LTL and FTL Shipping: What’s the Difference?
The terms less-than-truckload (LTL) and full-truckload (FTL) get thrown around often within the shipping and logistics community. However, newcomers may find themselves at a loss for what these terms actually mean. To clear this up, we are breaking down each term individually before directly comparing them so that you can choose the best shipping modes for your freight. Understanding the difference will help you make better freight choices.
Freight Shipping
First and foremost, it’s important to know what freight shipping actually is. The term freight shipping refers to the paid process of shipping goods by ground, sea, or air. Freight is typically composed of goods that are being transported to another location in bulk. Two subcategories that fall under the umbrella of freight shipping are less than truckload (LTL) shipments and full truckload (FTL) shipments.
Less Than Truckload (LTL) Shipping
Less than truckload freight shipments, commonly abbreviated as LTL, are shipments that exceed the size limit required to be able to ship as a single package through the mail (a parcel shipment). Despite being too large for a parcel carrier, less than truckload shipments are too small to fill an entire semi-truck trailer, leaving lots of wasted space and contributing to “empty miles.” In order for shipping to be mutually beneficial between the shippers and trucking companies, carriers often ship multiple LTL shipments together to make the trip economically sensible. This way trailers aren’t traversing our highways carrying only air.
Benefits
• Lessen environmental impact
This method of ‘carpooling’ with LTL shipments from other companies reduces the impact transportation has on the environment. Less fuel is used when fewer trucks are needed to transport the same number of total shipments.
• Decrease warehouse expenses
By adopting LTL shipping, companies relieve themselves of the stress that comes with having too much product built up in their warehouse or staged at their docks. Through shipping consistently, companies are able to keep less in their warehouse and also keep a more accurate inventory as a result.
• Minimizes costs on smaller shipments
Traditionally, the lowest rates are reserved for shippers that can fill the entire semi-truck trailer and qualify for full truckload rates. LTL shipping gives companies that aren’t able to fill an entire truck the opportunity to minimize costs by consolidating their freight with other company’s freight. With LTL shipping, companies only pay for the weight of their freight and the space it uses on the trailer.
Full Truckload (FTL or TL) Shipping
Conversely, full truckload shipments (abbreviated FTL or TL) are large enough to fill up an entire semi-truck trailer. Unlike LTL shipments which might ride alongside other shipments, FTL freight is contracted to one carrier and rides alone, meaning there don’t need to be extra stops along the way. This reduces the number of “touches” and reduces the likelihood of damages. When there is enough freight to qualify for a full truckload rate, this is usually the most economical choice.
Benefits
• Save money on larger shipments
If you have enough freight to fill an entire trailer, a FTL shipment will be the most efficient mode. It’s less expensive to ship a single FTL shipment when compared to splitting up the freight into multiple LTL shipments.
• Lower risk of damage
Shipping a full truckload means that from start to finish, your freight will remain in the same semi-truck trailer. This simplifies the transportation process and eliminates the potential risks associated with LTL shipments being handed off to other trucks along their route. Decreasing the number of “touches” freight undergoes during transport reduces risk.
• Ship products faster
When shipping FTL, the only factors considered in the truck’s route are the origin of the freight and its final destination. With LTL, there may be multiple origins and final destinations involved that can lengthen the travel time and impact delivery times as a result. FTL shipments ensure that freight is arriving as quickly as possible by traveling from point A to point B.
Which Should I Choose, LTL or FTL?
LTL and FTL shipping are both beneficial types of freight shipping. For smaller shipments that are too big to be shipped parcel, LTL shipping is often the best choice. For larger shipments that are able to completely fill or almost fill an entire truck, FTL is less expensive. Both are acceptable options when thinking about how to ship your freight, but each has specific scenarios in which they are most beneficial to the shipper.
It is always a good idea to compare the freight rates of multiple LTL or FTL carriers to choose the carrier with the best rate and service level for your shipment.
Why Should You Compare Your Freight Rates?
Comparing rates is the best method to avoid overpaying. Whether shipping LTL or FTL, different carriers will offer different freight rates and service levels and it’s important to shop around. Looking into what’s available often makes way for the discovery of less expensive rates or particular lanes that have the ability to speed up delivery. Prices constantly fluctuate and what initially seems like the better option may not be best in the end.
How Can a Transportation Management System Help?
Leveraging technology is the easiest way to ensure that you are shipping your freight most efficiently. By utilizing a transportation management system like Kuebix TMS, shippers can compare all of their negotiated and spot rates within a single platform. With the ability to compare rates instantly, shippers have the power to book confidently and quickly.
Kuebix TMS users can also leverage Community Load Match which provides complementary truckload rate assessments to ensure they’re making strategic truckload shipping decisions. Kuebix Community Load Match provides shippers with an alternative source of truckload capacity and allows carriers to fill their trucks!
Apart from acting as a vehicle for finding and booking better FTL rates, transportation management systems also simplify everyday shipping operations. Users can integrate ERP systems such as NetSuite and Microsoft Dynamics to increase operational efficiencies and remove the risk of human error. With an ERP integration, orders flow seamlessly between Kuebix and the external platform to reduce manual error and speed up operations.
Many companies also use optimization technology in their TMS to combine LTL shipments into FTL shipments for greater efficiencies and cost savings. Kuebix TMS offers a variety of advanced functionalities including Order and Route Optimizer, which optimizes shipments for maximum rate and route efficiency.
Check out this case study with Hanover Foods to learn how their utilization of Kuebix saved over $1 million in freight spend!
