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Consumer Goods Logistics Blog


5 Unflattering Secrets that LTL Carriers Don't Want You to Know

Published by Alex Stark on July 18, 2014

If you’re 5’7” with a vertical leap of about an inch and a half, a career as a professional basketball player is likely not in the cards. 

Smaller shippers might feel the same way.  You can’t fill a trailer with your volume, so the faster, cheaper, more reliable service of a truckload (TL) carrier is out of reach, right?  Well, not necessarily.

These days, even smaller shippers can avoid the drawbacks of LTL shipping. They can do it by calling upon the matchmaking capabilities of a third party logistics provider (3PL) to build multi-vendor truckloads for both region-to-region and last mile distribution.

Below are five unflattering secrets of LTL freight that LTL carriers don’t want you to know.  To see the full list of 10, read our white paper:  LTL Secrets Revealed:  How Collaborative Freight Strategies are Creating Greener, Lower-Cost Alternatives to LTL.

  1. LTL shipping costs more. You’ll pay 25%–35% more than small shippers who collaborate on transportation.
  2. The price keeps going up. Your LTL rates are almost certain to increase 6%–10% every time you renew your contract. And smaller shippers lack bargaining clout when negotiating with large LTL carriers.
  3. Legacy costs inflate LTL rates. Many of the biggest LTL carriers have legacy cost burdens that they have to pay year after year. That forces them to have higher rates, and those rates become the norm for the whole LTL market.
  4. You’ll have trouble predicting and comparing costs. The price tag for LTL shipping depends on the weight and dimensions of your freight, the pallet count, the freight classification and the origin and destination. Each carrier uses its own formula to crunch those numbers, and each sets certain weight thresholds for achieving volume discounts. So, it’s hard to know in advance what your shipment will cost, or to compare different carriers’ tariffs.
  5. LTL increases your carbon footprint. When you and other companies in your region all send independent LTL shipments, that that puts excess trucks on the road. The result – congested highways and more greenhouse gases in the atmosphere.

How can you reduce your dependence on LTL shipping?

For long-haul trips, explore pool distribution.

Let’s say that several mid-market companies need to get their products from the Northeast to the West Coast for final distribution. Typically, each company would make a separate deal with an LTL network. But, with pool distribution, all of them can ship their products down the road to a regional 3PL consolidation center, where the loads are combined onto a single truck. The companies may be shipping to different customers in different locations, but they still can share the cost of the longest leg of the journey.

For last mile delivery, explore retail consolidation.

Consolidation opportunities don’t end with the line-haul delivery.  Many consumer goods companies ship to the same regional DCs of Walmart, Target, CVS and other mass retail and grocery chains.  A 3PL can use transportation management software to review pending retail orders, comparing ship-to points and requested arrival dates for different vendors. Based on this analysis, the 3PL loads one truck with multiple vendor orders for the same retailer. The retailer benefits by receiving the same volume of freight in fewer shipments. Shippers gain the economies of consolidation while still hitting all ship windows – and avoiding chargebacks.

 

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LTL Secrets Revealed

Filed under: Freight Transportation