Less than truckload (LTL) is a beneficial and cost-efficient option for shipping goods. However, it’s often challenging for the shippers to manage it in the right way. It can be complicated to recognize the opportunities for better LTL freight performance. If you often face shipment delays, disruptions, or spend too much on LTL freight, you probably want to improve the effectiveness of the process. There are several useful practices you can implement to improve LTL efficiency.
How to improve LTL efficiency?
Extend lead times
It’s not a secret that advanced planning leads to a more consistent, high-performing delivery. There are numerous benefits to prolonging your lead times, at least to a few days extra. With limited LTL capacity, the earlier you start planning, the more access you get to the pool of top LTL carriers. Consequently, you have more diversity and flexibility in choosing an LTL carrier that will match your requirements, and not settle for options that are left on the market. With having better carriers, and more time to plan, you can get an accurate delivery time estimate, communicate all the additional services needed and eventually get high on-time performance. It’s recommended to leave 5-6 days of lead time to successfully plan an LTL shipment.
Freight weight and packing
Freight weight and shape also play a critical role in how attractive your shipment is to the carrier. Essentially, your freight has to be palletized and properly packed so it’s easier to stack. Any inappropriate packaging will probably lead to a delay, extra charge, or a failed shipment. Also, too light or too large volume of LTL will lose priority over average shipments weighing from 1,000 to 2,000 pounds.
Communication with carriers
Finally, communicating all the details to your carrier is essential for a high on-time delivery rate. You should accurately state all the shipment information, like precise weight, dimensions, and freight class. In case you need any additional services, like shipping to remote locations, using a liftgate, or more, it’s critical to communicate it to the carrier. This will match you with the exact transportation option that you need and will leave both parties satisfied.
Ultimately, looking into your current strategy and operations should provide a useful insight into efficiency and freight spend. After conducting a comprehensive analysis, it’s easy to determine where you can improve the process and boost LTL efficiency.
There are two wide-known transportation modes in freight shipping: full truckload and less than truckload. Usually, shippers have to choose between these two options to move their freight. However, there is a less known transportation method – volume LTL freight shipping. And it can actually become a cost-effective and practical solution for your shipments.
What is Volume Freight?
Volume freight is the shipment that exceeds standard sizes and dimensions of less than truckload but is not enough to fill an entire truck trailer. Volume shipments are more than 6 pallets or 5,000 lbs of goods (12 linear feet), but less than 30 pallets or a truckload (53 linear feet). When shipping volume LTL, shippers and 3PL’s can move a larger amount of freight and still get flexible rates, paying only for the used space. Additionally, in volume freight, you pay a spot price that is not connected to freight classification like in regular less than truckload shipping.
What are the benefits of volume LTL?
Volume shipments can drive substantial cost savings to your business since they are generally priced lower than full truckloads. Even more, the price you pay for the used space is defined and given to you upfront, so you will not be surprised by additional fees upon the delivery.
Usually, volume shipments are transferred faster than regular LTL loads. Unlike LTL, volume freight is going from dock to dock, and carriers do not unload it at every terminal. Additionally, this means a lower risk of freight damage because of less handling.
For some companies, volume freight can become a win-win solution due to its flexibility. You can avoid the common pitfalls of LTL, like long transit times, frequent handling, and density-based pricing. At the same time, you have visibility into the transportation process and pay lower than for a full truckload shipment and bypass the long negotiation process that often lies behind many FTL freight arrangements.
Ultimately, volume LTL can be a balanced option between LTL and FTL that will fit shippers with high freight volumes. Also, these shipments are easier to arrange and track, apart from other benefits
While LTL shipping is pretty straight-forward, LTL freight class may seem quite confusing for many. At the same time, knowing the right class of your freight is essential for shipping LTL. When shippers first come across having to move an LTL load, determining and understanding freight class may be quite a challenge.
