Types of LTL carriers in the US and strategies on when to use each
Updated: 5 days ago
Types of LTL Carriers in the US and Strategies on When to Use Each
Truck transport is popular in the US as it is one of the quickest and most dependable ways to move goods across states. Shippers in America can choose between full truckload and less-than-truckload (LTL) transport. Full truckload denotes a situation where a truck carries a single load up to a specified location.
On the other hand, LTL is where a truck carries goods from different shippers to be delivered to different locations. While the trucking industry in the United States has more truckloads than less-than-truckload carriers, LTL carriers offer benefits that may match your business's service levels, speed requirements, and costs. Below is a discussion of the different LTL carriers to help you optimize your supply chain.
LTL vs. Truckload Carriers
As mentioned above, these are the two main types of trucks in the US shipping industry - LTL and full truckload (aka FTL or TL). The main advantage of using LTL carriers is that it helps businesses reduce freight spend and sometimes increase velocity and time to delivery because there is no need to wait until you have enough cargo for a TL.
LTL carriers allow shippers to consolidate several small shipments by destination. However, businesses may struggle to build a network that seamlessly forms their operations. LTL carriers need multiple trucks to transfer shipments between regionalized terminals, and each of these terminals needs a significant lane density for-profit purposes.
Alternatively, full truckload shipping implies the same driver will pick up a shipment and deliver it to the destination. Carriers can enter the market with just a single truck, unlike the LTL market, where the carrier needs significant scale and resources to enter the market.
The LTL Carrier Market
The US LTL Transportation market is growing due to e-commerce, time-sensitive, and last-mile deliveries. Carriers range in size, with some being metropolitan or national carriers and others being regional carriers. Only a few players dominate the LTL carrier market compared to the truckload market. This consolidation means the market is less volatile regarding capacity and pricing. However, the networks are not very flexible.
The LTL carrier market is also just a smaller subset of the entire market, with approximately 200 carriers, and is worth approximately $46 billion as of early 2022. On the other hand, the fragmented full-truckload market revenue is worth close to $800 billion, with nearly 900,000 for-hire carriers.
Hub and Spoke LTL Networks and How They Work
You can think of the hub and spoke model as a bicycle wheel. The hub is in the middle of the model, allowing the spoke to move in a single direction and meet at one central location. The hub and spoke model is the traditional LTL delivery method.
The hub and spoke delivery method involves an LTL carrier setting up distribution centers or hubs where small shipments are assembled in one truck and transported to a single destination. This delivery method suits a shipper with a firm delivery schedule and small dense, or one-off shipments. You can also use hub and spoke if the freight does not need special attention and you must save on transport costs.
The hub and spoke model benefits LTL carriers by simplifying shipping smaller freight. Since most LTL shippers cannot use full truckload shippers, the hub and speak model allows delivery flexibility over different destinations. The hub is responsible for receiving, routing, loading, and launching shipments to their destinations.
LTL Carrier Types and the Pros and Cons of Each
LTL carriers apply business models that create varying speed, cost, and service blends. Therefore, your carrier may not clearly fall into a single category as there is no ideal carrier mix. Below are the different types of LTL carriers.
Local LTL Carriers
As you may expect, local carriers (aka local cartage carriers) operate within a particular geographical region and handle LTL, for example, within 50 miles of a metropolitan area. These are typically small businesses that offer quality service and competitive rates. Their coverage is limited, so they are likely to play a small role, such as the execution of a final mile delivery. This is an ideal carrier for you if you want to transport freight within state lines.
Examples of local carriers include Southwestern Motor Transport and Pace Motor Lines.
National LTL Carriers
National carriers use the hub-and-spoke model to transport freight nationwide and offer coast-to-coast coverage. National LTL carriers usually have massive fleets and great resources, such as the latest technology and numerous hubs and terminals. They efficiently transport goods over long distances, but some may depend on partner carriers for final mile services and deliveries.
You can use a national carrier with complex routes and hubs to move goods across the country. However, you may face time constraints and may not enjoy flexible rates and easy communication as you would with a local carrier.
