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Learn in Detail About LTL in Shipping

March 15, 2024

7 min read

LTL, short for less-than-load, is a service devised to transport loads that are smaller in quantity and do not require an entire vehicle for transportation. Many big and small shipping companies around the world provide LTL shipping services. Businesses often require transporting small batches of goods from one place to another and this is when they seek LTL service. The demand for this service has increased over the period and is expected to grow further in the times to come. Statistics reveal that the LTL market is anticipated to grow at a CAGR of 7.3% from 2023 to 2028. What is the reason for this growth? What are the advantages of LTL shipping service and how does it work? Let’s find out!

Defining Less-Than-Truckload (LTL) in Shipping

Less-than-load also referred to as less than truckload, proves to be a cost-effective means to transport smaller loads to distant places. It costs quite less in comparison to hiring the entire truck. You just need to pay for the small space your goods occupy when you choose this service. The LTL shipping market is flourishing because of many reasons. One of the main reasons for the growing demand for this service is the rise of the eCommerce industry. The increasing focus on adopting sustainable shipping practices is another reason. LTL service is particularly good for local shipments.

An LTL provider loads the shipments of different companies on its truck and transports them to their respective destinations.  The process is known as assembly service. It requires efficient planning and coordination to ensure the goods are packed and shipped promptly. Besides, the service providers must arrange the cargo shipments systematically and make sure that every item on board reaches its correct destination. Many advanced tools are used to make this process smooth and ordered. 

The Function of LTL in Shipping

The function of LTL is to provide a reasonable alternative to hiring a full truck for shipping cargo. Many times, businesses require shipping small quantities of goods. In such cases, it is not feasible to book an entire truck for moving shipments each time. LTL shipping is the best bet for such small-quantity shipments. It functions as per the hub and spoke model wherein the local terminals serve as the spokes and are connected to the main hubs. The cargo is loaded at local terminals and shipped to the hub terminal. At the hub, the goods are loaded onto other trucks to send them to their destination. The process involves carefully unloading the cargo, sorting it and then loading it to the other vehicle for distribution.

LTL service providers have guidelines for the dimensions of cargo which you need to adhere to for using their services.  Mostly only shipments weighing between 150 to 15,000 pounds are handled under LTL service. Most providers place plastic or wood stands to keep the shipments systematically. Small packages that need to be delivered to the same destination are often shrink-wrapped together to utilise most of the available space. Workers at the local terminals as well as hubs are provided essential training to manage these tasks efficiently. 

Significance of LTL in the Time of eCommerce

The use of less-than-load services has become increasingly popular in the eCommerce sector. Online businesses are using this service to fulfill the demands of their customers quickly and efficiently without digging holes in their pockets. As more and more businesses are going online and the number of online shoppers is increasing, the demand for LTL shipping is also rising. The eCommerce industry is expected to grow further in the coming years leading to the growth of the LTL market.

Advantages and Disadvantages of LTL

LTL shipping offers several benefits. However, it also has its set of disadvantages. Here is a look at the many benefits it offers as well as the drawbacks attached to this shipping service:

Advantages of LTL Shipping

1. Cost Effectiveness

As mentioned earlier, one of the main benefits of LTL is that it costs way less in comparison to hiring a full truck. You are required to pay only for the space your shipment occupies on the truck. It is particularly a good option for small businesses with limited budgets.

2. Shipment Tracking

You can track your shipment when you transport it using this service. You can use the bill of lading number, PO number or shipment reference number to do so.

3. Eco-Friendly

Different shipments to be transported to the same area are put together in a single truck and shipped. This reduces the carbon footprint and is thus considered to be an eco-friendly option.

4. More Service Options

You can access special services such as lift gates and inside pickup when you choose this shipping method.

Disadvantages of LTL Shipping

1. Lengthy Procedure

LTL takes a long time to plan, organise and make necessary shipping arrangements. This is because the service providers need to coordinate with multiple clients. Besides, the truck needs to be filled before moving and may have to stop at different places on its way. It may even require taking a longer route to drop certain shipments to their destination. Thus, it is not a good option for urgent or time-sensitive shipments. 

2. Risk of Damage and Misplacing

Different kinds of goods are placed together for delivery via LTL. Though the service providers stack the shipments appropriately for safe transit, there is still a greater risk of damage and misplacing.

Conclusion

The demand for less-than-load service is on the rise. Businesses are using the service extensively because of its cost-effectiveness and sustainability. Research shows that the market size of LTL is expected to grow by USD 120.31 billion by 2028. LTL’s long-haul carrier segment is likely to grow substantially in the next five years. LTL market growth is directly linked to the growth of the eCommerce industry. Many online businesses are using this service to ship their smaller loads at a comparatively reasonable price. LTL service not only proves to be more economical but also has a lower impact on the environment.

How do LTL shipping carriers charge for their service? What factors are taken into consideration while pricing this service?

LTL shipping carriers charge businesses based on several factors such as the type of goods to be transported, the distance to be covered and the size and weight of the cargo. Extra handling such as requests for inside delivery and lift gate also impacts the overall pricing. Seeking guaranteed and expedited delivery further adds to the expense involved in the process.

What is FTL and how is it different from LTL shipping?

FTL, short for Full Truckload, requires hiring the entire truck for shipping your goods to different places connected via road. It is ideal in case you require shipping large quantities of goods that would take up the entire space in the truck. LTL, on the other hand, is suitable for smaller loads that do not require the entire truck to accommodate the shipments.

Is LTL shipping fast enough?

Your goods move at a decent speed when you choose the LTL shipping service. Reputed service providers leverage technology to streamline the shipping process and ensure timely deliveries. However, in comparison to a full truckload, LTL may take longer. This is because LTL providers require coordinating with multiple clients and covering different destinations.

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