LTL — Definition, How It Works, and Types

LTL — Definition, How It Works, and Types

LTL (Less-than-Truckload) refers to the transportation of freight that is too large for parcel carriers but not large enough to require a full truckload. LTL shipments are typically measured by weight (commonly between 150 and 15,000 pounds), density, and classification. Carriers combine multiple shippers' loads into one trailer, optimizing utilization and spreading costs across customers. This model balances cost efficiency with reasonable transit times and is a cornerstone of regional and national distribution networks.

LTL service is built around consolidated networks and operational nodes—terminals, break-bulk facilities, and linehaul lanes. A typical LTL shipment follows a sequence: pickup from the shipper, transport to a local terminal, consolidation onto linehaul trailers, transport to a destination terminal, and final delivery. This hub-and-spoke arrangement enables carriers to aggregate freight by origin and destination zones, enabling regular and scheduled pickups and deliveries.

How LTL pricing works

LTL pricing is more complex than parcel or FTL because it factors in multiple variables beyond simple weight or distance. Core components of LTL pricing include:

• Freight Class: Assigned using the NMFC (National Motor Freight Classification) system, freight class (ranging 50–500) reflects density, stowability, handling, and liability. Higher class means higher rates per hundredweight.

• Weight: LTL carriers typically calculate charges per hundredweight (CWT). Many rates apply a minimum charge for very light shipments.

• Distance / Zone: Zones or mileage determine base linehaul cost; longer distances generally increase rates.

• Accessorials: Additional services (inside delivery, liftgate, residential pickup/delivery, detention, reconsignment) incur separate charges.

• Minimum Charges & Discounts: Carriers establish minimum shipment charges; negotiated contracts often include discounts off tariff rates.

Types of LTL services

Carriers and third-party logistics providers offer a range of LTL products tailored to time sensitivity, cost, and handling needs:

• Standard LTL: Cost-effective service with routine transit times and standard handling.

• Guaranteed/Expedited LTL: Priority handling and guaranteed delivery windows for time-sensitive shipments, at a premium.

• Volume LTL: For shippers whose regular LTL volume approaches small truckload thresholds; carriers may provide volume discounts and direct routing.

• National vs. Regional LTL: National LTL operates coast-to-coast networks; regional LTL focuses on shorter routes and can offer faster transit at lower cost within its footprint.

• White-Glove / Specialized LTL: Enhanced handling for fragile, high-value, or installation-required deliveries, including appointment scheduling and liftgate plus inside delivery.

• Cross-Border LTL: LTL services that include customs clearance and documentation for international shipments, common between neighboring countries.

Operational considerations

Successful LTL shipping requires attention to packaging, palletization, labeling, and documentation. Carriers expect freight to be palletized and stretch-wrapped for safe handling. Mis-palletized freight increases handling costs and damage risk. Accurate NMFC classification and proper documentation accelerate terminal processing and reduce the likelihood of reclassification or unexpected surcharges.

When to use LTL

Choose LTL when shipment size does not justify FTL and when cost-efficiency is prioritized over single-move control. LTL is ideal for manufacturers, distributors, and eCommerce merchants that ship pallets or skids, multiple skid orders, or mixed-commodity loads. It provides a flexible compromise between parcel (fast/low-weight) and FTL (single-shipper exclusivity) services.

Examples

Example 1: A furniture wholesaler ships three pallets, totalling 1,200 lbs, from Atlanta to Chicago. The shipment is assigned an NMFC class based on product density and handling, transported to the carrier’s Atlanta terminal, consolidated on a Chicago-bound linehaul, and delivered to the consignee’s dock two days later.

Example 2: A manufacturer with weekly shipments of small machinery uses volume LTL negotiated rates with a regional carrier, reducing per-shipment costs by consolidating multiple customers’ loads into scheduled pickups and backhauls.

Technology and visibility

Modern LTL operations rely on TMS (Transportation Management Systems), carrier APIs for real-time rating and tracking, and EDI integrations for automating tendering and paperwork. Visibility through GPS-enabled tracking and terminal scans improves customer communication and exception management, while a TMS enables freight audit, optimized carrier selection, and consolidation logic to minimize costs.

Advantages and limitations

Advantages include cost efficiency for smaller loads, flexible scheduling, and network reach. Limitations include potentially longer transit times due to multi-stop consolidation, increased handling steps that may raise damage risk, and complexity in pricing and accessorials that can make cost predictability more challenging.

Key performance indicators (KPIs)

Shippers and carriers commonly monitor:

• On-time delivery percentage

• Freight cost per CWT or per shipment

• Claims per 1,000 shipments

• Transit time variance

• Accessorial spend as a percentage of total freight cost

Conclusion

LTL remains a vital segment of freight transportation, balancing efficiency and flexibility for mid-sized shipments. Effective use of LTL requires careful attention to classification, packaging, and carrier selection, combined with technology to optimize routing, rating, and visibility. For many shippers, mastering LTL is a core competency that yields measurable savings and service improvements.