What Is LTL Freight Shipping? Definition & Key Benefits

In the rapidly evolving retail landscape, efficiency, and flexibility in logistics operations are not just advantages but necessities.

Retailers that can’t afford to run a captive fleet or don’t see them to be feasible for all deliveries, typically hire third party carriers and choose the Less-Than-Truckload (LTL) model for transportation of their parcels. Big and bulky retailers typically go for Full Truckload (FTL) due to sheer size of the shipment and retailers that sell smaller items and don’t operate via captive model, choose LTL to save cost.

What Is LTL Freight Shipping?

LTL is the democracy of shipping. It’s all about sharing space. If your shipment is relatively small, LTL allows you to pay for only the portion of the truck that you’re using. It’s like a potluck dinner – everyone brings something, and we all share the space. This approach, which allows for the transportation of smaller shipments that do not require the full space of a truck, offers multiple benefits. However, sharing has its drawbacks. Your shipment will be stopping at multiple places to pick up and deliver other loads, so the delivery times are longer. Not ideal if you’re racing against the clock.

Let’s explore three benefits for retailers with LTL freight shipping:

1. Cost Efficiency through Shared Transportation Expenses

One of the most significant advantages of LTL freight shipping is the opportunity for cost savings. Unlike FTL shipping, where a retailer pays for the entire truck space regardless of whether it’s fully utilized, LTL freight shipping allows multiple shippers to share space and the associated costs. This shared model means retailers only pay for the portion of the truck their goods occupy, making it an ideal option for small to medium-sized shipments.

For retailers, especially those with fluctuating shipment sizes, LTL offers a way to manage transportation costs more effectively. By avoiding the need to wait until there’s enough product to fill an entire truck, retailers can maintain a smoother, more consistent flow of goods. This not only helps in reducing overheads but also aids in better inventory management, ensuring that products are available to meet consumer demand without the burden of excessive shipping costs.

2. Enhanced Flexibility and Scalability

Retailers operate in a dynamic market environment where demand can vary greatly due to seasonality, promotions, and consumer trends. LTL freight shipping provides the flexibility needed to adapt to these changing demands without overcommitting resources. With the ability to send out shipments at various sizes and frequencies, retailers can respond more rapidly to market changes, maintaining a competitive edge.

Furthermore, LTL freight shipping is scalable, accommodating growth without the need for significant logistical adjustments. Whether a retailer is expanding their product line, testing new markets, or experiencing a surge in demand, LTL freight shipping can adapt to these changes efficiently. This scalability ensures that logistics operations can support business growth rather than hindering it, enabling retailers to explore new opportunities with minimal logistical constraints.

3. Sustainability and Positive Brand Perception

Today’s consumers are increasingly environmentally conscious, often favoring companies that demonstrate a commitment to sustainability. LTL freight shipping, by consolidating shipments and maximizing the use of truck space, contributes to reduced carbon emissions compared to sending multiple smaller vehicles. This more efficient use of resources aligns with the growing trend towards greener logistics practices.

Retailers leveraging LTL freight shipping can also enhance their brand image by showcasing their commitment to sustainability. By integrating eco-friendly logistics practices, retailers not only contribute to environmental conservation but also appeal to a broader base of consumers who prioritize sustainability in their purchasing decisions. This alignment with consumer values can differentiate a brand in a crowded market, fostering customer loyalty and attracting environmentally conscious consumers.

How technology enables retailers for success?

While LTL freight shipping has many clear benefits, they can only be achieved provided the retailers find third-party carriers that meet their requirement. Personal networks are one way for retailers to hunt down carriers/transporters. But with volume, time and cost factors in play, manual methods are less than ideal.

Even if retail establishments go forward with this, there isn’t any way for operations/logistics managers to monitor the performance of the third party transporter/carrier other than whatever the last mile dispatcher says. This could hamper the customer experience and ultimately hurt the brand, and even increase operating costs. So keeping a close eye on third party carriers’ performance is key.

However, this isn’t realistic considering the sheer volume of orders a retailer might receive on a regular basis considering shoppers around the world are embracing online shopping.

So what can retailers do to find the right carrier that aligns with their delivery objectives?

Finding the right carrier

Locus’ carrier management system, ShipFlex can help retailers connect with a vast carrier network and sort based on multiple parameters like SLA, cost, truck type and many others. To avoid last mile dispatchers from interfering with the carrier selection process, rules can be set to assign particular orders/shipment to specific carriers based on weight, dimension, order type, geography and many other parameters. With ShipFlex retailers can also track both captive and outsourced fleet together on a single dashboard

Transparent billing

Implementing a dispatch management system that has a built in Transporter Management System can really provide the much needed transparency for retailers when it comes to billing. Most of the time while leveraging legacy dispatch management systems, retailers have no way to counter the inflated cost from transporters due to the lack of visibility of planned costs.

However, smart DMPs can provide a portal for transporters to submit their quote and retailers can review and accept or reject and then leverage this data as planned cost and compare with executed cost to counter the overcharge.

Conclusion

LTL freight shipping presents a strategic opportunity for retailers to optimize their logistics operations in multiple ways. From cost savings and flexibility to enhancing sustainability efforts, the benefits of LTL freight shipping align closely with the needs and challenges of today’s retail landscape. By incorporating LTL freight shipping into their logistics strategies, retailers can not only achieve more efficient and cost-effective operations but also build a stronger, more sustainable brand image.

As the retail industry continues to evolve, the ability to adapt and optimize logistics operations will be crucial for success. LTL freight shipping offers a versatile and scalable solution that can help retailers navigate the complexities of supply chain management while meeting the demands of a dynamic market environment. By leveraging the advantages of LTL freight shipping, retailers can ensure they are well-positioned to thrive in today’s competitive landscape, delivering value to their customers while driving growth and sustainability for their business.