Less than truckload (LTL) freight shipping is an excellent method of transporting smaller quantities of goods that do not require the full space of a truck. This cost-effective solution enables multiple shippers to share the same truck space, reducing expenses and optimizing logistics. However, despite its advantages, LTL shipping comes with risks and challenges. Both LTL and truckload use trucks and drivers, the wheels on the trucks for both are round, and they usually deliver their cargo where they are supposed to. Then comes the question of damage and loss rates. One of the challenges of LTL transport is a higher ratio of loss incidents and damages than LTL’s cousin truckload.
Understanding LTL Freight Risks
LTL freight shipping involves more handling than truckload freight as LTL goods are consolidated, deconsolidated, and transferred between various terminals and trucks. These multiple handlings increase the likelihood of damage, loss, and delays. Common risks in LTL shipping include:
· Damage: Frequent handling and transloading can result in goods being mishandled, leading to damage.
· Loss: The more touchpoints, the higher the chance of misplacement or theft.
· Delays: With multiple stops and transfers, there is a greater potential for delays due to unforeseen issues.
Strategies for Mitigating LTL Freight Risks
1. Proper Packaging
Proper packaging is one of the most effective ways to minimize damage risk. Goods should be securely packed using appropriate materials such as bubble wrap, foam, and sturdy, filled-out boxes to prevent void spaces and ‘carton crush’. Palletization can also help ensure stability during transit. Plentiful shrink wrap, pallet toppers, and banding work wonders reducing damages. Also take care to have no overhang off the edge of the pallets that can catch on to a passing pallet or forklift, or have your pallet of goods slammed against the pallet next to it. Your wooden or composite material pallet should take that impact, not your cargo. Clearly labeling packages with handling instructions and using tamper-evident seals can further protect the contents. Using uniform-sized pallets that adhere to your country’s norm is a must when possible. The industry standard for North America is 48”x40” (1219mmx1016mm) unless otherwise specific to a commodity or industry. When LTL companies have to deal with odd-sized pallets, it creates extra work for them, and more damage for you.
2. Choosing Reliable Carriers
Selecting reputable carriers with a proven track record in LTL shipping is crucial. Research carriers’ histories, customer reviews, and safety records. ‘Saferweb’ (SAFER Web – Company Snapshot) is a great place to start. Safer Web can provide carrier vehicle and driver inspection reports and crash data statistics. Major carriers are likelier to have established protocols for handling and securing freight, reducing the risk of damage, loss, and delays. While carrier quality is important, how often your freight will be transloaded counts too. Everything else being equal, if ‘Carrier A’ has five transload points between the origin and the destination, and Carrier B has three transload points, consider picking ‘Carrier B’. Fewer transloads equal less handling, and reduced handling means less risk for damage or loss and theft. Also, with longer transports and more miles, consider whether your carrier will use their trucks and drivers for your freight’s transport or depend on ‘Partner Carriers’ to complete the transport. While your primary LTL carrier may be ‘rock solid’, if they are too regional to get your freight across the country without using partner carriers, who is getting your shipment across the Plains States to the other side of the country and last mile delivery counts.
3. Comprehensive Insurance Coverage
While proper packaging and reliable carriers can minimize risks, unforeseen incidents can still occur. Comprehensive insurance coverage is essential to protect against potential losses. Shippers should ensure that their insurance policies cover at least the full value of their goods and transport costs incurred by the insured, and account for various risks, including damage, theft, and non-delivery. It should be noted that the insured value should not include the insured’s profit margin or potential profit. The best, and most common form of cargo insurance is ICC Clause A or ‘All Risks’ insurance. Cargo insurance can be purchased in a yearly policy or per-shipment form, depending on your needs. Cargo insurance can’t stop a forklift fork from skewering your pallet, but it could pay for the loss as agreed.
