global freight audit

LTL and TL shipping rates: know more to lower shipping costs

Speed is the need of the hour for e-commerce giants such as Amazon. Companies that deal with high shipping volumes opt for faster, cheaper ways of freight transport. Depending on the specific freight requirements, companies opt for the mode of freight shipping. Freight transportation by land is by trucks and sometimes rail.

According to the Bureau of Transportation Statistics, “trucks carry most of the tonnage and value of freight in the United States.” In addition, many factors impact trucking freight rates of shipments. This article discusses LTL and TL freight shipping modes and shipping rates. Further, we focus on picking the right freight services to save on shipping costs.

So, let’s learn about LTL and TL shipping rates, but before that

What are TL and LTL shipments?

TL (or FTL) is Truckload or full Truckload shipments. Shipments that require the entire truck are Full Truckload or Truckload freight. A whole truck will exclusively move the shippers’ goods, whether full or half empty. Shippers opt for TL freight when they want their goods to reach their destination in time or when volume of goods shipped is more.

Less-Than-Truckload shipments are known as LTL shipments. Multiple shippers share a single truck to ship their goods. It is ideal for small e-commerce businesses that do not send goods in bulk or want to save money.

TL shipping rates

TL freight delivery is faster and requires less intermittent stoppage. The Full Truckload prices are more predictable than LTL shipping prices.  Further, Truckload shipping rates are easier to calculate from origin to destination. However, factors affecting TL shipping rates include:

  • Mileage

The cost of any shipment depends on the distance it travels. Longer distances incur higher charges due to the high amount of fuel used in delivery, driver time, etc.

  • Capacity

The capacity of trucks shrinks when the trucks are booked ahead for the movement of seasonal fruits and vegetables. Refrigerated trailers, also known as reefer trailers, are set at specific temperatures to ship dairy goods, flowers, fruits, meat, vegetables, and more. These truckload shipments are slightly more expensive due to special conditions such as temperature control.

  • Peak season surcharge

Shippers face a rise in shipping rates during holidays like Thanksgiving and Christmas due to the high demand of consumers. Peak surcharge by shipping carriers raises shipping rates.

  • Flexibility and timing

Shipping rates increase if shipping carriers do not have the flexibility to ship goods, In addition, weekend pick up and odd hour timings will cost more for shippers.

  • Fuel surcharges

Shipping carriers charge fuel surcharges based on the market price of diesel. The government-approved fuel charges change weekly.

  • Accessorial charges

Accessorial charges are expenses incurred for additional work done by shipping carriers, like handling charges, extra attention to freight in loading/ unloading, etc.

TL shipping rates change with the current market and fluctuate even within a day or hour. They also vary from carrier to carrier. And so, choosing the correct shipping carrier is essential for businesses to save money.

LTL shipping rates

LTL shipments are cost-saving as shippers only pay for the space their goods occupy in the truck. LTL freight shipping has frequent pick-ups/ drop-offs at multiple locations, hence longer transit time. As a result, LTL shipping rates are complex and not easily understood by shippers. Nevertheless, the calculation of Less-Than-Truckload shipments depends on a few factors, such as:

  • Weight

LTL freight is consolidated into pallets to protect goods in transitThe weight of LTL pallets is usually between about 100 and 10,000 lbs. The heavier the shipment, the less it will cost per hundred pounds (CWT), but the total cost will increase. Most LTL class rates have six-tiered weight break-off points, including the minimum charge per shipment.

  • Density

The density of LTL freight’s calculation involves dividing the weight of the shipment by volume (length x width x height – DIM Factor). Lower density shipments take more space in the truck and will cost more. The density of LTL shipments increases or reduces LTL shipping rates.

  • Freight Class

Each trucking shipment has a freight classification that affects the trucking rates. In the US, the National Motor Freight Classification (NMFC) has 18 cargo classes ranging from 50 to 500. Determination of freight class is by value, handling, stowability, and liability. The higher the freight class, the more expensive the shipment.

