For shippers like OEMs, F&B companies, or pharmaceuticals, the overhead charges deal a fatal blow to their efforts to keep the production cost low. Surprisingly, rough and ready logistics measures drive up expenses, claiming the maximum part of these shippers’ overhead costs. Sustaining this requires strategic choices regarding your freight’s mode of transport. Less-than-truckload (LTL) and full-truckload (FTL) are the two most popular shipment transportation methods carriers use widely for delivery. Today’s let’s go back to the basics and differentiate while disclosing the strengths and drawbacks of each one. Here’s what you should ask yourself to think about LTL and FTL:
LTL: What did we miss out on
Simply, LTL means that the volume of the dispatched freight was not sufficient to fulfill the truck’s capacity. That’s why this modality is also known as a fractional or consolidated load. To make this option viable, the vehicle space is divided within the fractional loads of other shippers. As a result, the carrier will assume responsibility for bundling all the goods to make the most out of the available capacity.
Stores, distributors trading with small volume stand to benefit the most out of LTL. After all, think about how it can be worthwhile to share the cost with others plying on the same trade lanes. What’s more interesting is, there are no bars on weight and volume. How? Oddly enough, but no defined weight and volume value limits delivery to the desired address. With LTL, any shipment will reach its destination.
For any logistics practice, time dictates success. As in for LTL, the delivery time is superior to the FTL. Your carrier’s schedule will determine the most efficient route, considering all companies that have fragmented the shipment volume. It might snatch away your upper hand over time and force you to rework on your promises. But the real pain is the increased number of handovers with many stopovers. It increases the risk of damage and loss of orders.
FTL: Looking back on the already known
Just opposite to LTL, it represents situations wherein the shipment volume occupies the entire transport volume. Although there is the possibility, a bit uncommon but effective in scheduled long-hauls or milk runs to practice FTL even when the shipment does not fill the entire transport volume. That’s when shippers need dedicated transport and do away with sharing any space with items from other shippers.
Large conglomerates, enterprises with high transport demand tend to close FTL contracts with carriers for specific/long periods. Businesses like grains, mining, pharma are recurrent entities in this modality. As advantages, the negotiation for lower volumes for the service and the guarantee of the products stand out – fewer damages. The transportation time is also shorter as it’s a unique shipment. And with no stopover, unlike LTL, there are lesser chances of in-transit risks.
Talking about the shortcomings, FTL has zero room for sharing the delivery costs with other companies when taking responsibility for the vehicle’s total holding capacity. Plus, you can only provide a single delivery address that makes deliveries and distribution to multiple customers or storage units along the route impossible. FTL also provides drivers with more leverage to set prices, define their availability, and choose their preferred destination. Since there is a massive driver shortage always, it can be tricky to find the right driver at the right time.
The bottom line is applying any of the shipping methods for a company might seem to burst at the seam as the company will have too much going for a freight execution strategy. Managing any FTL or LTL shipment is not too testing, but the best practices of both won’t mandatorily help each other. With FTL destined for one location, the calculation of ETA is comparatively easier than LTL shipments with multiple stakeholders. A single truck hauling shipments from different shippers and making an increasing number of stops – all this makes calculating ETA a tough job.
Carriers win this battle sometimes by combining the two alternatives (LTL and FTL) for better optimizing the work. For this, they travel with a full load to the warehouse using small vehicles and, from there, apply the LTL mechanisms to gather the items. It’s an unusual opportunity.