Optimizing LTL Shipping
Less-than-truckload (LTL) freight shipping is critical to everyday commerce and is an economical way to ship palletized or loose freight. Here’s how to do it well.
1. Understand Your Customers’ Expectations. The LTL choices you make are a direct reflection on you, in the eyes of your customer. Get familiar with your customers’ expectations and make these expectations a priority when considering your LTL options.
2. Identify Your Goals and Objectives. Your logistics and supply chain decisions should be in sync with your team’s goals and objectives. Logistics is not just a commodity—understanding your goals and how your LTL shipping fits into this is important.
3. Be Willing to Adapt. Stay nimble and be open to doing things differently. Partnering and collaborating with your LTL provider(s) can help improve operational efficiencies for all parties; for example, spotting/dropping trailers and eliminating multiple pickups or deliveries on the same day. If a mode-shifting solution is viable and can help the customer, then it will require some operational changes in order to achieve cost savings.
4. Keep Data Transparent. It’s to your benefit to share as much data as possible; the quality of the logistics solution and accuracy of the pricing are strongly correlated to how much data you’re willing to share. Don’t be fearful of sharing detailed data with a logistics provider that you trust. Signing a nondisclosure agreement is always an option to provide another layer of security to protect your data.
5. Conduct a Request for Proposal. There’s no "best" carrier for every lane. Every carrier may perform differently lane by lane. If you are inexperienced in conducting an RFP, just ask your logistics provider for assistance.
6. Ensure Carrier Fit. This closely ties back to the first tip. The lowest-cost provider may not always be the best option if customer experience is poor and expectations are not being met. There are other indirect ways to save money without having to settle for a subpar provider that’s offering "the lowest price in town."
7. Configure Shipments Accurately. Reviewing how you package and/or palletize your freight is very important and can affect density, class, and cube, among other things. For instance, would a Euro pallet better fit your freight than using a larger standard pallet that takes up more floor space on the trailer?
8. Consolidate Purchase Orders & Customer Orders. Combine smaller shipments that are going to the same destination (inbound or outbound). Communicate with your customers and look for ways to collaborate on the order process—for example, instead of sending over multiple orders per day, they can send you all the orders near the end of the day. This allows your team to combine orders into fewer shipments.
9. Shift Transport Modes. LTL freight doesn’t always have to move down the road in a traditional LTL network. It’s possible you have at least one lane that can be optimized and consolidated to find cost savings.
10. Clearly Define Service Offerings Establish and communicate shipping options with your customer (consignee) and explain the cost versus transit trade-off. Share the savings if the customer is willing to delay shipping, which allows the opportunity to consolidate/optimize shipments.
SOURCE: Scott Tharnish, Vice President of Managed Solutions, ArcBest