How do LTL and TL Carriers determine costs?

  1. Weight and Class: LTL carriers primarily base their charges on the weight and freight class of the shipment. Freight class is determined by the density, stowability, handling, and liability of the cargo.
  2. Dimensions: LTL carriers may also consider the dimensions of the shipment. If a shipment takes up a lot of space in the truck due to its size or shape, it may be charged at a higher rate.
  3. Distance: The distance the shipment needs to travel is a factor in LTL pricing. Longer distances typically result in higher charges.
  4. Accessorials: Additional services, known as accessorials, can incur extra charges. These may include liftgate service, inside pickup or delivery, residential delivery, and more.
  5. Freight Class Density: LTL carriers often calculate density (pounds per cubic foot) to determine charges. If the cargo’s density is low, it may be charged based on its volume rather than weight.
  6. Base Rate: LTL carriers may have a base rate for a specific weight range, and charges increase as the shipment’s weight exceeds that range.

Fuel Surcharges: Like FTL carriers, LTL carriers may apply fuel surcharges, which fluctuate based on fuel prices.

Full Truckload Carriers:

  1. Space Occupied: FTL carriers charge based on the space a shipment occupies in the truck. The entire trailer is dedicated to one shipment or a single customer’s goods, so the charge is often a flat rate or a per-mile rate.
  2. Weight: While weight is a consideration in FTL, it is generally less influential in pricing compared to LTL. FTL shipments are less likely to be charged solely based on weight.
  3. Distance: Like LTL, the distance the shipment needs to travel affects FTL pricing. Longer distances typically result in higher charges.
  4. Accessorials: Similar to LTL, accessorials may apply to FTL shipments if additional services are required, such as expedited delivery or specialized equipment.
  5. Base Rate: FTL pricing often involves a base rate that covers a specific distance or a portion of the trailer space, with additional charges for exceeding these parameters.
  6. Fuel Surcharges: FTL carriers may also apply fuel surcharges, which are calculated based on fuel prices.
  7. In Summary:
  • LTL carriers primarily charge based on weight, freight class, dimensions, and distance, with various accessorials.
  • FTL carriers charge based on the space occupied in the truck, distance, weight (to some extent), and accessorials.
  • FTL shipments are generally priced at a flat rate or per-mile rate for the entire trailer, while LTL shipments share trailer space with multiple shipments and are priced based on individual characteristics.

In summary, LTL and FTL carriers use different pricing models due to the varying complexities and services associated with each mode of transportation. Understanding these differences is essential for businesses to make informed shipping decisions and optimize their logistics costs.