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How to Find the Most Cost Effective Way to Ship LTL Freight

How to Find the Most Cost Effective Way to Ship LTL Freight

When developing a shipping strategy for your business, affordable capacity is one of the main issues.  In order to create the most cost-effective shipping strategy, it is important to understand what factors directly impact the price of LTL freight shipments.  Having an effective strategy will let you focus on getting affordable capacity for all of your freight needs.

Factors that Impact the Cost of LTL Freight

The biggest determinant of cost on an LTL shipment is its size.  Carriers will want to know the dimensions of your shipment so they can determine how much space it will take up in their trailer.  With this information they will then build our prices, with larger shipments typically costing more than smaller shipments.

The amount of available capacity is one of the main influences on the cost of freight.  Another one is major storms tend to drive up the prices as well.  So, if you can plan around the weather, it will save you as well.  Some carriers are better prepared for storms and crises.  Check around to see which carrier has the best process for attempting to conduct shipments as normal when a storm hits.  Even if it doesn’t help with the pricing, it does mean your freight will get to its destination.

Understanding the Freight Rate Factors in LTL

It is always best before creating a strategy to understand what carriers use when determining the rates in LTL freight.

  • Weight – Shipment weight is the first piece that is looked at. Between any given origin and destination zip codes, LTL carriers publish a “rate per hundred” that establishes the cost per hundred pounds at different shipment weight breaks.
  • Density – Weight and shipment dimensions are used to calculate shipment density. Density is used to figure out the freight classification.
  • Freight Classification – In order to accurately quote LTL freight rates, they must be classified. The classifications range from 50 to 500.  Classes are based on density, value, stowability, handling, and liability.  The lower the class, the lower rate, as they are less fragile and easier to handle.
  • Distance – The distance from the origin to destination is a factor. The longer the distance, the higher the rate.
  • Accessorial Charges – Services beyond the standard pickup and delivery that an LTL carrier provides will require an additional accessorial charge. Things like liftgates, residential pickup or delivery, limited access locations, weekend delivery, inside delivery, and refrigeration.  The most common is a fuel surcharge as some states in the U.S. have higher fuel taxes and it will result in an added charge.

Creating a Shipping Strategy

In order to create a cost-effective shipping strategy, look at your past shipment data to determine what capacity you will need for the immediate future.  From there, you can begin to determine pricing by evaluating the current trends within the market.

By having the dimensions in advance will prove to be beneficial as it will allow you to compare rates between carriers and find the best option.  The measurements must be accurate and if they are not, you will be charged with an adjustment fee.  Always follow best practices when measuring shipments.

Price Fluctuations in the Industry

Price fluctuations within the shipping industry are common and not always predictable.  This is why it may be in your best interest to look into a third-party logistics (3PL) provider.  Not only do they have the knowledge of the most current pricing, but they also have relationships with carriers that can get you the best pricing.  PPLUS Global is a leader with the resources to make your company shine with your customers and get you the most cost-effective solutions.

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