Less than truckload (LTL) shipping involves the transportation of relatively small freight shipments that can weigh anywhere between 150 to 10,000 pounds. LTL carriers collect freight from multiple shippers and consolidate that freight onto trailers before the delivery process begins. LTL shipments can be very confusing, because unlike Full Truck Load (FTL) shipments, LTL shipping rates are calculated from several varying factors. Knowing the factors that impact LTL shipping rates is helpful for creating more realistic rate expectations and increasing long-term savings. Here are the factors:
Weight & Density
Weight and density are the two most basic aspects of how LTL shipping rates are calculated. Typically, freight companies rate shipments at the lowest weight and category, meaning that the more a shipment weighs, the less it costs per hundred pounds. Furthermore, be sure to measure the longest sides of all packaging, including anything that overhangs. To determine the density of your shipment, the total weight of your shipment is divided by the total cubic feet. Logistics Plus offers a free, online freight density calculator to quickly determine the density of any shipment.
Once density is calculated, you can now determine the proper freight classification. The National Motor Freight Traffic Association (NMFTA) established “freight classes” that are used to classify commodities for rating purposes. Classifications are based on a products density, stow-ability, value, handling and liability. Each commodity is categorized into one of 18 different freight classifications that range from 50 to 500. Generally, the lower the freight class, the more dense the commodity. Conversely, a higher freight classification represents a less dense product that typically takes up more space. As a general rule of thumb, the higher the freight class, the higher the rate will be. You can read more about freight classification on the Logistics Plus website.
Base Rates & Discounts
Every LTL carrier establishes their own base rates upon which they normally offer discounts. Base rates are typically quoted per 100 pounds, but can vary by company or by lane. One thing to make note of is that carriers will change their base rate depending on their need for additional volume and increased costs for lanes where they have a good balance between trucks and freight. It’s difficult to create an accurate comparison of LTL shipping rates just by looking at base prices or discounts because they’re almost always different. A lower discount off a lower base rate can actually be a better deal than a higher discount off a higher base rate. Logistics Plus can offer you a free freight analysis if you want to compare rates.
The absolute minimum charges refers to the minimum price a carrier will offer, and they will not go lower no matter the circumstances. In this case, even when discounts are negotiated, the absolute minimum charge still holds true. This minimum charge helps ensure that carriers cover all of their fixed costs for a specific shipment or lane. Understanding your carriers absolute minimum charge is an important factor to research, especially if you’re shipments are small and moving across short distances.
Origin & Destination
A shipment that needs to travel a further distance will tend to have higher rates than a short distance shipment. Shippers should be aware of which carriers serve their intended destination so that they can avoid additional charges or fees. It’s important to choose the correct carrier because if your shipment needs to be transferred to another LTL carrier, costs will rise and the goods will be more susceptible to damages.
Surcharges & Accessorial Fees
Accessorial fees apply when additional services are required to handle your shipment. These fees apply when the typical dock-to-dock pickup and delivery service most LTL carriers provide isn’t enough. Common examples of accessorial services include lift-gates, weekend deliveries, and pickup or delivery at special origins or destinations. Fuel surcharges are also a common accessorial fee that LTL carriers charge. Knowing how these additional fees impact your overall expenses is important when determining who you want to work with as your LTL carrier.
If you feel like you’re over-spending on LTL freight, or if you lack the expertise to negotiate your own rates, please consider working with Logistics Plus. As a top freight brokerage firm, our LTL experts help hundreds of companies save on their LTL shipping every day. Logistics Plus will ensure you get a quick and accurate LTL freight quote for any shipment.