Navigating the world of freight shipping can be overwhelming, especially regarding LTL pricing. Less-than-truckload (LTL) shipping offers businesses a cost-effective way to move smaller loads without paying for a full truck. However, the process of determining accurate shipping costs involves several factors and methods of calculation. In this comprehensive guide, we’ll explore what impacts LTL pricing, how companies arrive at these rates, and what you need to know about LTL rating to manage your shipping expenses effectively.
What is LTL Shipping?
LTL shipping allows multiple shippers to share space on the same truck. Each shipment typically weighs between 150 and 15,000 pounds. The carrier combines shipments from various customers, making it more efficient and economical than full truckload shipping for smaller freight.
“LTL shipping is the most efficient way to move freight for businesses that don’t need a full truck—both environmentally and economically.”
What is LTL Rating and Why Does It Matter?
Understanding LTL pricing starts with identifying the key variables that influence it:
- Weight and Dimensions: The size and weight of your freight directly impact the cost. Larger or heavier shipments take up more space and require more resources.
For example, a 500-pound pallet that takes up half a truck costs more than a 200-pound compact crate. (Freightquote, n.d.)
- Freight Class: Determined by the National Motor Freight Classification (NMFC), freight class considers density, handling, stowability, and liability.
For instance, a dense stack of metal rods may have a lower freight class than a fragile set of plastic parts. (National Motor Freight Traffic Association [NMFTA], n.d.)
- Distance and Route: Longer distances and complex routes usually mean higher costs.
For example, shipping from New York to California will generally cost more than shipping from New York to Pennsylvania. (uShip, n.d.)
- Accessorial Charges: Additional services such as liftgate delivery, inside pickup, or limited access fees can increase your total shipping costs.
For example, delivering to a residential address often incurs additional fees (Freightquote, n.d.).
- Fuel Surcharges: These fluctuate based on fuel prices and are often added as a percentage of the base rate.
For example, if diesel prices rise, you might see a 10% surcharge added to your rate. (Freightquote, n.d.)
According to the American Trucking Associations, fuel costs rose by 20% in 2023 due to market volatility, impacting LTL pricing across the board (ATA, 2024).
“The key to controlling LTL pricing lies in mastering the fundamentals—know your freight, optimize your routes, and always question extra charges.”
How can businesses strategically reduce their LTL shipping costs by adjusting key factors like freight class, packaging, and accessorial services?
How to Calculate LTL Freight Rates
Many businesses struggle with how to calculate LTL freight rates, but understanding the basics can save time and money. To accurately determine LTL freight rates, follow these steps:
- Determine Freight Class: Assess the shipment’s density, stowability, handling, and liability to identify its NMFC freight class.
Example: Let’s say you’re shipping gym weights and yoga mats. The gym weights are dense and compact, classified as Class 50. The yoga mats, being lightweight and bulky, are Class 150. Because of the higher classification, the mats will cost more to ship even if they weigh less. This difference is built into the LTL rating system and dramatically affects the overall cost.
Understanding freight class is a core step when learning how to calculate LTL freight rates correctly.
- Measure Weight and Dimensions: Accurately measure the shipment’s weight and dimensions to calculate its density and ensure proper classification.
Example: A pallet of engine parts weighs 600 lbs and measures 48″ x 40″ x 40″. Converting that to cubic feet:
(48 × 40 × 40) ÷ 1,728 = 44.44 cubic feet.
Density = 600 ÷ 44.44 = 13.5 lbs/cu ft.
That density may place it in Class 70 — a favorable LTL rating for pricing.
- Calculate Density: Divide the total weight by the total cubic feet to find the shipment’s density, which influences its freight class.
Example: A 300 lb shipment that occupies 30 cubic feet has a density of 10 lbs/cu ft. This would likely fall into Class 92.5. However, if you pack it more efficiently and reduce volume to 20 cubic feet, the new density is 15 lbs/cu ft — bumping it to Class 70, lowering your LTL pricing significantly.
- Identify Shipping Distance: Consider the distance between the pickup and delivery locations, as longer distances generally increase costs.
