How is LTL Freight Calculated?

Freight transport is a regular occurrence for any shipping or logistics company. There are many businesses and individuals constantly acquiring shipping services from these shipping companies. The choice of shipping method is a question that is normally inquired from these customers. For those unfamiliar with shipping methods, these include full truckload shipping (FTL) and less than truckload shipping (LTL). A shipping method has its own characteristics, advantages, and disadvantages, which is why customers must be more familiar with it.

One of the characteristics that is comparable is the computation of freight for these shipping methods. With LTL shipping, it is already known that the cost for freight transport using this method is usually cheaper than FTL shipping. The factors that would determine how LTL shipping computes for the freight transport service will be discussed in detail in this article.

Shipping Companies and Methods for Shipping

Shipping companies are known to offer various types of shipping services to their customers. These companies have a wide variety of trucks and trailers that can handle shipping all kinds of products. When it comes to the shipping methods, these companies offer either FTL shipping or LTL shipping. Customers have to consider the characteristics for each method to be able to decide which method will be suited to handle their cargos. You may refer to the following information that discusses the characteristics for each of these methods:

LTL shipping

1. Based on the quantity, size, or weight of the cargo, this shipping method may be the most cost-efficient option of the customer. The shipping company will be gathering and combining multiple cargos owned by various customers.

2. Customers availing LTL shipping services will only pay for the total space their cargos take up on the trailer. However, weight is also a factor in determining the freight costs. The shipping company will choose to include in the price quotation the higher cost between computing for the space used or the weight of the cargo.

3. If the cargo of a customer is not able to fill up all the available space of a trailer, LTL shipping may be available by the customer. However, the total weight of the cargo has to be considered as well. The government has set load limits for different types of trucks and trailers. This is to avoid accidents while the truck is transporting cargo. Even if the size or quantity of the items included in the cargo will not be able to fill up all the space of the trailer, if the total cargo weight reaches the allowable load limit for the cargo, then LTL shipping may not be given as an option to the customer anymore.

4. When it comes to the shipping process, LTL shipping uses a more complex structure. The shipping company employs a hub and spoke distribution model. This makes it easier for the shipping company to plan and sort out cargos that would be shipped to destinations that may be close to each other. The process involves customers transacting at different shipping terminals owned by the shipping company. This is where items may be dropped off by the customers. All the cargos received in the terminals are sent to a distribution hub. This is where all cargos are sorted and grouped based on their destinations. Cargos that will be delivered to areas that are relatively close to each other will be grouped and loaded onto a pre-assigned trailer. After being given the go-signal, the loaded trucks will then go to different destinations assigned to them. They will drop-off the cargos at their respective locations while ensuring that there are people waiting to receive the cargos for each destination.

5. Customers who avail of LTL shipping service must remember that deliveries will be fulfilled when the trailer of the truck has been fully loaded with cargo or if the total weight of all the cargos have reached the allowable load limit for a trailer to be able to go in transit. If there is still some space left on the trailer while the maximum load limit has not been reached, the transactions will not be fulfilled, and the shipping company will wait for more customers with cargos that will be sent to the same area.

FTL shipping

FTL shipping

1. Customers who need to send cargo as soon as possible may choose this shipping method. It is known to be costly as the shipping company will be dedicating a trailer/s to fulfill the delivery of the cargo of one customer.

2. This is cost-efficient if the customer has cargo that will be able to fill up all the space of a trailer. Also, FTL shipping will be used if the allowable load limit is reached by the customer’s cargo even if there is still considerable unused space on the trailer.

3. FTL shipping uses a straightforward process of delivering freight. The shipping company will send a trailer to pick up the cargo from the customer’s location. The trailer will then go directly to the assigned destination where the cargo needs to be delivered. The truck will be following a strict route which may have little to no stopovers until the truck reaches the required destination. This is another reason that makes it a bit more expensive than LTL shipping. If needed, shipping companies will be assigning at least 2 drivers to take turns driving the truck until it reaches its destination. This is followed when there is a need to lessen the delivery time.

Calculating LTL Shipping Costs

There are multiple factors that shipping companies consider when computing the costs in relation to LTL shipping. These factors basically determine the total amounts a shipping company will be able to put in the formal quotations they will be giving to their customers. To give you a better idea how a shipping company was able to determine the final quotation for your cargo, you may refer to the following list:

Quantity and weight

1.  As previously discussed, the main reason why customers choose LTL shipping is due to the fact that they are sending fewer items.

2. Customers should not forget that other than the quantity, they must also consider the total weight of their cargos.

3. Shipping companies will compute the cost of both the amount of space taken up by the cargo and the total weight of the cargo. The one that yields a higher amount is the one that they will be including in the price quotation.

Classification and type of items included in the cargo

1. There are items that are known to need extra care during transit. Fragile and perishable items may become factors for the shipping fee to increase.

2. With regards to the classifications, these need to be determined beforehand since Ontario requires the customer to pay for harmonized tax on some product classifications.

Surcharges and accessorial charges

1. These are additional charges that may be added by the shipping company for extra services it may add when needed.

2. These additional charges may include additional fuel based on the location of the delivery, use of a lift gate if needed by the cargo during loading and unloading, pickup of cargo from the residence or warehouse of the customer, or simply if customers would need the shipping company to facilitate the placement of the cargo into a warehouse or residence at the destination. Customers may discuss with the shipping company beforehand if they will be availing of such additional services.

Base rate

base rate

1.  This is usually computed differently by each shipping company.

2. The base rate may consider the distance and location where the cargo will be shipped. For hard to reach areas, the base rate may be higher since the wear and tear of the truck and trailer will be factored into the costs.

3.  This is also interconnected to the classification of the items that compose the cargo.

Discounts and insurance

1. Customers may ask the shipping company for possible discounts. This is usually given whenever the shipping company needs your cargo to fill up the needed volume of its trailer so that the truck will be given the go-signal to proceed with the delivery.

2. In relation to insurance, customers may avail of this to ensure that precious items will be covered whenever an accident will happen during the transport of the cargo. Since cargo will undergo multiple cases of handling before it arrives at its destination, there is still a small possibility that items may get lost or damaged throughout the process. Customers will be reimbursed based on the amount they pay for the insurance. There are specific limits that shipping companies will be paying depending on the insurance taken by the customer. It is highly recommended for customers to get insurance with a reimbursable limit that will be able to cover for the actual cost of the items being shipped.

For international shipping, costs related to customs fees and taxes may be included

1. For a faster turnaround time, shipping companies may already factor in any customs taxes and duties for each classification of items. This will make the process faster since the shipping company will be the one facing the customs officer.

Being Vigilant With The Included Fees Will Help You Pay For What Is Needed

If you are dealing with a reputable shipping company, it rarely happens that mistakes will be made with the formal quotation that they will be giving to you. However, you should still inquire for further explanation on the charges added to ensure that you are paying only for what is needed. They may have factored in a default computation that may not apply to your case. If you are in need of a shipping company that offers LTL shipping, you may get in touch with RoadLINX at 905-760-1141. Rest assured that we are transparent with the fees included in your quotation. We always do our best to help our customers pay for the least possible amount when shipping their cargos.

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