The Hidden Costs of LTL Shipping and How to Avoid Them

Shipping less than truckload (LTL) can be a practical choice for many shippers, but it also comes with a host of potential inefficiencies and surprise fees that can eat into your budget. Understanding where these hidden costs originate and how to manage them is crucial for optimizing your shipping strategy. Let’s dive into the factors impacting LTL pricing and explore how you can avoid common pitfalls.

What Impacts LTL Pricing?

LTL pricing is influenced by several factors, including the total weight, distance traveled, and density of your freight. However, tariffs set by carriers also play a significant role. These tariffs, which are uniform across the industry, are determined by the class of cargo being shipped and typically last for a year. Whatever the hidden costs might be, we broke down some of the most common ones so you can keep an eye out. 

Accessorial Fees

Accessorial fees are extra charges for services beyond the standard agreement between the shipper and carrier. These fees often arise from inaccuracies or missing information and can significantly increase costs. Common accessorial fees include: Liftgate, redelivery and layovers, Bill of Landing (BOL), limited access, driver load and unload fees, and many more. 

Late Fees

LTL shipping can suffer from delays due to inefficiencies like transloading at terminals and suboptimal routing. When shipments are late, shippers face not only direct costs from penalties but also indirect costs from customer dissatisfaction. In fact, a significant percentage of LTL shippers experience delays of 1-2 days, with some reporting average late fees of $477 per shipment.

Damage Claims

With LTL shipping involving more handling and transloading, the risk of damage is higher compared to other shipping modes. Shippers often have to replace damaged goods and cover additional shipping costs. In recent years, a substantial portion of LTL shippers have reported significant costs related to damaged goods, with average claims running into thousands of dollars.

Limited Carrier Options

Scalability Issues

As your business grows, so will your shipping needs. A solution that can’t scale with increasing order volumes or evolving requirements will lead to operational bottlenecks and inefficiencies, ultimately impacting your ability to meet customer demands.

How a TMS Can Help Avoid Hidden LTL Fees

Navigating the complexities of LTL shipping can be challenging, but a Transportation Management System (TMS) offers powerful tools to help avoid hidden fees and optimize your shipping process. Here’s how a TMS can make a difference. 

Enhanced Visibility and Accuracy

A TMS provides real-time visibility into your shipments, helping ensure that all details are accurate and up-to-date. By monitoring each shipment's progress and validating key information like weight and dimensions, a TMS helps you avoid costly errors and discrepancies that lead to accessorial fees. Accurate data input and tracking reduce the risk of issues related to incorrect measurements, classifications, or incomplete paperwork.

Optimized Route Planning

One of the primary benefits of a TMS is its advanced route optimization capabilities. By analyzing and selecting the most efficient routes, a TMS minimizes delays and reduces the likelihood of late fees. Efficient route planning also helps avoid potential bottlenecks and ensures that shipments are delivered on time, meeting customer expectations and reducing the financial impact of delays.

Automated Documentation

Managing documentation is a critical aspect of shipping, and a TMS automates the creation and management of essential documents such as Bills of Lading (BOLs). Automation ensures that documentation is accurate and complete, reducing the risk of fees associated with BOL changes and reclassification issues. Efficient document handling also speeds up the processing time and enhances overall operational efficiency.

Claim Management

Damage claims and loss management are inevitable in LTL shipping, but a TMS streamlines this process. With features for tracking and managing claims, a TMS helps you gather and organize the necessary information to support your claims effectively. This not only aids in recovering costs from carriers but also reduces the financial burden of uncovered damage claims, ensuring that you’re not left bearing the full cost of damaged goods.

Incorporating a TMS into your shipping strategy can revolutionize how you handle LTL logistics, providing you with the tools needed to avoid hidden fees and improve overall efficiency. By offering enhanced visibility, optimized route planning, and streamlined cost and documentation management, a TMS empowers you to make informed decisions and manage your shipping operations more effectively.

Investing in a TMS is not just about managing costs—it's about transforming your entire shipping operation to be more efficient, transparent, and responsive. As the logistics landscape continues to evolve, having a TMS in place positions you to stay ahead of the curve, making data-driven decisions and enhancing your competitive edge. Start integrating a TMS into your shipping strategy today and experience the benefits of a more streamlined, cost-effective approach to managing your logistics.