In today ’s, we want to talk about some basics of freight classification and answer the most common questions: What is it? How does it work? Why is it important to know your freight class? How do you find the correct class for your freight?
What is the LTL freight class?
Freight classification was introduced by NMFTA (National Motor Freight Traffic Association) to categorize freight based on a number of characteristics and standardize pricing. According to this concept, all commodities are grouped in 18 classes, ranging from Class 50 to Class 500. The higher is the class, the higher will be the shipping rate. Basically, freight classification depends on your freight’s density. Many shipping companies would calculate the LTL freight class for you, so you don’t have to worry about it. However, stating an inaccurate classification can lead to extra charges and delays. The classification is cataloged in the NMFC tariff, and a unique NMFC number is assigned to each item.
What factors determine LTL freight class?
A hundred-pound load of brick will probably be smaller and easier to handle than a hundred-pound load of ping-pong balls, right? The classification is fairly comprehensive and is based on four characteristics:
Ease of handling
Each commodity is evaluated according to these factors and cataloged under a specific NMFC number and class. The densest and “shipping-friendly” loads will fall under Class 50, which will also be the cheapest. The least dense and “inconvenient” loads will be classified as Class 500, which will be the most expensive.
Why is the LTL freight class important?
As mentioned above, freight class directly affects the pricing. Knowing the accurate class of your freight will ensure that you know the correct shipping price up front and avoid carrier re-class and up charges. The best way to avoid unpleasant surprises on the invoice is not only to know the correct class but the accurate NMFC number for your freight as well. The NMFC number should be on the BOL along with the clear freight description.
How to determine the freight class?
Finding the correct item and determining freight class may be a little confusing at times. If you are not yet a pro, you can reach out to your 3PL representative. They have expertise and access to the NMFC database and will be able to help you determine the class. Classifying LTL freight may be tricky, so make sure to provide extensive and accurate freight description, including weight, dimensions, packaging, and value to your 3PL representative.
Need help figuring out the correct class for your LTL freight? We can help!
The less-than-truckload (LTL) market is adjusting to a soft freight environment, triggering less volume, revenue and profits. As the U.S. freight economy weakened, LTL carriers saw a slip in revenue year-over-year. To date, the only large LTL carrier that hasn’t reported a decline in revenue is FedEx.
In the first quarter of 2016, LTL carriers posted a 3.1% rise in yields (revenue per hundredweight) despite a 2.7% drop in tonnage per day. Compare that with a 6.6% rise in yields on a 0.9% rise in tonnage per day in the first quarter of 2015.
Most LTL carriers said freight demand was better in July, but still reduced compared to a year ago. Stifel trucking analyst, David Ross, called the LTL pricing environment “a little more competitive than originally anticipated.” But, most LTL executives say pricing remains rational, even during the usually slow first quarter.
“Despite near-term headwinds from decreasing fuel surcharge revenue and an inconsistent industrial economy, we believe LTL pricing remains rational,” says James Welch of YRC Worldwide. “LTL companies are focused on evolution of the supply chain distribution process and getting an adequate return on the capital,” Welch continued.
LTL carriers have been able to maintain rates even with declining volumes. Some LTL carriers have even increased rates. The pricing ceiling grown by LTL carriers since the last recession and LTL price war appears to be holding firm despite the sluggish economy.
LTL carriers aren’t experiencing excess capacity like the truckload sector. 55% of shippers surveyed said LTL capacity was balanced. Only 6% expect LTL capacity to increase over the next 12 months, while 74% said they expect capacity to remain about the same.
Since LTL rates aren’t decreasing anytime soon, shippers can avoid extra fees and negotiate better base rates by working with a 3PL. In order to negotiate lower transportation rates, shippers should consolidate freight, leverage freight spend, highlight attractive freight and utilize the CzarLite Tariff.
Less than truckload shipping is a transportation method where your freight doesn’t take the entire container space. Freight is combined into one trailer with multiple shipments. LTL shipment typically weighs between 151 and 20,000 pounds. When a freight shipment isn’t large enough to fit into a 48- or 53-foot trailer, a shipper’s best option is to use LTL.
