Truckload vs LTL

LTL: Frequency complements business demands
Although the opportunities for savings are pushing many shippers toward truckload consolidation, a couple of countervailing trends are pulling them in the opposite direction.

Companies are seeing an increase in the number of SKUs, which leads to more fragmented shipments. The trend toward Lean manufacturing and minimal inventories forces shippers to make smaller, more frequent deliveries to customers. Even though better information management provides more opportunities for load consolidation, the increasing number of individual products and the pressure for smaller, faster shipments may mandate using LTL.

Many Canadian shippers are currently moving away from one or two national DCs toward a network of warehouses in regional markets. This is another instance where LTL is preferable to cheaper truckload service. Regional distribution networks keep inventory close to customers so deliveries can be made in 48 hours or less. The resultant drop in the distance of haul makes it less likely they’ll have enough tonnage to fill a truck. Combine that with more specific customer demands and it’s no wonder the use of regional LTL is growing—or that some truckload business is moving into regional markets.

The customer is always right
For many shippers, the choice between truckload and LTL hinges on how best to meet customers’ expectations. Fulfilling those needs clearly takes precedence over efficiency.

The imperative to fulfill customer demands often means shippers cannot wait for a full truckload to be built. Although conventional wisdom says that the shipper should use LTL in these circumstances, that’s not always necessary.

You don’t have to fill a truck to have a truckload. If a shipment is less than a typical truckload but the trip costs less than it would if shipped via LTL, then why not send a partially full truck? For example, if you have four shipments of 4,000lb, this approach might cost less than LTL, and you’ll get more efficient movement at truckload prices. Not only does this bring about some savings on transportation costs, but it also supports the main objective of getting products to customers more quickly.

There’s no clear winner or loser. Industry statistics provide no evidence that shippers are flocking to truckload transportation despite the growing use of TMS. And although TMS allows companies to achieve significant savings through load consolidation, they can also more efficiently route the frequent, small shipments sought by customers.