How are LTL Rates Calculated

How are LTL Rates Calculated

How are LTL Rates Calculated

LTL shipping is one of the most popular types of transportation. It is known to be a bit slow and sometimes pretty expensive. But the flexibility of this shipping service compensates for the imperfections.

LTL rates are based on weight and distance, as any other shipping method. However, it gets more complex when you consider other factors that affect the shipping costs. Also, you should know that carriers can establish their own basic rates for shipment. 

What is LTL Rate

LTL rate is the amount of money you, as a shipper, will pay for your freight delivery. Keep in mind that you pay only for the space occupied by your cargo. The more you have to ship – the more you will pay. Plus, add handling services and factors that affect the rates.

There is also a thing as absolute minimum charges (AMC). It is the minimum price that the carrier sets for delivery and won’t go below it. This price cannot be affected by discounts or special offers as it exists to protect the carrier.

What are LTL Rates Based On

In addition to weight and distance, there are several factors that affect the rates, even for the smallest cargo. Let us look closer at each of them.

• Weight. It is one of the main factors as each vehicle has weight limitations, and it is crucial to fit it.
• Density. Shipment density is important because the carrier needs to properly describe the load in the Bill of Lading. 
• Distance. The longer the distance, the higher the rates will be. If the destination is not in your carrier’s location, they will transfer your load to the other carrier which will also affect the rates.
• Freight class. Each freight has its classification established by the National Motor Traffic Association. Higher classes have higher rates.
• Fuel cost. Carriers can charge the fuel surcharge fee to cover the fluctuation in gas prices. The Freight Carriers Association gives fresh rates chart every week, and carriers are using it.
• Additional services. Any services that go beyond the regular delivery are going to add numbers to the rates. It can be packaging, liftgate service, residential pickup or delivery, areas with limited accessibility, etc.
• Rate negotiations. It can help you to decrease rates or find great discounts for regular transportation.

Average LTL Cost Per Mile

Average LTL rates are based on every hundred pounds. When your freight exceeds the first hundred pounds, the rates will change. Each carrier can break the price in their own way.

According to the American Transportation Research Institute (ATRI), the rate per mile consists of many components:

• Gas cost
• Truck/trailer lease
• Vehicle maintenance
• Licenses and permits
• Tires
• Tolls

How Do Get the Best LTL Rate

If you want to minimize your transportation spendings and get the best LTL rates, you should consider the following advice. 

Packaging

First off, you can pack your freight by yourself and don’t pay for this service. Second, efficient packaging without necessary dead space will also reduce the density of the package. The lesser density – the lower rates.

Be a regular client

Regular clients always get special offers and discounts. Choose a carrier that fits your needs, and work with them. 

Try not to split the freight

It is always cheaper to ship in bulk. Don’t split the freight into several small ones. Bulk shippers always have lower rates as it is easier for a carrier to handle the freight.

Don’t ship on-peak days

Try to ship your load not on-peak shipping days. It will create measurable savings for you. Also, if you are a business owner, you can create a backhaul which also reduces the rates for you.

Fixate your volumes

This option might not fit your needs but buying fixated space from a carrier reduces the rates. It is a great option for businesses that ship equal amounts of freight regularly.