  • Distance

Shipping rates depend on the distance of each shipment. Long distances are more expensive. Shippers need to know the origin and destination zip codes to reduce shipping costs. In addition, knowledge about the shipping lanes or routes having high traffic is essential.

  • Accessorial Charges

Extra services cost more and are a part of accessorial charges. Special fees for pick up or delivery from remote locations, weekend delivery, special handling charges, and fuel surcharges are expenses that contribute to shipping rates.

LTL shipping rates vary from carrier to carrier. Choosing the shipping carrier for LTL shipments is critical for saving money for businesses.

How Audintel helps you choose freight shipping mode and rates

After seeing the above two freight options, it becomes difficult to decide which shipping mode is the best for your business. For this reason, partnering with an audit company, Audintel, benefits shipping businesses to a great extent. Our team monitors the TL and LTL freight shipping rates and guides shipping businesses. We audit fuel surcharges applied by carriers to TL or LTL shipments. Our team of experts helps shippers negotiate the best freight shipping rates with shipping carriers. Further, Audintel helps its clients track, monitor, audit, contest with carrier in case of dispute their freight shipments so that there is no loss of revenue.

To Summarize

LTL and TL shipping rates depend on the shipper’s freight requirements. While LTL shipping mode is appropriate for businesses with smaller loads, it is better to know the shipping rates of TL if the load occupies more than half truckload space. Alternatively, TL shipments reach on time, but they cost more. Partnering with Audintel will help you find a balance in choosing LTL and TL shipping modes and managing their shipping rates. You can reach us for further discussions or you can call us at +1 (619) 354 8539. Further, you can also learn about our services on Audintel website.

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Shipping trends of 2022 that redefine the way we ship

The supply chain industry has faced many challenges in 2020 and 2021. This year appears to be difficult for small and mid-sized businesses. In addition to the pandemic resurgence in some countries, the Ukraine conflict has posed many challenges.

Shipping costs have risen as FedEx has hiked its peak surcharges for international parcel and freight shipments. Many areas of the shipping industry have also seen disruptions. This article will explore the shipping trends of 2022, focusing on small packages.

Shipping trends of 2022

Online buying has put tremendous pressure on the supply chain industry. E-commerce customers are expecting faster delivery and returns of items. Small and mid-sized businesses are looking for opportunities to mitigate late parcel deliveries. With this in mind, here are ten shipping trends of 2022 that will change the way we ship parcels.

  • A rise in shipping costs

Parcel carriers have hiked annual general rate increases (GRI) and surcharges leading to a rise in the shipping costs. Unprecedented consumer demand for same-day delivery has led to increased shipping volumes. In addition, inflation is surging upward due to supply chain issues. Shippers need to evaluate the services they need to spend on to offset the rise in shipping costs. Further, businesses are advised not to change their parcel carriers or renegotiate their carrier contracts. It is because parcel carriers offer less attractive terms than their existing agreements.

  • Congestion at warehouses, port terminals

Due to the pandemic restrictions in countries, the waiting time to load and unload goods has risen. As a result, there is congestion at warehouses and port terminals, causing shipment delays. There is a backlog that is hampering shipping operations. Opening new fulfillment centers or physical stores in heavily populated areas brings products closer to the public. It allows shippers to provide quick parcel shipping to their customers.

  • Digitalization

The pandemic caused a shortage of professional workers such as logistic operators. Digitalization of shipping processes like warehouse operations is improving supply chain efficiency. Shippers can avoid several manual steps during order fulfillment by using shipping software solutions. Digital solutions are reducing shipping costs and enhancing shipping processes.

  • Personalized delivery experience

Customer experience is essential for recurring shipping business engagement. It is necessary to provide a personalized delivery experience with reliable, on-time delivery of packages. Clear and transparent communication regarding delivery and tracking of parcels helps customers. Further, adopting new technology to limit package theft and enhance the delivery process are other factors to increase customer satisfaction.

