You need to know the clear cut differences between less than truckload and full truckload shipping services before you can effectively decide on which one is most suitable for your shipping plans. This article will help you with the information you need to clearly understand each shipping option, and also point out what to consider before settling for one or the other to meet your logistic needs.
Less Than Truckload Shipping
This kind of shipping service, which is often shortened as LTL, is the kind that requires shippers to pay for the trailer space that they use per shipment alone. These shipments are less than a full truckload. They may be made of about one to 10 pallets that weigh as much as 100 to 10,000 pounds. The LTL carriers operate by the use of a network of terminals that’s similar to a hub and spoke formation. The spokes, in that illustration, represent the local terminals while the hubs stand for the major centers of distribution. By the use of their various terminal positions, carriers can help with freights that are headed in a similar direction to cut down the cost of their shipping for shippers who don’t have the capacity to completely fill a whole truck.
Full Truckload Shipping
Unlike the less than truckload shipping, full truckload shipping, which is also shortened as FTL, is the conveyance of similar goods that completely occupy an entire truck or trailer. Some carriers are able to haul as much as 24 standard pallets that weigh as much as 42,000 pounds. Freight that is transported through FTL would normally convey goods straight from the take off point to the scheduled destination.
The Market Differences Between Them
One of the cardinal factors to consider when trying to decide on which kind of shipping to settle for is the market difference.
The Full Truckload Market Place
The full truckload market is almost incapacitated by the demand of more than 350,000 owner operators who are looking to fill up their trucks or trailers to transport goods around the United States. Carriers aim to keep their trucks full because empty miles result in the loss of revenue. So they use load boards, which is a software designed to aid carriers and shippers in posting their needs to transport freight or the availability of carriers to transport the freight in any given area.
This kind of market is referred to as the full truckload spot market. This is because rates aren’t determined beforehand. Instead, they’re decided on the spot by negotiations. In the spot market, a cardinal factor to consider is something called backhauls. Backhauls is another word, in the spot market, for return trips that are needed for a carrier to return home after a primary haulage. If the backhaul of a carrier is empty, there’s bound to be a loss of revenue and an unavoidable expense on the return trip. So, carriers consider their backhauls before embarking on a primary haulage.
See the following illustration for clarity: Carrier Company X is based in Houston, Texas. In order to be in profit while also avoiding any possible losses of revenue, they stick with shipment requests from within Houston in order to avoid running with empty trucks, which would unavoidably cost but not generate revenue, leading to a loss. For Carrier Company X to accept a shipment request from Oklahoma City in Oklahoma, for instance, there has to be a need for another freight in Oklahoma City to be hauled back to Houston, Texas. That way, Carrier Company X stays in profit.
The Less Than Truckload Market Place
This market is different from the full truckload market because it has fewer carriers to choose from. This is caused by the need for certain assets to manage the operation of an LTL business. The entire United States is served by only 10 national LTL service providers. A few of the LTL carriers are specialized for operations in certain parts of the country, which means they’re not available to others. The pricing of LTL services is also more complicated than that of FTL. With LTL, carriers offer diverse discounts that depend on density, distance, minimum charges, classification, and accessorial charges.
Furthermore, the LTL carriers evaluate the freight of the shippers before coming up with a price. They consider factors such as packaging specifications, product value, and pattern of shipping in order to determine a shipping cost. To find out more on LTL cost, visit http://ltxsolutions.com/less-than-truckload-ltl-shipping-cost/
LTL and FTL alike offer various kinds of capacity. FTL is likely to be influenced by erratic factors that can result in capacities either in the shippers’ favor or in the favor of the carriers. Think of it like a scale in which the carriers are on one side and the shippers are on the other. Factors like seasonal freighting needs, fuel, tonnage, and driver availability all determine where the scale tilts to in connection with cost. For instance, seasonal freight, like produce, can move the shippers’ freight expense to twice or thrice as much as the normal price, which gives the carriers an edge on the shippers. On the flip side, shippers would pay less if the overall market tonnage went down.
The capacity of LTL isn’t as closely related to the overall economy as FTL. Typically, pricing contracts can last as long as a year, which enables shippers to negotiate on annual basis. This is also in favor of the carriers because it allows them to account for levels of capacity by extrapolations. Both FTL and LTL serve most shippers well. If you fall into the category of shippers who turn out enough products to fill a whole trailer per shipment, then, FTL will serve you best. If, on the other hand, your shipment is sparse, go for LTL to avoid paying more than you should.
Justin Bright – CEO Brighter Logistics
Michigan Freight Broker