What Is Less Than Truckload (LTL) Trucking?Posted On 31th December 2015
COMMON CARRIER LTL SHIPPING
No problem because this is not rocket science. LTL shipping usually refers to a shipment larger than 150 lbs. that parcel carriers say is too big or heavy for them to handle. LTL shipping also refers to the “volume shipments” between 10,000 lbs and 20,000 lbs or those that take up 5 to 12 skid spaces on a truck (up to 24 linear feet of a truck). These limits are not fixed by law - so they are commercially negotiable.
But most LTL shipments fall within these limits. Parcel carriers handle smaller shipments and Full Truckload Carriers, also known as Contract Carriers, handle larger shipments. Now let’s explain a few terms and legal distinctions which you should know about the realm of Less than Truckload shipping in order to do a decent job at it and, furthermore, to protect your company from disasters.
“Common Carriers” are most likely the way you move your Less Than Truckload shipments now. Yellow Freight, Estes Express, Conway now XPO, Land Air of New England, Lakeland Motor Express, New England Motor Freight, Holland Motor Express, USF Holland, Southeastern Freight Lines, Old Dominion and Frontline are all carriers that operate under the legal authority known as “common carriers.”
They all operate out of a terminal based system, a hub and spoke system, like the USPS system, where freight of one skid to 6 skids generally is collected from various shippers, sorted geographically, and then loaded on consolidated trailers. These trailers are shipped to the final terminal, or intermediate terminals, until, perhaps after a sort along the way, the freight arrives at the final terminal where the company unloads a particular shipment and sends it out for delivery on the delivery truck. The freight does not have to be skidded, it can also be floor loaded. Common Carriers most often have unionized work forces, although there are exceptions such as Estes Express.
Tariffs are the governing documents issued by Common Carriers and lay out their shipping rules. These are long documents, and everything from pricing to surcharges to liability details are discussed. Pricing with Common Carriers is dependenton the National Motor Freight Classification System – each commodity has a NMFC number which corresponds to a particular CLASS which then determines the price.
The underlying rationale is that the price per lb. to ship feathers has to be much greater than the price per lb. to ship lead, right? Because a 1000 lbs. of feathers might take up half a truck; and a 1000 lbs. of lead just half a pallet space; so Common Carriers charge a lot more per LB for feathers than lead to balance out the revenue of their trucks full of such mixed freight.
The value of the freight is also a consideration - the Carriers will charge you a higher price for a higher value product because they have more insurance liability (other things being equal). Last, the Carriers will charge you more depending on how labor intensive your freight is to handle from a packaging perspective.
KNOW YOUR FREIGHT
It is very important as a Freight Buyer that you “Know your Freight” – you are being charged largely, as mentioned above, based on the weight and space taken on the trailer – so per lb. and per linear foot – so you should always know and be able to specify the weight and outside measurements of what you are shipping, if it is stackable, and be able at least to do your own calculation of how much space it will take up on the truck (you must know the inside measurements of the trailer).
The Class is derived from the NMFC description which is determined by the density, value, and handling/packaging characteristics of the particular freight you ship. So first you must find an NMFC description of the freight you ship that is closely matching – there is a general number and description but also usually a Sub number based on density and characteristics of the particular commodity you are shipping.
So each full NMFC number including its “sub” number corresponds to a particular “Class”, Classes range from 50 to 400, with class 50 classically being a heavy metal object, perhaps in a square or rectangular shape, packaged in ideally a 42”x48”x40” crate, This 20lbs/cuft density object is inexpensive to haul on a $/lb. basis and dense, well packed, low value, hard to damage, double stackable and such a rectangular skidded freight fits most efficiently inside a truck’s long trailer.
Class 300, could be for example, a kayak that is packaged in cardboard – light – not dense, about 2 lbs. per cubic foot as opposed to a class 50’s 20 lbs/cuft, The kayak has to be put on top of other freight, it is easily damaged and awkward and difficult for driver to easily move about – so such a 2 lb/cuft density kayak is a class 300.
If the same kayak is not packaged in a box it is a class 400 – even more expensive to move, and more prone to damage claims and so subject to the charges of class 400 freight. Note: just because two pieces of freight move at the same class does not mean they move at the same rate; again, that depends on the commodity: class 400 kayaks might move for less of a rate than class 400 flat screen TVs; the latter are even more expensive and fragile.
So the NMFC description and commodity selection process is critical for you to know. Many shippers have no idea and get frequent surprise upcharges on their freight shipments after carriers do inspections of their freight and classify it correctly.
It is the shipper’s basic responsibility to know precisely what NMFC description and code they are shipping under. Again, to do this properly you must know the exact weight and outside measurements LxWxH of each commodity you ship in order to determine density and thus the complete NMFC number with is “sub-number” (final 2 digits of the NMFC code).
If you are in charge of Purchasing to be able to rely on your supplier for this information but, unfortunately, they often get it wrong. So before you ship, make your shipper weights and measures what he is shipping and puts that in writing to you along with the NMFC#. You can also call your carrier or broker to work out the proper NMFC number to put on the Bill of Lading in advance.
BILL OF LADING
Ah, another term – Bill of Lading. The Bill of Lading plays an integral role but if you look at FreightRun’s previous blogsand/or Logistics101 section, you can read all about it. Suffice it to say here that anythingyou write or do not write on the BOL will and can be used against you and you are guilty until innocent per the Common Carrier’s Tariff. That makes getting the correct details on the BOL very critical to being charged the rate you expect and to protecting your Company.
If you ship Common Carrier, your packaging must be rigorous enough to withstand multiple transfers by forklifts and specifically meet the requirements set out somewhere deep inside the common carrier’s tariff. To ship in flimsy packaging is to risk insurance coverage on the shipment provided by the carrier. They can deny a damage claim based on unsuitable packaging. This is especially critical on high value machine shipments and used machine shipments and in those cases you are probably better going with a Contract Carrier with whom you can specify extra requirements like blanket wrap, strapping to sides, and other safety precautions.