This transportation option is more cost-effective and environmentally friendly when only some products need to be transported.
The benefits of LTL shipping include gaining control over shipment visibility, decreasing costs, and obtaining scheduling flexibility.
How does less than truckload shipping work?
LTL trucking has suffered for a long time. Historically, it has been an expensive mode of transportation. However, the past couple of years it has seen unusual growth. Short capacity in the full truckload sector forces some freight to move via LTL. Some LTL carriers are benefiting from this, but many aren’t.
Most of the time, a billion-dollar LTL trucking company will handle your LTL freight. The industry is dominated by these large carriers, and this trend is likely to continue. The top 25 LTL carriers own approximately 91 percent of all LTL revenue and are benefiting significantly from the rise in economic activity, increasing revenue by 9.1 percent in 2014.
This is all at the expense of small LTL carriers, whose revenue dropped 6.6 percent in 2014, which followed a 3.2 percent drop in 2013, and many are going out of business. But for large LTL carriers, the future looks bright. They will continue to grow and eat up more of the LTL market.
As economic activity continues to rise, there will be more pressure on freight capacity and pricing in the LTL trucking sector. 3PL-shipper relationships are valuable and common because 3PLs know how to negotiate with the large LTL carriers and secure better rates and better service than a shipper.
Determining less than truckload pricing
LTL rates can be very confusing because a variety of factors calculate the final payment. For truckload shipping, rates are determined based on per-mile or per-hundredweight plus a fuel surcharge, but LTL shipping is influenced by weight, density, class, distance and more.
Less than truckload shipping is used for shipments that are too large to be sent as a parcel but too small to fill an entire truckload. LTL carriers collect freight from various shippers and consolidate that freight to its destination.
Here are 8 factors that determine less than truckload freight rates:
Weight: For LTL shipments, the more a shipment weighs, the less you pay per hundred pounds.
Density: Shippers have to know how to accurately calculate the LTL shipment’s density and mark it on the BOL. You divide the total weight of the shipment by the total cubic feet to determine density. If the shipment is on pallets, use the dimensions of the pallet, the combined height of the freight and the pallet, and the total weight of the shipment. Once density is calculated, you can determine the freight’s class.
Freight Class: There are 18 different classes – ranging from 50 to 500. The class is determined by density, value, stow-ability, and handling. Lower classes have lower rates and higher classes are subject to higher rates.
Distance: If an LTL shipment has to be interlinked, then there could be more charges. Interlining occurs when a shipment’s destination is outside the carrier’s standard service area and the carrier must find another LTL carrier to finish the delivery.
Base Rates: LTL carriers establish their own base rates, which are quoted per one hundred pounds.
Freight All Kinds (FAK): FAK is an arrangement between the client and carrier that enables multiple products with different classes to be shipped and billed as the same freight class.
Minimums: LTL carriers apply a specific price point, an absolute minimum charge, which they will not charge below.
Accessorials: These charges apply if LTL carriers perform more duties than stated on the BOL. Usually, these charges can be negotiated or avoided.
What is the LTL freight class?
Freight class for less than truckload shipments is important because it plays a substantial role in calculating how much the LTL carrier will charge for moving the freight to its final destination.
There are 18 different LTL freight classes: 50, 55, 65, 70, 77.5, 85, 92.5, 100, 110, 125, 150, 175, 200, 250, 300, 400 and 500.
The higher the class, the higher the rate for every hundred pounds you ship. If a product’s classification is inaccurate, then the shipper runs the risk of paying too much, violating transportation laws that could lead to major fines.
To learn more about freight class, download our free eBook here!
What characteristics determine LTL freight class?
