shipments protects shippers from over, short and damage (OS&D) claims, which can be a nightmare that cost companies tens of thousands of dollars and leave their customers extremely unhappy.
Enhancing Efficiency in Shipping Operations
In the complex world of logistics, cost and service is king. This statement holds especially true when it comes to optimizing both Less Than Truckload and Full Truckload shipments for improved supply chain performance.
Consolidation Strategies for LTL Shipments
The practice of consolidating multiple smaller shipments into a single transport method stands as a cornerstone for achieving cost-effectiveness in freight shipping. When small businesses or those with less-than-truckload needs opt to consolidate freight on an entire truck that will have multiple stops, they essentially share space on a truck that might otherwise go underutilized. This approach not only maximizes trailer space but also leads to increased handling efficiency by reducing the number of separate pickups and deliveries required.
On the other hand, consolidating LTL shipments with your own business on a single truck also eliminates the NMFC because the shipper is making a full truckload buy, not an LTL buy.
Utilizing FAK Freight Classifications for LTL Shipments
Familiarity with NMFC ensures that shippers correctly categorize their goods, which directly impacts LTL freight rates and delivery time considerations. Incorrectly classified items may lead to unexpected charges or delays - precisely what every shipper aims to avoid. Additionally, ensuring your shipment meets all necessary regulations before hitting the road will save you from potential headaches down the line.
The topic of FAK, or freight of all kinds, is often a technique used in the LTL industry to classify a company's entire freight into a single classification to pull down LTL pricing. This is a great way to save on the company's freight spend, but in doing so understand that a lower FAK also lowers the insurance coverage - a side effect which is fine as long as you know the potential liability.
Managing Costs with Strategic Shipping Choices
Making informed decisions between LTL and FTL based on specific needs requires an intimate understanding of how each option affects transit times, delivery schedules, and ultimately the bottom line. An optional service, domestic 53’ intermodal, can also be a tool to help save freight costs by converting truckload to intermodal on shipments over 700 miles.
Less Than Truckload vs Full Truckload FAQs
What is the difference between FTL and LTL?
LTL ships smaller loads by sharing truck space. FTL takes up a whole truck for one shipment. Different needs, different picks.
What is the difference between FCL and FTL?
FCL (full container load) involves shipping containers fully loaded by one shipper, mainly via sea. FTL fills trucks on land routes exclusively.
What is the difference between LTL and TL?
LTL mixes multiple shipments in one truck for multiple shippers. TL dedicates a full truck to just your goods - it's simply another way of referring to full truckload.
Is LTL or FTL more expensive?
Utilizing LTL and FTL for their intended design makes FTL less costly on a weight per pound basis.
Conclusion
Understanding LTL and FTL shipping is key to saving on costs and optimizing freight needs based on size, weight, and delivery requirements. Smaller shipments benefit from the shared-space, cost-effective nature of LTL, while larger loads might need the direct route that FTL offers.
Grasping the nuances between LTL and FTL shipping will empower you to choose wisely, ensuring your company's shipping requirements are met in the most economical manner.
Hopefully the knowledge gained on how to make smarter choices between LTL and FTL for your business's bottom line will help you in your logistics career.
In the end, the right freight provider partner should be able to leverage multiple modes when possible - whether land or by sea for truckload, intermodal, ocean or a combo - to get the job done most effectively and efficiently. And it should incorporate the latest technology to plug in to market conditions, capacity availability, license and safety information, and shipment track and trace (shared with the shipper as well).
All of these components may sound like a big ask, but at InTek, we've got you covered. Just reach out to us, and make our Request a Quote form the last one you'll need to fill out for a long time. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides.