  • Sustainability

An increasing number of consumers are trying to reduce the carbon footprint of parcel deliveries. Re-cyclable biodegradable material is in use for packaging and shipping goods. Further, shippers use ground services to reduce overall transportation routes. Shipping businesses keep sustainability in mind by using eco-friendly boxes and mailers. Parcel carriers are using electric vehicles for shipping parcels to customers. Moreover, shipping carriers meet environmental, social, and governance (ESG) standards by using electric-powered delivery vehicles.

  • Optimization of supply chain management

The “just-in-time” supply chain has become unpopular during the pandemic time. Shippers have shifted to holding a large buffer stock for any surges in demand and a decrease in the supply of goods. Shippers are examing their logistics and inventory data to optimize supply chain management. Inventory and e-commerce data help shippers optimize their shipping processes while reducing shipping costs.

  • Last-mile innovation

Last-mile delivery of packages is an integral part of customer satisfaction for businesses. Shortage of drivers can cause a delay in last-mile deliveries of parcels. Innovation in the form of robotics, drone, and self-driven vehicles will prevent poor last-mile delivery experiences. Some shipping businesses are already using drones to drop off medicines. However, using a drone for parcel delivery is difficult for communities. They require special permission to receive such deliveries. Big Data, Artificial Intelligence, and Machine Learning have the potential to make logistic processes more simple.

  • Reverse logistics

A drawback to the increase in online shipping is the rise in returned packages. Shipping businesses have to pay for the returns processing fee with the increased shipping rates of parcel carriers. It eats into the profit margins of shipping companies. As a result, some big businesses offer refunds and keep the product in the customer’s hands. Alternatively, some shipping companies are mitigating returns costs with a multi-carrier strategy. Therefore, shippers use artificial intelligence to calculate whether it is economical to process a return.

  • Local pop-up e-commerce distribution centers

Shipping companies respond to local shipping demands by operating local pop-up distribution centers. Shipping parcels from long distances costs more. Lessening the delivery time by renting out warehouses allows customers to receive orders sooner. Expect gig economy carriers to rise in 2022. Shippers are planning to use the services of gig economy carriers to deliver packages within a few hours to customers.

Partnering with parcel shipping audit company

2022 will be a challenging year for shipping businesses. But, partnering with the right parcel shipping audit company can save money for businesses. In addition to negotiating the best shipping rates, Audintel helps businesses receive discounts for services from parcel carriers. Audintel helps shippers analyze their shipping data for inaccuracies, accessorial charges, refunds, etc.

Finally, the Shipping industry has to change with the times. What was popular two years back is not feasible now. Shippers have to make critical decisions and adapt to the ever-changing consumer demands. Data-driven innovation will have an impact on package deliveries in 2022. Partnering with Audintel will be beneficial for shipping businesses. You can reach us for further discussions or you can call us at +1 (619) 354 8539. Further, you can also learn about our services on Audintel website.

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Why is periodic up-gradation of carrier contracts essential?

How recent is your contract with your parcel carrier? Is it a few days or years old? Does your contract offer discounts for some services? These are some questions that businesses need to address in 2022. With this in mind, contracts with shipping carriers play a crucial role for companies.

A periodic contract review is essential to minimize financial and legal risks. This article explores the importance of carrier contracts. And the ways to navigate the challenges shippers face during parcel carriers negotiations.

Importance of carrier contracts

With the rise in fuel prices, businesses have to be careful they do not pay for “peak”  surcharges. Recently, parcel carriers such as UPS and FedEx have raised General Rate Increase (GRI), among surcharges. The impact of these surcharges will affect shippers’ budgets and resources. A robust contract with shipping carriers ensures that businesses pay the amount mutually agreed by the two parties. But, shippers have to be aware of when their contracts end, or it may cost them dearly.

