The thing to know is that under certain circumstances the two best known parcel shipping companies – UPS and FedEx – are not the only shipping options you have. Unfortunately, a lot of companies make the incorrect and costly assumption there are no other alternatives.
The bad news is for smaller, lightweight shipments this is still the case. Along with the U.S. Postal Service, Fed Ex and UPS still dominate this market. The good news is the bigger your shipment, the more shipping mode options you have. And, the potential savings grows exponentially as well. So what are the circumstances that open up these new options?
With shipments that exceed a certain size or have certain characteristics an LTL (Less Than Truckload) carrier is a cheaper, faster, and frankly better option to handle the delivery.
First, a quick explanation in case you did not know – LTL carriers specialize in combining multiple small shipments from different customers to fill up larger trucks. The benefit is that by combining their volume, various customers save by sharing the expense of using a large truck to make the deliveries.
A long standing rule of thumb has been that shipments greater than about 200 lbs. end up being more expensive to ship with a small parcel carrier (UPS or FedEx) when compared to an LTL carrier. This means if you have a single, or multiple items shipping to the same location that exceed 200 lbs. don’t use a small parcel carrier, call an LTL carrier. To complicate things further – enter dimensional pricing by UPS and FedEx. This new method of rating some shipments introduced in early 2015 has changed the equation and made many lighter weight shipments less expensive with LTL.
An important note: even if you already use LTL you should re-evaluate your established breakeven rules for deciding between the two modes. Chances are LTL will be a better option for a significant new percentage of your shipments you would have assumed should just go small parcel in the past.
Along these same lines, LTL is a great option if you are selling a product too big or awkward for the small parcel carriers. There are plenty of successful online retailers selling products like couches and beds using LTL carriers to make deliveries to customers, so chances are your products can also economically ship LTL.
A common misconception holding some companies back from exploring the LTL option is the concern that only the small parcel guys can handle special delivery requirements like inside or residential delivery. There are potentially additional fees for these types of extra services with LTL carriers but they are simply things to make part of your calculation when booking the shipment.
If you are a brick and mortar retailer, concern over shipping large and bulky items may have prevented you from exploring ecommerce as an option for growing your sales. Selling online and containing shipping costs open up new markets, so don’t let concerns over shipping hold back the growth of your company.
The principle applies to inbound shipping as well. For example, look for opportunities to have your suppliers place those 20 boxes on a pallet for LTL instead of shipping them as 20 different UPS Ground shipments. You’ll not only save on shipping, but cut down on damages and missing boxes too.
Using LTL can open up the option for you to order more product in bulk as well. Doing this can reduce your per unit costs – both in terms of what you pay for the product and also the per unit shipping cost. The bottom line is when it’s done right, LTL is a cost effective alternative to UPS and FedEx.