Are you wondering what LTL freight is?
Well, the word itself denotes Less Than Truck Load. The trucking industry was initially founded on full truckloads but realized quickly that not all firms needed or could afford paying for a full van which in today’s standards are 53 feet in length.
Some enterprising souls therefore came up with the less than truckload concept. Now in the United States, the LTL Freight market is cornered by several large common carriers. Their dominance is due to the fact that they have been in the LTL freight field for some time and have huge market coverage (i.e. North America: Canada, USA, Mexico ). USA, or even just segments of the USA, east, west or central United States coverage, as well as Canada.
So what’s the advantage of using an LTL Freight carrier?
Well, saving money. Yup! Savings can be large with respect to Full Load pricing. Now, less than truckload freight is priced differently than full load pricing, which is usually based upon mileage. For example, if its 1000 miles from your dock point A to your customer’s dock point B, then $ 2.00 per mile is a good number as a general rule to use or $ 2000 for that full load. I won’t get into back hauling, and the reductions in rates due to this process at this point in this article. That will be for another article and a different topic. I just want to get you used to the full load pricing concept.
Now let’s get into what LTL Freight pricing is all about… classes!
Yes, that’s correct. Your product will be classified into one of 18 different classes from a low of 50 to a high of 500. The class takes into account 4 important factors in pricing your shipment: Density, stowability, handling, and liability. The lower the number, the cheaper it is to ship. It’s very important to get your class right. A good piece of advice that I can provide right now is to contact the service provider that you would like to be dealing with and put the onus on them to classify your product. I like to do this twice to get a different opinion and to ensure that it’s well classified. Once your product is classified, you will be provided with a tariff based upon that rate class calculated by hundred weight of the shipment, or in other words, per 100 lbs. Yes I know it’s getting complicated, but I can assure you that I will get you through this, we are almost over. To calculate your rate you will have to know the size of your skid in inches preferably, and calculate its density per cubic foot. The cubic feet of your shipment will be balanced against the total weight of your shipment including the skid it’s on. This calculation is based upon a norm of 10 lbs/cubic foot for ground transportation. The higher number of the two is used to calculate your rate based upon so many cents per 100 lbs of weight.
Let’s take an example
If you have 1 skid and its 48″X40″X48″ in size and has an actual weight of 175 lbs. The cubic weight of the shipment would be 48X40X48/1728 = 53.33 or 54 Cubic Feet * 10 lbs per cubic foot which equals 540 lbs. Now since the cubic weight of the shipment by far outweighs the actual weight, that weight is used to calculate your rate. Skyfer Logistic is a 3PL that can demystify LTL rates, you can contact them for any of your needs.
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