To understand the total cost of less than truckload (LTL) shipping, and where you could be saving, it’s important to understand all of the factors that can and can’t be negotiated. Several factors help determine LTL freight rates including weight, density, and freight classification. But what can be negotiated in LTL agreements and how can you use that to your advantage? Keep reading to find out.
What affects the cost of LTL shipping?
To better understand the costs of your LTL shipping, read up on the three main, non-negotiable factors affecting LTL rates.
Freight Weight: LTL shipments are placed into classes by their weight. To determine how much your shipment will be charged based on weight, you can look at the weight groups and find where your shipment fares. Generally, the heavier a shipment is, the lower the price per hundred pounds.
Freight Density: To calculate density, the total weight of the shipment is divided by the total cubic feet (height x width x depth). Density is also used to determine the class of an LTL shipment.
Freight Classification: LTL rates are largely based on classification of freight. These are published by the National Motor Traffic Association (NMFTA) in the National Motor Freight Classification (NMFC) book. There are 18 different classes that are determined by product density, value of shipment, handling and liability of the shipment, and stow-ability. Generally, the higher the class, the higher the shipping rate will be.
There are additional factors that affect the cost of LTL shipping including distance and base rates. Like weight, density, and freight classification, distance and base rates are typically non-negotiable. However, creative logistics planning could help you save money with both. For more, see The Value of Public Warehousing as Part of the Supply Chain.
What can be negotiated in LTL agreements?
To start saving on LTL freight costs, look to the factors in the bill of lading or BOL, that can be negotiated.
Carrier Rate Tariffs: Negotiating with LTL carriers could be as simple as negotiating lanes of shipping. Using your logistics software, you can analyze your freight costs and success per lane, then go to the LTL carrier and work with them to get different rates for different lanes.
Discounts: By working with a third party logistics company, who has strong ties with major carriers, you could save up to 25% on the cost of your LTL shipping. Carriers know 3PLs have big client books and will regularly use their services; for this they can often receive a discount. Business owners can take advantage of these relationships to save big.
How to Save on LTL Shipping
For businesses seeking ways to save on the cost of shipping using LTL, having all of the information you need in one place is a great start. With Amrate, the proprietary web-based logistics software from Amware, you can receive instant quotes from multiple carriers for your shipment in one place. Not only will Amrate help you save on LTL shipping, but it can also integrate your tracking, freight bill auditing and payment, and create custom reports. Want to learn more? download your FREE 30-day trial of Amrate or contact the team at Amware today to learn more about Amware.