4. Clear Communication and Documentation
Effective communication and thorough documentation are critical in LTL shipping. Clearly communicate expectations, handling instructions, and delivery requirements to all parties involved. If your shipment is a ‘no stack shipment’ or ‘requires strapping’, make sure it is clearly stated on the bill of lading. Also, make the shipment requirements a bold addition to the pallet placards on each of the four sides of the pallet. Sometimes the person handling your pallet in a transload warehouse never sees the bill of lading. Maintain accurate records of shipment details, including tracking numbers, delivery receipts, and any damage reports. This documentation can serve as valuable evidence in case of disputes or claims. To file a claim with an insurer, you must provide specific documentation, including all bill of ladings, delivery receipts, commercial invoices, all shipping invoices, for per-shipment insurance, the insurance certificate, surveys, photos, and communications between relevant parties.
5. Regular Audits and Assessments
Conducting regular audits and assessments of LTL shipping processes can identify potential vulnerabilities and areas for improvement. Evaluate carrier performance, packaging standards, and security protocols. Implement corrective actions based on audit findings to enhance overall risk mitigation strategies. Using your shipping data means collecting data. If you are not collecting data on your shipments, you may as well be driving across the country using only back roads with no GPS or map. For cargo risk mitigation, complete data on all shipments must be recorded. Recording losses for risk purposes isn’t as laborious as it sounds. While it may add a few lines to your spreadsheet, much of the data is already collected in-house from measuring carrier KPIs. You measure carrier performance, don’t you? For loss data, the must-haves include:
carrier,
all the bill of ladings and pro numbers,
freight charges,
commodity and freight class,
weights and measures,
packaging, (cartons on pallets (pallet crate, floor-loaded cartons or crates ect.)
shipping method,
expected transit time,
expected ship date,
expected delivery date,
actual delivery date, (Unless non-delivery)
origin and destination,
location of loss if known,
type of loss (theft, lost, damage),
if damage, concealed or apparent,
cause of loss if known,
and estimated dollar amount lost.
Along with all of your standard data uses, with a bit of sorting and or AI help, using essential statistical process controls, you can first identify what percent of your total shipments experience a loss, along with items such as which carriers, origins, destinations, commodities, dollar amount of loss, shipment sizes, types of losses, travel lanes, and more are frequent fliers on the naughty list. Now that you have defined the issues, measured the data, and analyzed the data, you can begin to improve your freight’s environment and wrap solid processes around it to maintain the improvements.
6. Training and Education
Now that you have improved the processes due to having and analyzing the data you collected, don’t keep it a secret. Training and educating employees involved in LTL shipping is essential for risk mitigation. Ensure staff members know about and practice proper packaging techniques, handling procedures, and security protocols. The organization would be best served by sharing ‘what to do’ with the team and ‘why it is best practice’. Even the best procedures can fall short if dictated in a task mastering fashion. Understanding is the precursor to genuine participation. Training and education are ongoing processes. Regular training sessions can reinforce best practices and keep employees updated on new technologies and industry standards. Moreover, it enables team members to share their insights on improving or adjusting their front-line work procedures. Being the smartest person in the room is useless if you do not communicate your knowledge effectively with others.
7. Developing Contingency Plans
What happens when a top ten LTL carrier like Yellow goes belly up, or when an ocean carrier implodes with hundreds of thousands of containers on the water as Hanjin did, or worse? Preparing for unexpected events is a key aspect of risk mitigation. Develop contingency ‘Plan ‘B’ plans to address potential disruptions such as natural disasters, labor strikes, or transportation issues. Having predefined plans in place can help minimize the impact of these events and ensure continuity in operations. Companies with no supply chain contingency plan can find themselves bought for pennies on the dollar by those who do.
Conclusion
By implementing the strategies outlined in this article—such as proper packaging, choosing reliable carriers, leveraging technology, and maintaining clear communication—shippers can effectively mitigate risks and enhance the efficiency of their LTL shipping operations. Ultimately, a proactive approach to risk mitigation can lead to improved customer satisfaction, reduced losses, and a more resilient supply chain.
This article was partially written with the aid of AI using the below sources.
References
· National Motor Freight Traffic Association. (2021). The Importance of Proper Packaging in LTL Shipping. Retrieved from [URL]
· FreightWaves. (2020). How Technology is Transforming the LTL Shipping Industry. Retrieved from [URL]
· Logistics Management. (2019). Best Practices for Managing LTL Shipping Risks. Retrieved from [URL]