Density and Value
The density is the space the item occupies in relation to its weight. The density is calculated by dividing the weight of the item in pounds by its volume in cubic feet. Density guidelines assign classification 50 to freight that weighs 50 pounds per cubic foot. The Commodity Classification Standards Board (CCSB) assigns classifications 70, 92.5, 175 and 400 to freight with densities of 15, 10.5, 5, and 1 pound per cubic foot, respectively. Freight less dense than 1 pound per cubic foot is classified as 500. Your item’s volume in cubic feet is Length x Width x Height/1,728, measuring all dimensions in inches. The density of your item equals Weight/Volume, where you measure Weight in pounds and Volume in cubic feet.
Most freight stows well in trucks, trains, and boats, but some cargo is regulated by the government or carrier policies. Excessive weight, length or protrusions can make freight impossible to load with other freight. The absence of load-bearing surfaces makes freight impossible to stack. A quantifiable stow-ability classification represents the difficulty in loading and carrying these items.
Most freight is loaded with mechanical equipment and poses no handling difficulties, but some freight, due to weight, shape, fragility or hazardous properties, requires special handling.
Liability is the probability of freight theft or damage, or damage to adjacent freight. Perishable cargo or cargo prone to spontaneous combustion or explosion is classified based on liability and assigned a value per pound, which is a fraction of the carrier’s liability. When the classification is based on liability, density must also be considered.
How to reduce LTL costs?
There are two notable ways to drive down less than truckload freight costs. The first is to avoid or mitigate accessorial charges. These occur when a carrier has to provide services above and beyond the standard shipping procedures. There are three different types of accessorials:
Organizational: These are charges when a carrier has to make an unnecessary appointment call, reweigh an LTL shipment or correct the bill of lading (BOL).
Transportation: A carrier will charge extra for transportation when a driver has to go inside a building to deliver a package, is going to an area that is difficult to get to, or if the freight doesn’t fit neatly onto a pallet or into a truck.
Equipment: These charges are most common. The fuel surcharge belongs to this category. A carrier will make additional charges if you need a lift gate, forklift or other equipment for delivery.
There are many different accessorial charges a carrier may use and sometimes it is impossible to avoid them. However, you can avoid or mitigate most accessorials by being aware of what charges may apply to your individual LTL shipments.
The second, to work with a 3PL. They are very knowledgeable in the LTL industry and can help you avoid accessorial charges. A 3PL also has the experience to negotiate prices with LTL carriers, so they can get you the best rate with the best service. 3PLs can also provide a number of other services to give you visibility and control over your LTL shipments.
Why do LTL carriers add GRIs?
A general rate increase (GRI) is the average amount that LTL carriers increase base rates. Carriers apply a GRI to all or specific trade routes in order to balance the cost of business. The rate increase helps carriers maintain service levels, attract and retain drivers, compensate high fuel costs and integrate technology to enhance customer service.
For shippers, GRIs generally means that you will pay more to move your LTL freight. To avoid a GRI surcharge, you can negotiate special rates with carriers or leverage a 3PLs buying power to secure competitive pricing. A 3PL helps companies recognize when a GRI is affecting their bottom line and can advise shippers on how to keep costs down.
How to improve the attractiveness of your less than truckload freight?
To secure capacity from LTL carriers, shippers need to consistently differentiate themselves and improve their attractiveness to carriers. Today, carriers expect more from shippers in exchange for competitive rates, including:
Annual freight spends and shipment data
Shipment level data should include ship dates, origin and destination zip codes, freight class, weight, details of accessorial charges, number of pallets, their dimensions, and shipment density. With more information at the carrier’s disposal, there is less risk.
Provide LTL carriers with photos of common inbound and outbound shipments from your dock, as well as corresponding weight and dimensions of LTL shipments in those photos.
Disclose your historical frequency of guaranteed service, volume shipments, and frequency of claims. Hiding information from a carrier because you fear higher rates may ultimately lead the carrier to increase GRI or undergo major supply chain disruptions.
Know the trends
Ask carriers to bid using current tariff rate bases and use a standardized market fuel surcharge program.
