What is Full Truckload shipping?
FTL shipping is a mode of transportation where an entire truck, typically utilizing a 48’ or 53’ trailer, is dedicated to a single load going to a specific destination. Generally, 24 to 26 standard pallets (40” x 48”) can fit on a trailer. This means that the whole truck is paid for and filled with goods belonging to one party, which can be the shipper, a third party, or the consignee (which is the party receiving the goods). Generally speaking, FTL shipping is often used when the shipment is too large to transport economically as an LTL shipment or when the load requires the exclusive use of the tractor-trailer.
Direct FTL shipments are picked up and delivered to the consignee with no stops. Often, when a load can be planned economically, FTLs can be multi-stop, which means multiple orders can be picked up from the shipper and delivered to several consignees during its route. This type of multi-stop delivery differs as an alternative method of delivering from LTL in that LTL orders generally share space with other companies’ freight en route for reasons explained below.
A typical FTL delivery sequence involves a shipper contacting a truckload carrier to inform them that a load is ready. If the chosen carrier has capacity available (i.e., a driver and truck available to make the delivery) and the rate is acceptable, the driver will arrive at the shipper’s dock at the instruction of their dispatcher for live loading. In some instances, shippers will keep empty trailers on-site in their yards so that loads can be pre-loaded onto trailers to save time and space for better resource utilization. The delivery can begin when the driver has the paperwork in order and the load secured. Once at the consignee (which may or may not require a delivery appointment), the trailer is unloaded. From there, the driver is free to make their next pickup.
What is Less-Than-Truckload (LTL) Shipping?
LTL shipping is a method of transportation for a freight order that does not require an entire trailer’s capacity to haul and is more economical to ship combined with other small freight orders moving to and from the same general areas managed by different parties. For these shipments (often 12 pallets or less), the LTL carrier consolidates multiple smaller shipments from different companies and delivers them to their respective consignees. This is accomplished by leveraging one or more regional terminals the carrier operates.
A typical LTL delivery sequence includes a shipper contacting their local LTL carrier branch via phone, email, or TMS to provide notice of the load’s availability. Paperwork, including the Bill of Lading, is filled out and accompanies the shipment during transit. The LTL carrier will arrive to pick up the pallet(s) and take them to its local terminal for consolidation. The shipment is unloaded at the terminal and then, at some point, reloaded onto another trailer with other orders destined for the same region. Depending on the destination and carrier’s network, off-loading and reloading can happen more than once. Once the goods reach the final delivery terminal, the pallets are put on a truck and ‘out for delivery.’ Modern LTL carriers provide online tracking for customers to see the locations and ETA of shipments in real-time while in transit.
How do FTL transit time and service compare to LTL?
One of the primary benefits of FTL shipping is that it is faster than LTL shipping. Because the truck is dedicated to the individual shipment, there are no stops to pick up or drop off other freight, which keeps the truck moving and requires less time.
LTL requires pallets to be often unloaded and reloaded multiple times as they move through the carrier’s network of consolidation centers during their journey, which can increase the likelihood of damage.
Although transit times may be slightly slower, LTL carriers operate based on a set schedule which can make pickup and delivery more predictable. Such a schedule also provides more consistent capacity shippers can use when FTL carriers do not have trucks in the area.
How do FTL and LTL pricing work, and their costs compare?
FTL costs are often charged on a per-mile or flat-cost basis that is quoted in advance. By comparison, FTL rates are easier to calculate and understand compared to LTL. Mileage accuracy is vital to ensure the costs are calculated and invoiced correctly, so shippers and carriers need to ensure they are using the same mileage calculation method.
The obvious pricing advantage of FTL shipping is that it is usually more cost-effective than LTL shipping for larger deliveries that take up a lot of space. And because the entire truck is dedicated to the shipment, the shipper pays a flat rate for the truck. This is regardless of how much the shipment weighs or how much product is in it as long as it does not exceed the weight limit of the equipment used.
A Full Truckload cost is typically a base rate (per-mile or flat rate) plus a fuel surcharge and any accessorials incurred. Accessorials can include detention, unloading, or other special handling charges. The shipper and carrier should have any potential accessorial costs defined and agreed to in a rate agreement or contract in advance.
A primary benefit of LTL shipping is that it is more cost-effective for smaller shipments. Because the cost of the truck is shared among multiple shippers, each shipper pays a lower rate than they would for FTL shipping. But, LTL pricing is more complex, and the cost also depends on the weight and type of goods being shipped more so than for FTL shipments.
Although they can sometimes be quoted as a flat rate, the main factor determining an LTL shipment’s cost is a Freight Classification code. A published index usually determines the class called the NMFC (National Motor Freight Classification®) and is administered by the National American Motor Freight Traffic Association. The NMFC is a highly detailed calculation that accounts for weight density and product value. Often, companies are offered a discount on their tariff as additional savings. LTL shipments are also subject to accessorials and fuel surcharges like FTL.
The complexity of LTL rates makes technology to calculate shipping rates accurately, and auditing invoices a necessity for many companies.
An important note is that truckload carriers often offer much more competitive rates, enabling them to position drivers and equipment in their busiest shipping lanes. Looking for local carriers for your shipments is always a good idea as a money-saving technique. The downside is these carriers do not always have equipment availability when you need it. Similarly, LTL carriers have lanes and regions that work best for their networks and where they can offer the best rates.
What are the other advantages to consider when choosing FTL or LTL?
Another advantage of LTL shipping is that it can be more flexible than FTL shipping. Since the carrier can combine multiple smaller shipments into one truck, shippers have more shipping options.
The better choice cost-wise between FTL and LTL can be nuanced because the lower cost is not always obvious. There are borderline shipments when paying for a whole truck, even though the shipment does not require the space, is a lower cost option. For example, because a product’s class and weight directly influence the cost of the LTL shipment, there becomes a point when the cost of LTL, even though it does not require all the space, is cheaper to pay for a whole truck. This often becomes a factor when the pallet count for an order reaches about 12.
How do you choose FTL or LTL?
Shippers need to consider the cost difference between FTL and LTL for deliveries with pallet counts between about eight and 12 pallets. But really, it depends on the types of goods it most often ships. Higher value, denser types of products may be cheaper to ship as a full truckload than LTL at lower pallet counts.
In summary, FTL shipping is most often ideal for larger shipments that require exclusive use of the truck and need to be delivered quickly. In comparison, LTL shipping is best for smaller shipments that can be consolidated with other shipments to save on shipping costs.