Truckload vs LTL

Is it more efficient to consolidate shipments into a full trailer or to send them out in smaller batches? We asked Dan Einwechter, chairman and CEO of Challenger Motor Freight, to explain how shippers should choose.

Is truckload or less-than-truckload (LTL) more cost-effective?
This age-old question is even more relevant in these times of economic upheaval. It is in every shipper’s best interest to consider whether it’s more economical to make smaller, more frequent LTL shipments or to consolidate orders into cheaper, faster truckloads. The correct answer depends on so many factors that no single rule can apply to all shippers. Everything from the commodity’s characteristics, to the location of DCs, to time-to-market enters into the final decision. The choice is complex.

Many shippers rely on sophisticated software, such as a transportation management systems (TMS), for help. Such tools can take the guesswork out of the truckload vs LTL decision, but they shouldn’t be the last word. Instead, the smart option is to balance technology with customer needs.

Truckload: Technology makes it cost-effective
When it comes to cost control, the benefits of combining LTL shipments into full truckloads seem obvious. Doing so generates cost savings that can range from five percent to 50 percent. These savings accrue in terms of time—a tandem driver team can make it coast-to-coast in just three days—as well as in packaging, handling, administrative costs and per-unit freight costs. The cost benefits can be so significant that some companies will even look for opportunities to consolidate their loads with those of other shippers to create a truckload.

This is where technology plays a supporting role. More and more shippers are using decision-support tools like a TMS to spot opportunities to combine partial loads into full truckloads. TMS suites do more than simply identify transportation efficiencies. For example, transportation optimizer applications—which are commonly included in TMS packages—can help shippers choose the most economical shipping method. The optimizer helps you select the right mode and then helps you build the load.

A TMS also introduces more flexibility because it allows shippers to continue collecting orders and reconfiguring loads until just prior to departure. A good package, moreover, improves customer-pleasing performance at other points in the supply chain. To the extent that transportation optimization can help expedite order fulfillment and provide better visibility, there’s certainly is a customer-service benefit associated with its application.