Moving LTL freight isn’t easy and often shippers need assistance, but where does a carrier go for assistance? Many people are unaware that 3PLs are there to help both shippers and carriers. Although a 3PL may negotiate a low price from a carrier, they will help that carrier in other ways. Otherwise, the carrier would never agree to lower prices.
Pricing: When a 3PL manages to price, less than truckload shippers can go to one place to look for capacity instead of calling multiple carriers, repeatedly providing pickup zip, destination zip, piece count, and weight. Carriers working with 3PLs can get the targeted freight they want at a reasonable price and protect margins.
Administrative Tasks: Inevitably, everyone has to do paperwork. A 3PL will facilitate document creation with a shipper and transfer them to the correct LTL carrier. The shipper will save time doing the paperwork and the carrier will save time waiting for it; both can focus more time on core business functions.
Technology:TMS technology from 3PLs simplifies the shipping process for both carriers and shippers. LTL shippers will automatically get the best rate, lane, and mode while LTL carriers will be connected with their ideal customer base.
Special Shipping Arrangements: These can be time-consuming and difficult, especially for LTL shippers. A 3PL will have pre-qualified carriers for any special shipping requirements. Also, it may even be able to help mitigate LTL accessorial charges. This saves the shipper time from searching around for the perfect carrier. LTL carriers benefit, too, as they can spend less time and resources on advertising/promoting their special shipping capabilities.
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When it comes to moving Less-than-Truckload shipments one of the first things to consider is how the product is defined by the trucking industry.
Each shipment is defined by a classification, depending on the nature of the product. This Freight Classification plays a prominent role in calculating how much the carrier will charge you for transporting it. Choosing the wrong Freight Class could waste money, time, resources, and delay shipments. It is important to classify a shipment correctly.
There are 18 different freight classes defined by the National Motor Freight Traffic Association (NMFTA): 50, 55, 60, 65, 70, 77.5, 85, 92.5, 100, 110, 125, 150, 175, 200, 250, 300, 400, and 500. The higher the class, the higher the rate for every one hundred pounds shipped.
There are a couple of factors that affect LTL Freight Class. The main four are the density of the product, how the product is handled, its ability to be stowed, and the type of liability it assumes. Here are further explanations of each:
Density: Density guidelines assign classification 50 to freight that weighs 50 pounds per cubic foot. The Commodity Classification Standards Board (CCSB) assigns classifications 70, 92.5, 175, and 400 to freight with densities of 15, 10.5, 5, and 1 pound per cubic foot, respectively. Freight less dense than 1 pound per cubic foot is classified as 500.
The density is the space the item occupies in relation to its weight. The density is calculated by dividing the weight of the item in pounds by its volume in cubic feet. Your product’s volume in cubic feet is Length x Width x Height/1,728, where all dimensions are measured in inches. The density of your item = Weight/Volume, where Weight is measured in pounds and Volume is measured in cubic feet.
Stow-ability: Most freight stows well in trucks, trains, and boats, but some articles are regulated by the government or carrier policies. Some items cannot be loaded together. Hazardous materials are transported in specific manners.
Excessive weight, length or protrusions can make freight impossible to load with other freight. The absence of load-bearing surfaces makes freight impossible to stack. A quantifiable stow-ability classification represents the difficulty in loading and carrying these items.
Handling: Most freight is loaded with mechanical equipment and poses no handling difficulties, but some freight, due to weight, shape, fragility, or hazardous properties, requires special attention. Therefore, a classification that represents ease or difficulty of loading and carrying the freight is assigned to the items.
Liability: Liability is the probability of freight theft or damage, or damage caused to adjacent freight. Perishable cargo or cargo prone to spontaneous combustion or explosion is classified based on liability and assigned a value per pound, which is a fraction of the carrier’s liability. When classification is based on liability, density must also be considered.
