Parcel shipping is used for small amounts of goods or products, usually under 150 pounds. Parcels are more manageable for shipping companies to work with, as they usually can be lifted by one worker without assistance. Less than Truckload (LTL) is most often used for shipments over 150 pounds but no more than 10,000. Multiple items, boxes, or shipping units are secured to pallets for LTL transit. While the carrier may accept loose freight, it is best to use a pallet, as it dramatically reduces the chance of damage or loss in the LTL environment. When comparing LTL vs. parcel, larger bulkier materials may be a better fit to move via LTL vs. parcel.
How Do You Know Which Transport Mode Is Best to Use?
Shippers must first consider shipment size and weight when determining whether to ship via LTL or parcel. LTL is typically used for larger, heavier shipments that are too big for parcel carriers to handle. For small and lightweight packages, parcel shipping may be more cost-effective.
If speed is a priority, then parcel shipping is a better choice. LTL shipments usually take longer than parcels, as LTL shipments can involve multiple stops along the delivery route. If the shipment is fragile or contains high-value items like furniture or artwork, parcel shipping may provide better handling and protection. LTL shipments are usually consolidated with all types and sizes of freight, which may lead to potential damage of items as packages can shift during transport.
Regarding costs, LTL shipping is more cost-effective for larger shipments, while parcel shipping may be more cost-effective for smaller items. Rates should be compared from different carriers to determine which option is best.
Plus, some areas of the country or city may be better served by LTL carriers than parcel. Consider destination locations, such as a rural or urban area, and available carrier options when deciding which carrier to book.
When shippers use parcel shipping, they must schedule pickups and deliveries, typically during office hours. What does a shipper do if they need something shipped after hours? Many parcel carriers offer drop-off locations shippers can utilize. But as LTL shipments contain larger and heavier products, shippers may far prefer to schedule the pickup and delivery during regular business hours so that the carrier can use the shippers' loading dock.
Still, LTL is a great mode to choose when all the packages are smaller but in the same location. LTL shipping allows shippers to transport more items together in one place while also saving money.
Working with a 3PL specializing in helping shippers reduce and mitigate freight costs, while improving customer service, can ease the decision process. These third-party logistics companies understand their customers' needs, issues, and service contracts and can make the best decision for them. 3PLs have contracts with various carriers, including parcel, LTL, TL, and regional carriers, and can best decide how to meet the shippers' needs.
LTL Shipping Is Undergoing Changes
LTL shipping is undergoing several changes that are transforming the industry, such as using advanced technology to streamline operations and improve customer service. This includes transportation management systems (TMS), real-time shipment tracking, and automated invoicing and payment systems. A TMS can provide rate quotes for LTL, parcel, or TL; create bills of lading; dispatch shipping instructions to carriers electronically; track shipments in real-time; help file damage or loss claims; provide freight bill audit and pay services; and generate reports for continuous improvement. Many TMS systems can electronically connect to carriers so that carriers can book their loads and manage freight without a person involved. The near future will continue to see the adoption and implementation of predictive analytics, rating structure changes, and freight optimization strategies.
The rise of e-commerce has led to an increase in small- and medium-sized shipments, which are ideal for LTL carriers. As e-commerce grows, LTL carriers will likely see more business from online retailers and consumers. However, many e-commerce retailers use parcel carriers to ship items depending on the size and weight of the products.
Many LTL carriers are reducing their environmental impact by investing in fuel-efficient vehicles to reduce emissions and optimizing routes to reduce mileage and fuel usage. Some LTL carriers use technologies that automatically shut down the engine during idling to reduce emissions.
Like many transportation industry segments, LTL carriers face capacity constraints due to a shortage of drivers and other operational challenges. This is leading to higher prices and longer lead times for LTL shipments. If a shipment needs a faster delivery time, it might be best to choose parcel.
The LTL industry is currently undergoing consolidation as carriers seek to gain scale and improve their competitive position by acquiring other carriers. This is leading to fewer but larger carriers in the market, which could affect pricing and service levels.
Partnerships Are Key
Many LTL carriers are forming strategic partnerships with other carriers or 3PLs to expand their capabilities and service offerings. The expertise of the 3PL allows the carrier to offer more comprehensive solutions to customers than just working alone. 3PLs have expertise in managing logistics and supply chain operations, as well as risk and compliance, reducing carriers’ exposure to regulatory and legal risks. 3PLs can manage customs and trade compliance, insurance coverage, and liability issues, and also provide greater flexibility and scalability.
Whether a shipper transports shipments via parcel or LTL carriers, the expertise of a 3PL provider can be used to help the shipper decide which type of carrier to use, resulting in lower costs and the best service for the customer.
Ryan Polakoff is President, Nexterus. Visit www.nexterus.com for more information.
This article originally appeared in the May/June, 2023 issue of PARCEL.