Less-Than-Truckload (LTL) shipping is a cost-effective method for businesses moving commercial freight that is too large for standard parcel services but does not require the entire capacity of a semi-trailer. This logistics solution is a significant component of modern supply chains, enabling the efficient movement of goods across various industries. LTL allows many smaller shipments to be combined into one large movement, which optimizes transportation costs and provides economic benefits to shippers.
Defining Less-Than-Truckload Shipping
Less-Than-Truckload shipping is a logistics service designed for consolidating multiple individual shipments from various customers onto a single truck trailer. This model is ideal for freight weighing between 150 and 15,000 pounds, or that occupies only a fraction of the total trailer space. The defining characteristic of LTL is the shared-space arrangement, where transportation costs are distributed among all shippers utilizing the trailer. This allows companies to avoid paying for unused capacity, benefiting businesses with frequent, smaller freight needs.
Freight below 150 pounds is handled by traditional parcel carriers. Conversely, freight exceeding 15,000 pounds or requiring dedicated trailer use is classified as Full Truckload (FTL). LTL serves as the middle ground, bridging the gap between small package delivery networks and high-volume, dedicated transportation.
How the LTL Shipping Process Works
The LTL shipping process relies on the highly efficient hub-and-spoke system. The journey begins with the initial pickup, where a local driver collects the freight from the shipper’s dock. This freight is transported to the carrier’s local service center, often called a terminal, which acts as the first spoke. At this initial terminal, the shipment is consolidated with other freight destined for the same general region or a primary hub.
Once consolidated, the freight moves in a linehaul trailer to a larger, centrally located facility known as the main hub. Here, shipments are sorted, broken down, and reloaded onto new trailers based on their final delivery terminals. This continuous process of consolidation and de-consolidation optimizes trailer space and generates cost savings.
The trailers then travel from the main hub to the destination terminal, the final spoke in the system. Upon arrival, the shipment is sorted and loaded onto a local delivery truck for final delivery to the consignee’s location. This multi-stop, multi-terminal process makes LTL transit times longer and less predictable than direct, dedicated services.
Key Factors Determining LTL Freight Class and Pricing
LTL pricing is heavily influenced by a standardized system called Freight Classification, established by the National Motor Freight Traffic Association (NMFTA). This system uses the National Motor Freight Classification (NMFC) tariff, which assigns a class number, ranging from 50 to 500, to nearly every commodity. These classes directly impact the rate per hundred pounds a shipper pays. The assigned freight class is determined by four primary characteristics related to the difficulty and risk of transporting the goods: density, stowability, handling, and liability.
Density
Density is calculated by dividing the weight of the shipment by its volume in cubic feet. Higher density shipments typically receive a lower, more favorable class number because they occupy less space relative to their weight.
Stowability
Stowability considers how easily the freight can be loaded and transported with other commodities. Shipments that are hazardous, excessively long, or cannot be stacked often receive a higher classification because they limit the carrier’s ability to maximize trailer space.
Handling
Handling addresses the difficulty or special care required to load and unload the freight. Items requiring specialized equipment or careful manual handling are placed in higher classes.
Liability
Liability accounts for the shipment’s value, propensity to damage, and potential to damage other freight. High-value or fragile items represent greater risk and are assigned a higher class, resulting in higher rates per pound. Accurately determining the correct NMFC class is necessary for calculating the final transportation charge.
Comparing LTL to Full Truckload
The primary differentiator between Less-Than-Truckload and Full Truckload (FTL) services is the volume and weight of the freight. LTL is appropriate for shipments under 15,000 pounds or those occupying fewer than 10 standard pallet positions. FTL requires the dedication of the entire trailer, typically accommodating up to 45,000 pounds. When a business’s freight volume consistently approaches or exceeds 10 pallet positions, transitioning to FTL often becomes more cost-efficient.
Transit time is significantly impacted by operational differences. FTL shipments travel directly from origin to destination without intermediate stops for sorting or consolidation, resulting in faster and more predictable delivery schedules. LTL shipments must navigate the hub-and-spoke network, inherently slowing down transit time and introducing variability.
A key distinction lies in freight handling. LTL shipments are loaded and unloaded multiple times as they move through various terminals, which increases the potential for damage. FTL shipments are loaded once at the origin and unloaded only at the final destination, minimizing damage risk. Cost structures also vary greatly: LTL is based on the specific freight class and space utilized, while FTL is priced as a flat rate for the entire load, often calculated per mile or per load.
Essential Documentation and Liability for LTL Shipments
The Bill of Lading (BOL) is the most important document for any LTL shipment, serving multiple administrative and legal functions. The BOL acts as a contract between the shipper and the carrier, a receipt for the goods, and a temporary document of title. It must accurately contain specific information, including the official freight class, the number of pieces, the weight, and a detailed description of the commodity.
Accurate completion of the BOL informs the carrier how to handle, bill, and route the freight. LTL carriers operate with limited liability, meaning they do not assume full financial responsibility for the total commercial value of the goods. Carrier liability is typically capped based on the freight’s determined NMFC class or a maximum dollar amount per pound. Shippers must understand these limits and consider supplementary cargo insurance.