TL and LTL Freight Differences Part I

We give some tips to avoid common mistakes that we see shippers make when they are accustomed to doing LTL freight and start doing TL freight, or vice versa. Avoid costly shipping mistakes with these simple tips that will help you ship your freight in a smarter way.
  Hi. I’m Chris Clever, the president of FreightPros. And this is the first of what is hopefully a long series of short videos targeted towards the small- to medium-sized business shipper from a freight brokers perspective. Today we’re gonna be talking about the basics of LTL and truckload and the differences between those. One thing that we find a lot with our current customers, we might have a customer that commonly does LTL all the time or commonly does truckload all the time, but they haven’t utilized both types of modalities. Then we’ve run into issues oftentimes when they do their first truckload or their first LTL, and their expectations aren’t quite right. And things work a little bit differently between the two. We’ll have future videos that go much more detail on to specifics of LTL and specifics of LTL pricing, and likewise with truckload and the operations that goes on behind the scenes. But today I just want to establish what is LTL, what is truckload, some common differences, particularly on the pricing side between the two, and then some of the service expectations that will be different. OK. Getting started with less than truckload, or LTL as it’s commonly called in the industry. Some people call it less than load, but LTL is typically the name that’s ascribed to it. So what is LTL? LTL shipping is just what it says, less than truckload. So there’s a series of carriers throughout the United States that have a less than truckload infrastructure build out. And essentially it’s a hub and spoke model. They’ll often have service locations, either spread throughout the country if they’re a national carrier, or regionally, just depending on the size of their operation. What happens is if you’re shipping something, typically 10 pallets or less of your goods, you’ll want to do that through an LTL carrier to be as cost effective as possible. So the LTL carrier will come to your location. Let’s say, for instance, they’re picking up bowling balls from your factory, you’ve got two pallets of bowling balls to ship out to someone. They’re gonna come and take those two pallets. What’s gonna happen is they’re then gonna go to maybe a factory or warehouse or another manufacturing location near your location and pick up a palette or two from that customer, and then go throughout your city until that truck is filled. And they’ll take that product back to the terminal. Then your freight, depending on where it’s going, it will get moved onto and off of that truck or onto other trucks that carrier has as it moves out throughout the country. So this lets the freight carriers combine a lot of different customers freight on a single truck at a time. But it is unloaded and offloaded at terminals as it moves throughout the United States. One downfall of this, with all that loading and unloading, the risk for damage is much higher in LTL than it is for truckload. Jumping to truckload shipping, this is gonna be typically for larger items, but not always the case. But this is the scenario where you’re gonna have a dedicated truck moving your product. So, you’ve got your bowling ball manufacturer from the previous example, maybe there’s a new bowling alley opening up and they want to order 40,000 pounds of bowling balls from your factory. So a dedicated truck’s gonna pull up. You’re gonna be able to load your product onto that whole truck. That truck is gonna essentially move from point A to point B. Again, not always the case. Sometimes there are multiple stops. But just want to keep it basic for this scenario. They’ll move from point A to point B. Your goods will not be moved onto and off for that truck until it’s at its final destination. Gets to the final destination. It’s unloaded. Your full truckload move is done. All right. Let’s jump to pricing and the differences with truckload and LTL. Truckload pricing, from a broker’s perspective at least, is very dependent on supply and demand in the marketplace. You might have a specific freight lane where a few weeks ago you got a truck to move your goods for a $1,000. And depending on market conditions, it might $1,200 a few weeks later or $800 a few weeks later. It really depends on how much capacity is out in the marketplace, and utilizing resources to go out and find those available trucks and getting the best price available either for your own goods or for your own customers. One nice thing about truckload pricing as opposed to LTL pricing, which I’ll jump to in a second, there’s very fewer surprises when we get the bill from a truckload carrier. Common things that we will see that are on top of just the base price to move the freight that aren’t pre-negotiated when we’re getting the quote, really detention is the one that comes up the most. And typically we’ve negotiated two hours of detention time either for unloading or offloading you’re freight. But if a carrier does show up at a prescribed time and is sitting there four or five hours, they’re gonna charge you for that. So once you go over that two hour window, you will see some additional pricing. But the nice thing is with truckload, we’re aware of that information usually upfront. We’re in contact with the dispatcher or the carrier and have that information and can relay that to the customer so if there is a delay, they can try to take some actions to correct that if possible. The other one we do see is truck order not used. Not as common, but that’s usually where a customer of ours will say,hey, we need to truck at this location. We’ll go out, find a driver, book that truck, driver goes out there, and for whatever reason the customer cancels that shipment. So the driver thought they had a load. They did use their resources to get out there. So there will be a truck order not used fee. It depends, but typically somewhere in the $150 to $200 range for our own customers, our own carriers that we work with. But it may very for you and your carrier broker. Jumping to LTL pricing, vastly different than truckload. LTL, if you’re working with a carrier directly, another broker, of you’re one of our own customers, we have LTL pricing already negotiated. Now it’s complicated. There’s different factors that go into that pricing. But for the most part, the basics that you’ll need to get an LTL quote are origin and destination zip code, the weight of the product, the class, and if there any accessorials, such as a residential delivery or a lift gate needed. We’ll have future videos that go much more detail on what each of those things are. How to determine a freight class. What it is. Some of the different accessorial basics. That’s not for today’s topic. But, if we do know that information, we can instantly tell a customer of ours, or your carrier will be able to instantly tell you if you’re going to carrier directly, what your pricing is for that prescribed lane down to the penny. We have our own software internally that our customers utilize or we utilize for our customers. We put in that information. We’ll see what carriers in the LTL networks that we have contracts with can service a particular lane, what the transit times are, and what the exact cost is going to be. On the billing side, though, with LTL, the nightmare is you find out a lot of the updates or amendments to you bill after the fact. So, unlike in truckload where we’re in communication with the driver and dispatch directly, LTL you’re not. So something is re-weighed if there is an additional service that may be your delivery location or consignee location asks for and doesn’t tell you, may not find that out until you get the bill. I know internally, we don’t know that a lot of times until we get the bill. We try to communicate with our customers and find out it, hey, was this accurate or not. Also weight, I guess, is the other thing, which I did mention a little bit. But typically in truckload, you’re good up to 45,000 pounds. If you say something’s 20,000 pounds and it actually weighs 25,000 pounds, you’re most likely never gonna hear about it. On the LTL side, pricing is very sensitive to the weight. Even 10 or 20 pounds off can increase your charge. So it’s important to be as accurate as possible on the weights with pricing, particularly with LTL.

Chris Clever

Chris is the president and founder of FreightPros. Chris has been involved in the transportation industry for over ten years and focuses on strategy and new business initiatives to help drive FreightPros to become the most progressive freight broker in the industry.

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