Challenges faced while negotiating with parcel carriers

In the first place, shippers need to know the challenges they face during contract negotiations. Incidentally, parcel carriers have in-depth knowledge about a business’ shipping characteristics. And so, shipping businesses have to know about their shipping history before negotiating with the parcel carriers. Here’s a list of challenges that shippers need to address:

  • Identify the areas to save money

Shipping history and past shipping data help shippers understand the areas to reduce shipping costs. Shipping businesses should know their shipping services with the carriers of their choice. They have to review factors influencing the shipping spend, such as shipping zones of parcels, the weight of packages, package dimensions, and more. Knowledge of one’s shipping characteristics helps businesses close better deals with parcel carriers.

  • Examine the often used accessorial charges

Additional expenses may reduce to a large extent by examining shipping data. For instance, residential deliveries are more costly than commercial deliveries. Further, surcharges like additional handling, address correction, large packages, remote areas, etc., add to the shipping costs. During negotiations, shippers need to find ways to eliminate the extra charges.

  • Keep parcel carriers’ competitor’s data ready

Shippers should have the competitor’s data handy during negotiations with parcel carriers. This data gives an upper hand to shippers to secure better rates in the carrier contracts. In addition, businesses know what to bargain for when negotiating with shipping carriers.

  • Work towards a mutually beneficial contract

Shipping businesses need to work towards a mutually benefitting carrier contract. The contract has to be drafted so that shippers can ask for renegotiations at no particular time. The contract should not be time-bound or favor the parcel carriers. A mutually beneficial carrier contract makes life easy for both shippers and shipping carriers.

  • Do not waive money-back guarantee services

It is a vital part of carrier contract negotiations. Parcel carriers like UPS and FedEx offer a money-back guarantee for late deliveries of packages. However, during contract negotiations, they ask businesses to waive the money-back guarantee clause by offering discounts. Shippers need to be careful not to waive the money-back guarantee clause as they will lose money in the long run.

  • Ask for discount incentives

Each shipment is eligible for discount incentives from the parcel carriers. Carrier contract negotiations involve discounts based on the weight of packages, type of services, and shipping zones. In addition, based on shipping volumes and their shipping data, shippers ask for a discount.

  • Avoid risks by partnering with experts

Shippers can avoid financial risks by partnering with audit experts. Detail analysis of shipping data gives an idea of the overall cost of each shipment. Companies need to hire extra resources to understand the intricacies of shipping rates of various parcel carriers. It is where audit firms such as Audintel can provide the leverage to save money for companies.

The significance of periodic renegotiation of shipping carrier contracts

In addition to the challenges mentioned above, shipping companies need to renegotiate their carrier contracts. Parcel carriers may dissuade shippers from renegotiations, citing no change in shipping costs or disruption in carriers’ discounts. However, shipping companies need to renegotiate their carrier contracts periodically to benefit from discount incentives. Shippers have to balance budgets along with providing best-in-class customer services. If the current carrier contract does not help shippers, it is best to renegotiate or consider using other shipping carriers.

How does Audintel help in carrier contract negotiations?

Audintel’s team analyzes the data of the client and the parcel carriers to give the best deal. Our experts have a deep understanding of the working of parcel carriers’ pricing models. We root out anomalies in carrier contracts so that our clients get the best service rates. Audintel considers the current market conditions that will influence negotiations. We negotiate for our clients fairly and transparently and save money.

Conclusion

The parcel industry has faced several challenges in the past two years. The challenges include shipping delays from parcel carriers, capacity constraints, etc. In addition, UPS and FedEx have surcharges increasing every year. The frequent increase in expenses is hurting the bottom line of many shippers. Audintel assists shipping companies in carrier contract negotiations by auditing their shipping spend. We inform shippers about new carrier practices and encourage them to upgrade their carrier contracts periodically. Finally, for queries on shipping carrier contracts and negotiating tips, get in touch with us or you can call us at +1 (619) 354 8539. However, you can also learn about our services on the Audintel website.