Freight Class plays a large role in the price of shipping. Choosing the wrong Freight Class can lead to surprise fees. Select the correct classification with the help of a TMS, like PLS Pro, or by subscribing to the NMFC publication, and keep shipping without hassle.
When it comes to moving less-than-truckload shipments from point A to point B, one of the first things to consider is its definition in the trucking industry. In the world of freight shipping, each product definition is its classification. It is important to know how to determine LTL freight class because it affects the final price of your shipment.
The class of freight plays a prominent role in calculating how much the carrier will charge you for transporting it.
How many freight classes are there?
There are 18 different classes LTL freight can ship under: 50, 55, 60, 65, 70, 77.5, 85, 92.5, 100, 110, 125, 150, 175, 200, 250, 300, 400 and 500. The higher the class, the higher the rate for every hundred pounds you ship.
How do you determine LTL freight class?
The many definitions or classes of freight are listed in the National Motor Freight Classification tariff, commonly referred to as the NMFC. The NMFC is a publication for motor carriers containing rules, descriptions, and ratings of all commodities.
There is a publication to classify freight for freight bill rating purposes. Besides defining the classes of shipping commodities, the NMFC also assigns item numbers to each type of commodity. The item number relates not only to the commodity itself, but to its packaging, the material of the commodity, and other considerations.
Item numbers associate with rates as well as commodity classifications. PLS Logistics Services’ LTL department is very familiar with the NMFC classification and can help you determine the proper class of your item.
Which factors affect LTL freight class?
Before a class can be determined, there are some characteristics of the freight that needs to be identified. You need to know how the freight’s density, the stow-ability, how to handle it, and what type of liability it assumes. There are several main factors that determine the LTL freight class, including:
Essentially, dimensions play a large role in estimating the final price of your shipment. Especially, when shipping LTL. Although it goes along with many other factors, length, width, and height are important. It is crucial to provide an exact and correct number since even small discrepancies may result in additional charges.
Weight and Packaging
The next critical measure of your shipment’s cost is the actual weight. Most likely you’ll have to palletize your freight, so the actual weight means the weight including the pallet. Additionally, your shipment’s package will be considered when determining the freight class.
Density and Value
Density guidelines assign classification 50 to freight that weighs 50 pounds per cubic foot. The Commodity Classification Standards Board (CCSB) assigns classifications 70, 92.5, 175 and 400 to freight with densities of 15, 10.5, 5, and 1 pound per cubic foot, respectively. Freight less dense than 1 pound per cubic foot is classified as 500. The density is the space the item occupies in relation to its weight. You calculate density by dividing the weight of the item in pounds by its volume in cubic feet. Your item’s volume in cubic feet is Length x Width x Height/1,728, where all dimensions are measured in inches. The density of your item = Weight/Volume, where Weight is measured in pounds and Volume is measured in cubic feet.
Most freight stows well in trucks, trains, and boats, but some articles fall under the regulation by the government or carrier policies. Some items don’t fit together. You need special conditions to move hazardous materials. Excessive weight, length or protrusions can make freight impossible to load with other freight. The absence of load-bearing surfaces makes freight impossible to stack. A quantifiable stow-ability classification represents the difficulty in loading and carrying these items.
Loading freight with mechanical equipment poses no handling difficulties, but some freight, due to weight, shape, fragility or hazardous properties, requires special attention. You have to mention a classification that represents ease or difficulty of loading and carrying the freight and assigns it to the items.
Liability is the probability of freight theft or damage, or damage to adjacent freight.
Perishable cargo or cargo prone to spontaneous combustion or explosion is classified based on liability and assigned a value per pound, which is a fraction of the carrier’s liability. When the classification is based on liability, density must also be considered.
In conclusion, the class of your freight plays a prominent role in calculating how much the carrier will charge you for transporting it. Knowing the characteristics of freight is very important.
If the product class is inaccurate, you risk paying too much. Also, you violate transportation law which leads to hefty fines if caught trying to pay a cheaper rate.
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