By Scott Gowan | Director, Transportation | Chainalytics |
Having the proper transportation mode mix or approach remains an ongoing concern for most shippers. Integration of additional modes proves necessary as a shipper’s network continues to evolve over time. When faced with the question of transitioning from LTL to TL, there are many key areas and questions that need to be addressed.
There are many reasons why shippers shift away from LTL as the main mode of transit. Some of the key factors include:
- Cost – Organizations often use standard cutoffs or weight breaks to determine mode selection. However, this approach does not allow you to consider all possible modes and the best financial option for your freight. Cost modifiers such as Dimensional Weight, or dim weight, could be another factor shippers need to consider when selecting the optimal mode best suited to meet your transportation needs.
- Transit Time – LTL carriers generally publish expected delivery schedules that will show the expected transit time between given Origins and Destinations. Depending on the carrier’s network and number of break bulks that are involved, this can vary significantly with ranges stretching from 1 day up to 7 days. With TL carriers, we can expect on average 500 miles per day when estimating transit time.
- Service Requirements – If you are having issues meeting customer delivery appointment requirements, you may need to consider alternative mode options. TL can be considerably faster in total transit time and consistently more reliable. When dealing with customers who have strict delivery requirements, such as On Time, In Full (OTIF), shippers must use the mode that allows them to regularly meet expectations.
- Average Shipment Size/Weight – As the average shipment size and weight increases, it likely becomes more cost effective to consider TL multi-stop vs LTL. If you are shipping to repeat locations multiple times in a week, another option to examine involves looking at consolidation opportunities, which can be beneficial and cost efficient.
- Product Characteristics – Product packaging and other characteristics can have significant impact in a couple of areas. Dim Weight rating was mentioned earlier but another area where mode matters pertains to shipment damage. LTL service involves increased handling of each shipment as it flows through the various terminals and break bulks. Unfortunately, this increased handling creates more opportunities for product damage.
Any of the aforementioned factors are reason enough to consider transitioning from LTL to TL to meet your transportation needs. There are other considerations as well such as whether or not your plan includes utilizing a Dedicated Fleet. Normal acceptable stop-offs on a single load for common carriers are in the 2-3 range, but dedicated fleets can range as high as 10-12 stops per load, offering you more flexibility in your deliveries. When evaluating what is correct for their network, the shipper needs to consider all options and understand what the optimal mode approach is for their network.
Recognizing the signs for when a transition from LTL to TL makes sense is critical. Knowing what factors will help drive that change is an important step towards getting the most value out of your transportation network. Regularly evaluating your mode mix for improvement options should be a priority for organizations seeking cost saving opportunities and improved service levels.
As Director of Chainalytics’ Transportation competency, Scott Gowan specializes in providing clients with supply chain planning and optimization, transportation optimization, and logistics management and optimization services to enhance their bottom line.
Read more about how Chainalytics supports better transportation strategies for our clients:
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