Purchasing agents: do not assume the people you bought from know how to package what they are shipping – ask about it – have them send pictures – and use your common sense. If you are buying their used machines for a transfer to your factory be really careful if they are not used to packaging and transporting that commodity. If it is extremely fragile, might tip over or isn’t crated in a heavy duty fashion, look at other alternatives such as Contract Carriers – or a re-pack job.
Also keep in mind the insurance questions that plague damage to a used machine: does Carrier or their insurance company pay you for what you paid for the machine though you got a great deal and it is worth much more to you, or its scrap value, or a fixed value per lb. - depends on the terms of carriage and their insurance company - ask these questions in advance.
Hazardous cargo has special requirements. Domestic USA laws apply and international ones can too - it is beyond the scope of this LTL Primer to get into it much but of course you must be sure to disclose to your Broker and Carrier, whether Common Carrier or Contract Carrier, that the cargo you are tendering is hazardous. You need to be sure the drivers and trucking company is certified for transporting hazardous materials (hazmat).
The trucking company’s insurance must cover hazardous. Hazardous freight must be marked as such and travel with Material Data Safety Sheets and there are other requirements such as placards on the outside of the truck that might apply. Look into federal laws and ask a lot of questions if you ship or receive “hazmat.”
ROLE OF 3PLs
A note on 3PLs, truck brokers, and transportation brokers: online brokers such as FreightRun.com act as coops of freight accounts and receiving larger discounts from the Common as a result of the volume of combined freight in their umbrella. 3PLs can often sell you the freight movements for less than you can buy directly from the Carrier itself, while providing other services and value added, often for free. This is one reason there is a vibrant 3PL industry.
LTL SHIPPING VIA CONTRACT CARRIERS OR SPOT CARRIERS OR EXPEDITED CARRIERS
Ok so Common Carriers are not your only alternative, and on larger shipments over 4 skids or expedited shipments of any size that must deliver on time or your Company’s reputation will be sullied, or greater resources or opportunities wasted, you should ship on a direct ship dedicated truck.
Also specialized freight that is high value or of high fragility or both - even if it is LTL - should probably not be shipped through terminals where it is more susceptible to both theft and damage. “Contract Carrier” is a different legal category of trucking companies registered with the US Dept. of Transportation’sFederal Motor Carrier Safety Administration (FMCSA).
There is no Tariff governing Customer-Carrier relations. Instead it is up to each party to utilize customized Contracts to do so. Laws have gotten stricter on some areas and looser on others; this is a good reason why many freight buyers prefer to use Brokers in this “Buyer Beware” environment. Brokers have sophisticated contracts governing their relations with the Contract Carriers.
For each Contract Carrier they use, Brokers require carriers to sign a legal contract specifying responsibilities and liabilities, and furthermore, Brokers are required to check to be sure the Carrier they have booked for your load has the proper insurance for the commodity you are shipping. If this is done correctly the Broker is an excellent liability shield for your Company be you a shipper, receiver or a distributor in between.
Let’s talk about “volume shipping” briefly – I like to say it is shipping 4 skids or more – but many Common Carriers ship “volume” when it meets their requirements - like 10 linear feet of freight or more, or more than 5,000 lbs. or more than 230 cubic feet; each Common Carrier’s tariff and Volume guidelines are different unfortunately.
My advice to Freight Buyers like you is that whenever you are shipping 4 skids or more you should check with your freight broker to see if you can beat the common carrier price or their service with a “spot truck,” which is a contract carrier usually.
You should consider the broker and his contract carrier – which is usually faster and more direct than common carrier – a great alternative even at a higher price – as the freight moves direct usually, often is not even touched while in transit, so your customer gets the freight in the EXACT CONDITION you shipped it in and usually faster.
More handling by the Common Carrier hub and spoke system means more potential for damage, loss, etc. Sometimes paying a bit extra is worth it – not always – but depending on your product cycle, value, sensitivity to late deliveries of your clients – a lot of trouble can be avoided with direct, load-to-ride freight shipping via a broker’s contract carrier.
Contract carriers are also an excellent way to ship urgent freight or freight that you want better control over as well during its shipping. A broker can babysit the freight for you and provide updates every few hours if necessary. You can sometimes have the driver’s cell number so you can talk directly to the driver if you require that level of control (maybe better to let your broker do that all night and weekend!).
Often going airfreight is riskier even than using a truck because airlines can be grounded and flights cancelled and that eliminates or postpones the guarantees of UPS and FedEx for instance. While this is expensive of course, perhaps the option of NOT getting there is MORE expensive.
Contract Carriers are a great reliable way to get freight on a deadline there. With today’s more accurate weather predictions, you can know in advance if weather is going to be a factor or not. You can write the terms of the Guarantee you require – no exceptions or excuses for weather or anything if that’s the way you want to write it – and you have incentive pay and severe penalties if you like both in the agreement and on the Bill of Lading.
We highly recommend this method of shipping for especially urgent freight. For example, you don’t want your Exhibition to arrive after your CEO/Sales Team have arrived to a Trade Show. You don’t want your product to arrive late for a Sales Presentation. This could cost you your job or reputation inside your Company. In those cases go with a trusted Broker and his direct contract carrier and spell out the terms of the delivery guarantee you must have. The common carrier guarantees do not protect you – you need a contract with real guarantees and real bites out of Carrier Pay if they fail to deliver on time.
Those are the basics. We hope this is helpful - feel free to ask us questions or to take issue with something we’ve said that doesn’t apply in your segment of the freight world. We’d love to hear from you, post comments below or contact us.