If it's time to find a new less-than-truckload (LTL) shipper, or if you're just shopping around for a better price, spend some time comparing carriers. Don't just pick one based on price, because the "bottom line" price can mean different things to different carriers. Look at the whole service offering to find the right fit for you.
LTL pricing can be confusing, because each carrier uses different factors to determine the price. The carriers will all quote a base rate, but it's important to understand all of the additional charges factored in to that rate.
Validate Each Carrier
Look for carriers' United States Department of Transportation (USDOT) and Motor Carrier (MC) numbers. Use these numbers with safersys.org to double-check their authority to do business, their safety rating and any complaints filed against them. How big their fleet is, how many routes they use and how many years they've been in business will tell you if you're looking at a stable company.
Comparing Base Rates
Base rates are normally quoted per 100 pounds. The factors affecting the base rate can include:
- Freight classification
- Shipment weight
- Distance of the route
- Origin and destination zip codes
Additional charges may be included for:
- Inside or outside pick-up and delivery
- Lift gate requirements
- Fuel surcharges
- Special pick-up and delivery times
Freight Classification
There are 18 different freight classes based on the shipment density and handling risk. Typically, the lower the class, the lower the rate. For instance, 15,000 pounds of lead shot has a low freight class. It takes up little space and is easy to handle. However, 15,000 pounds of goose down pillows can take up a large amount of space and requires more handling, so it would have a high classification and cost more to ship.
Distance and Price
LTL carriers typically service a certain area. If a shipment must go outside of the area for delivery, it may be transferred to a different LTL that services that area. This service, called interlining, increases the base price, as well as the risk of something happening to the shipment schedule.
Weight and Price
The base rate, or price per 100 pounds, decreases the more your shipment weighs. Carriers work with weight groups and can "round up" your shipment to the next weight group and price break. This is a negotiating point with the carrier.
Minimums and Extra Fees
An absolute minimum charge (AMC) will be applied to your shipment if it falls below the minimums the carrier has established for themselves. This fee is also something you can negotiate with the carrier.
Additional Fees
Other services are lumped into this category and include storage, wait time, packing, fuel charges and special pick-up and delivery requirements. These may be negotiated, or included as a flat fee. You also need to account for any fees for storage units, insurance or additional transportation. Map out a budget to be clear on the cost.
Cargo Insurance
Cargo theft is a growing problem, Entrepreneur reports. The LTL carrier will have cargo insurance, but you will need insurance to cover what the carrier is not liable for. If the carrier has to increase their insurance to cover a special type of shipment, you'll see that expense on your invoice.
When looking for a new LTL carrier to use, understand all these factors that affect the price, so you can better compare services.
Do you have advice for choosing an LTL carrier? Share it in the comments.