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It should come as no surprise that freight shipments can be completed either by partial truckload or by full truckload. Although it may seem obvious, what isn’t so obvious is that the costs can vary drastically if you choose to ship your freight by one method over another. There are many circumstances that determine which is the most cost-effective solution, but there are also environmental concerns that businesses may wish to consider as well.
LTL vs Full Truckload (FTL)
Less-than-truckload (LTL) shipping is also referred to as partial truckload shipping. Simply, the truck carries less than its full capacity from point A to point B. Most often, SMEs and medium-sized enterprises don’t ship enough goods or products to justify a full truckload (FTL) shipment, so they’ll opt for this method in order to keep deliveries frequent and thus keeping customers happy with timely deliveries.
FTL is often used by large businesses and corporations that can easily justify filling a truck with goods or products. Furthermore, some specific products such as refrigerated goods cannot easily be shared with any other product for safety or hygienic reasons, so these types of products will often take advantage of FTL shipments depending on their lead time and expected delivery times.
Which Method is More Cost-Effective?
There’s no simple answer as to whether LTL or FTL shipments are more cost-effective than the other, but there are some general rules of thumb. Namely, LTL shipments generally command a premium over FTL shipments since you’re essentially carrying a less-than-optimal amount of goods. Any good supply chain manager or procurement officer will know precisely how much the added costs increase the product’s landed costs and should minimise these costs whenever possible, all other things held equal.
Consider how many units you plan to ship and divide the total freight cost over the number of units to determine the shipping cost. FTL is often significantly more cost-effective for most freight since the same cost is often divided over a greater number of goods, thus yielding a lower overall shipping cost per unit.
How Can I Switch to FTL Shipments?
It would be easy to simply say that your business should hold off until the number of deliveries can fill up a truck in order to save costs, but this is most often not a straightforward affair and can have negative repercussions. That’s because there’s a lot more involved than simply cutting costs; customers won’t be happy with delays, product shipments will be less frequent and more susceptible to disruptions, and some products are perishable and thus cannot be kept in a warehouse longer than their shelf life permits.
Consolidated Shipping
An attractive solution to the above problem is to choose a logistics provider that is willing to consolidate freight. By filling up a truck with your goods and those of another client, overall cost savings can be shared without having to sacrifice delivery times.
Furthermore, look for a company that understands 21st-century logistics, i.e. smart logistics. Real-time data and supply chain innovations work to tighten supply chains not only for the freight provider but also between your business and all stakeholders involved. By choosing a forward-thinking freight provider for your logistics needs, you can rest assured that modern technology will be put to use to streamlining your deliveries and maximising cost savings for you as well.
Get in Touch With Freight People
If you’re looking to lower shipping costs but also to have your products reaching customers in a timely fashion with modern smart logistics technologies, look no further than Freight People. Our reputation for quality freight management can leave your business more profitable and keep your customers happy.