Less Than Truckload (LTL) - Definition
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What is LTL or Less-Than-Truckload?
Less-Than-Truckload is a term that refers to transportation of freight that is less than the capacity of the trailer and only occupies a percentage of the trailer. In such a case, different shippers will transport goods in the same trailer and only pay for the portion of their goods. This makes the system cost-effective.
A Little More on Less than Truckload Shipping
There are different benefits that come with LTL including:
- Eco-friendliness Instead of shipping goods separately, shippers share transport and this reduces the carbon footprint.
- Bonus Services Those who use LTL services have access to extended services such as lift gates, notification options, inside deliveries and pickups and non-commercial delivery.
- Trackability Freight services show the number of days that a shipment will take and shippers can track the transportation by checking PRO number, bill of lading number and PO number.
In instances where does not have enough goods to fill a trailer, they choose LTL. LTL operates in hubs and spokes where local collection terminals are the spokes and the central terminal acts as the hub. Goods are collected from the spoke terminals and are moved to the hub terminal where they are sorted and transported. When calculating transport rates, shippers consider a number of factors including:
Pickup and Delivery Distance: The further the pickup and delivery distance, the more the fuel the trailer will consume and the higher the charges. Shippers need to consider the area of operation of the freight company as delivering outside their area will cost more and take a longer time.
Specifications of shipment: The size and weight of the load will determine how much space the load occupies and how heavy it is. Size and weight influence freight class calculation. In these calculations, lower classes are said to have high density but they have low carrier liability and hence lower rates. Higher classes are for goods that require special handling such as hazardous material and for these, there are extra costs incurred.
Academic Research on Less Than Truckload
- A local improvement heuristic for the design of less-than-truckload motor carrier networks, Powell, W. B. (1986). Transportation Science, 20(4), 246-257. This paper examines some of the problems experienced when planning for LTL transportation. It also examines how the system can be improved for both the shippers and the freight company. The system developed in this paper has been tested on a network with more than 300 terminals and it has proven to be successful.
- A heuristic algorithm for the truckload and less-than-truckload problem, Chu, C. W. (2005). European Journal of Operational Research, 165(3), 657-667. Due to fluctuations in demand, there is a problem of transporting goods from the warehouse to local customers. In cases where the demand for goods exceeds the capacity of the available trucks, logistics managers will need to hire outside transport services. This paper looks at ways through which managers can choose external carriers to minimize costs and enhance transportation.
- Mathematical model and solution approach for collaborative logistics in less than truckload (LTL) transportation, Dai, B., & Chen, H. (2009, July). In Computers & Industrial Engineering, 2009. CIE 2009. International Conference on(pp. 767-772). IEEE. This paper observes that shippers are able to cut costs when they collaborate and ship their goods together. It offers a model to be used by shippers to optimize transportation, increase trailer optimization and reduce empty back hauls. The developed model is great for carrier collaboration and shipper collaboration.
- Optimizing inbound and outbound door assignments in less-than-truckload crossdocks, Bozer, Y. A., & Carlo, H. J. (2008). IIE Transactions, 40(11), 1007-1018. This paper examines in-bound and out-bound trailer to door assignment in crossdocks. The author develops a model that can make the process better. The test results of this model shows that the system obtained with SA heuristic outperforms the conventional door assignment by about 35 percent.
- Allocating collaborative profit in less-than-truckload carrier alliance, Liu, P., Wu, Y., & Xu, N. (2010). Journal of Service science and Management, 3(01), 143. The global financial crisis has phased out some of the small LTL carriers and left the other collaborating to cut on costs. However, the collaborations are always faced with the challenge of sharing the proceeds from the transportation. This paper has developed a model that will make it easier for the collaborating shippers to divide proceeds from the transportation.
- The effect of less-than-truckload rates on the purchase order lot size decision, Carter, J. R., Ferrin, B. G., & Carter, C. R. (1995). Transportation Journal, 35-44. This paper examines how LTL loads are charged and how the charges are affected by purchase order lot size decisions.
- A less-than-truckload carrier collaboration planning problem under dynamic capacities, Hernndez, S., Peeta, S., & Kalafatas, G. (2011). Transportation Research Part E: Logistics and Transportation Review, 47(6), 933-946. This paper studies the collaborations between small and medium sized carriers in LTL transportation. It analyzes the problems of such collaborations especially the difference between costs incurred holding goods while waiting for a less costly option and the costs of collaborating with an expensive carrier.
- Collaborative transportation planning of less-than-truckload freight, Wang, X., & Kopfer, H. (2014). OR spectrum, 36(2), 357-380. This paper observes that when small and medium sized freight companies collaborate, they get better results. For the process to be effective, most freight companies do not share details of their loads including customer payments, costs and contents. This paper develops a model to be applied in collaborations. The model has been tested and it has proven to be successful.
- Large-scale, less-than-truckload service network design, Jarrah, A. I., Johnson, E., & Neubert, L. C. (2009). Operations Research, 57(3), 609-625. The author in this paper observes that there are constraints in large scale freight operations especially when picking routes. This paper suggests a network design model that optimizes collection of goods from terminals.
- Marketing economies and the results of trucking deregulation in the less-than-truckload sector, Rakowski, J. P. (1988). Transportation Journal, 11-22. This paper observes that the LTL sector has thrived a lot in the past few years. The sector has not been regulated and this, though it has brought some issues, has also helped carriers. This paper examines the effects of trucking deregulation.
- Dynamic analysis of lessthantruckload shipments and test method to simulate this environment, Singh, S. P., Joneson, E., Singh, J., &Grewal, G. (2008). Packaging Technology and Science: An International Journal, 21(8), 453-466. This paper shows data on vibration dynamics for trailers used in LTL. Most of the trailers used in LTL differ significantly from those used in full-load shipments. The paper examines vibration inside a trailer from different dimensions. It also develops a video showing physical displacement and load shifting inside the trailer.
- Estimating and benchmarking less-than-truckload market rates, zkaya, E., Keskinocak, P., Joseph, V. R., & Weight, R. (2010). Transportation Research Part E: Logistics and Transportation Review, 46(5), 667-682. This paper presents a model that can be used to calculate LTL market rates. The paper examines shipments from the past and successfully combines qualitative market knowledge with quantitative data to develop near perfect estimates. The paper also identifies the main factors influencing the pricing of LTL transportation.