Example: Shipping a pallet from Los Angeles to Phoenix (a major freight lane) may cost $180, while shipping the same load to a remote part of Idaho may cost $300. Even with the same freight class, LTL pricing varies due to lane efficiency and carrier availability.
- Account for Additional Services: Factor in any required accessorial services that may add to the total shipping cost
Example: Say your shipment of office furniture is being delivered to a school (a limited-access location). If you didn’t declare that upfront, the carrier may charge $75+ for a surprise accessory. Add a liftgate charge of $65, and your total LTL pricing just increased by $140 due to these two services.
- Consult Carrier Base Rates and Discounts: Review carrier-specific base rates and apply any negotiated discounts to estimate the final shipping rate.
Example: You request a quote from two carriers for a Class 70, 500-lb shipment from Dallas to Denver.
Carrier B’s base rate is $350, but a 35% discount reduces it to $227.50.
Although Carrier B’s base rate is higher, your actual LTL pricing is lower due to the discount — a perfect example of why understanding how to calculate LTL freight rates goes beyond just comparing base numbers.
Carrier A quotes $280 with no discount.
Freight calculators and transportation management systems (TMS) can also assist in determining how to calculate LTL freight rates more accurately. These tools factor in real-time data, negotiated rates, and historical shipment trends.
“Technology gives you visibility and control—use it to your advantage when calculating LTL costs.”
Looking for an easier way to calculate LTL freight rates? Explore our shipping services to access tools, real-time quotes, and expert support.
Tips to Optimize LTL Shipping Strategy
To make the most of your shipping budget, consider these tips:
- Consolidate Shipments: Whenever possible, consolidate smaller shipments to reduce overall costs.
For instance, two 300-lb shipments going to the exact location can often be shipped cheaply together. (Freightquote, n.d.)
- Package Efficiently: Reducing wasted space and using proper packaging helps lower your freight class.
For example, using stackable boxes reduces volume and the risk of reclassification.
Use Technology: Employ a TMS to streamline quoting, booking, and tracking. Companies using automated systems report 30% faster booking times.
Negotiate Rates: Frequent shippers should negotiate contracts for better pricing. Some businesses secure annual rate discounts of up to 20%. (Freightquote, n.d.)
“Smart logistics isn’t about spending more—it’s about spending right.”
Explore smarter shipping solutions and discover how we can help you optimize your strategy. Learn more about us.
Frequently Asked Questions (FAQs)
1. What is LTL pricing, and how is it calculated?
LTL pricing is the cost structure used for less-than-truckload shipments. It’s calculated based on freight class, weight, dimensions, distance, and accessorial charges. Freight calculators and TMS platforms help businesses determine these rates accurately.
2. Why is LTL rating important for my business?
Understanding your LTL rating ensures you’re charged appropriately for your shipments. Proper ratings prevent costly reclassifications and allow you to optimize your shipping budget.
3. How can I reduce my LTL freight costs?
To lower LTL pricing, consolidate shipments, use accurate freight descriptions, leverage TMS platforms, and negotiate with carriers. Knowing how to calculate LTL freight rates helps you stay in control.
Unlock Smarter LTL Shipping
Whether you’re a seasoned logistics manager or new to the game, understanding the intricacies of LTL pricing is essential. With a solid grasp on calculating LTL freight rates and insight into LTL rating systems, you can make smarter decisions, save money, and improve delivery efficiency. As e-commerce and distribution demands continue to grow, mastering these concepts becomes increasingly valuable for any business involved in shipping.
Ready to simplify your LTL shipping strategy? Contact us to navigate pricing and optimize every load.
References
American Trucking Associations (ATA). (2024). Trucking Industry Update. Retrieved from https://www.trucking.org
Freightquote. (n.d.). LTL freight rates and quoting. Retrieved from https://www.freightquote.com
Logistics Management. (2023). Annual Logistics Report. Retrieved from https://www.logisticsmgmt.com
National Motor Freight Traffic Association. (n.d.). Freight classification guide. Retrieved from https://www.nmfta.org
uShip. (n.d.). LTL shipping rates. Retrieved from https://www.uship.com