If you are a business that intends to expand nationally, you can benefit from a national carrier, as this model will streamline your supply chain. The national carrier will also allow you to ship large cargo amounts nationally regularly.
Examples of national carriers include R&L, YRC, Estes Express Lines, Old, and Dominion Freight Line.
Regional carriers serve a group of adjoining states in a geographic region where they always have a strong presence and a dense network. These carriers always provide customers with next-day service, have numerous trucks and personnel, and offer competitive pricing. They also have access to advanced service functions and technology.
You may have a problem with carrier services if you do not know which carrier operates in which region. This is especially true if your region has multiple carriers and your freight needs to exceed the carrier’s coverage area. However, many of these carriers compensate for the limited coverage with an extensive area of operation.
Examples of regional carriers include Reddaway, A Duie Pyle, Pitt Ohio, Sutton Transport and Ward Transport.
Some carriers have multi-region coverage. However, they do not offer coast-to-coast coverage and can be described as between an expansive national provider and a small regional operation.
This type of carrier allows you to enjoy a broader capacity and coverage. However, you may face a significant challenge because of a rising number of shipments that may cause your freight to be given lower priority. Furthermore, you may have to work with a different provider if your freight should be delivered beyond their scope.
Examples of multiregional carriers include AAA Cooper and Averitt Express.
Such carriers focus on long-range and bulky shipments. The carriers have drivers who pick up freight from multiple shippers and directly deliver them instead of making stops at terminals through direct delivery routes.
This model may favor you if you have sensitive freight as it reduces product handling. The method is also ideal if you want a long-range shipment, want a competitive rate and are willing to work with the carrier’s schedule. However, load-to-ride carriers are niche providers and will only add value to your business if your needs match the carrier’s capabilities.
Load-to-ride carriers include iShared and Sunset Pacific Transportation.
Asset-light carriers try to work with minimal assets while maximizing geographic reach. Since they have fewer terminals, they share space at terminals with larger carriers. These carriers are a good option for a low-budget carrier because the model means the shipper can save more money.
Carriers who have embraced this model rely on intermodal, which makes transit times longer. Shippers may not have control over their product when under transit, as there will be multiple handlers.
Examples of asset-light carriers include Frontline Freight and Clearlane Freight.
Reefer (refrigerated) carriers operate in the same way as load-to-ride carriers. They specialize in long-range freight shipment and do not encourage terminal product transfer. However, what differentiates this method of shipment from the former is that the freight is usually temperature sensitive.
Since the products transferred are temperature-sensitive, the selection of reefer carriers is limited. Finding the capacity and coverage for reefer carriers can be challenging.
Examples of reefer carriers include DTS Logistics and H&M Bay.
Factors to Consider When Choosing a Carrier
By now, you may already have an idea of the type of carrier you would like to use for your freight. To learn more about LTL shipping, look at this resource. However, the factors below can help you make a wise decision.
Avoid using cost as the only deciding parameter if you want to choose an LTL carrier. You may end up paying more for a cheap carrier if there are inconveniences such as delays, damages, and other significant damage to your business.
However, low costs do not necessarily mean the carrier is low quality. Sometimes, you may experience cost-effectiveness since your needs match the carrier’s capabilities.
Ease of Doing Business
Consider whether the carrier has a digital platform and whether it is accessible and convenient for you. Does the company have a customer service team, and does the team communicate effectively?
You should understand whether the carrier is willing to deliver to residences or you will have to pick up the freight from a particular terminal. Also, consider whether you have accessorial needs and if the carrier charges for the services.
Equipment and Network Density
Do they have the capacity to handle your freight? For example, if you are looking at a refer carrier, establish if they have refrigerated trailers and lift gates and how they charge for the equipment.
LTL carriers can be the most efficient way to transport your luggage locally, across regions, and coast to coast, depending on your needs and the capabilities of the different types of carriers. Request a quote or reach out to us today to learn more about our trucking services and how we can help you with your LTL freight requirements.