There are still plenty of shipping options for small package shipping companies, and often the most difficult decision for small package shippers is whether to ship less-than-truckload (LTL freight), or to ship with a small parcel carrier through hundredweight programs. There are perks and downsides to each of these shipping strategies, so a lot of shippers get overwhelmed trying to decide when to use each method. To improve supply chain management it’s important to consider all shipping options. Those whose business revolves around package shipping know just how complicated it can be to save money shipping and optimize logistics management strategies. You have to consider shipping rates, transport times, shipping software and shipping technology to manage rates and routes, loading and unloading docks, staging area, and so on. To make the decision just a little bit easier, let’s take a look at advantages and disadvantages of both parcel hundredweight, and LTL freight shipping.
Shipping with Parcel Hundredweight (CWT)
To begin with, shipping in the CWT method requires less handling. There is less manual effort in CWT than LTL freight shipping, so less need for putting together pallets, shrink-wrap, shipment segregation, and staging. Parcel shipping with hundredweight is almost always handled in the exact same way as normal parcel shipping, and LTL freight shipping involves a lot more labor. In turn, this does mean there are immediate savings, as the cost of the pallet is eliminated, and shipping costs would be instantly reduced, because the weight of the pallet will not be included.
Another advantage of parcel shipping CWT instead of LTL freight is that fuel costs are less expensive, and several other accessorial charges aren’t applicable. For example, in February LTL freight shipping surcharges from UPS are 21.4%, while the CWT parcel shipping fuel surcharges were 5.5%. As for other accessorials, things like lift gate charges, inside delivery, etc. don’t apply. Additionally, for shippers who have a variety of commodities, opting for CWT parcel shipping eliminates the need to determine freight class for every package.
A few final benefits of hundredweight parcel shipping are that the volume tendered in CWT programs goes toward overall parcel incentives, and that for outer zones delivery, the minimum hundredweight charges are lower than LTL freight shipping carriers, and charges for equivalent destination state for LTL freight shipping are increased the further away from the shipment’s origin.
So if these are CWT advantages, let’s take a look at the disadvantages.
For parcel hundredweight shipping, it can be very difficult to determine the best route or to get cheap shipping rates, which can take a toll on supply chain management. Using transportation management systems (TMS) or other shipping software may be necessary to compare CWT pricing and shipment times, not only relative to LTL freight shipping, but to compare it toward your current parcel shipping rates. In addition to cost uncertainty, many shippers feel lost or overwhelmed with CWT pricing, because shipping rates are structured a certain way, and they are negotiable in terms of commodity tiers, discounts, deficit weight, minimum charges, accessorials, etc.
LTL Freight Shipping
While every LTL freight carrier has unique liability limits and rules in relation to loss or damage claims, generally speaking LTL freight liability limits are higher than CWT shipping. Parcel hundredweight shipping is usually covered less than LTL freight shipping at major carriers like UPS and FedEx, but either way it’s good to review carrier’s rules tariff.
LTL freight shipping is also a better option when shipping over-dimensional packages that you can still put on a pallet, because they aren’t usually charged for extra handling or oversize fees unless reaching an excessive length of usually around 12 feet. Another benefit of using an LTL freight shipping option is that package handling time is greatly reduced, and using shrink-wrapping and pallets make damage to individual packages less likely.
In some situations, mostly depending on the destination, LTL freight shipping can also reduce transport times compared to small parcel shipping. Often times parcel carriers will have two day guaranteed shipping when LTL carriers will do it in one. LTL freight shipping can be a solid option, because the market houses a lot of competition, and this can make negotiating cheap shipping rates for small package shipping through LTL carriers more likely than you’ll save money with hundredweight parcel shipping.
Given these advantages for LTL freight shipping programs, what is the downside?
One downside is that, while package handling is minimized, the use of forklifts, and double stacking pallets on a truck can cause damage, but proper dunnage, and blocking and bracing practices can prevent that. Another issue with LTL freight, however, is that it can be more likely that the shipment will get lost or the delivery will be late. One last potential downside to shipping packages LTL freight instead of parcel shipping CWT, is that they don’t automatically work toward revenue-based incentives. Contracts with parcel shipping carriers who do LTL freight like FedEx Freight or UPS Freight need to specifically state that volume tendered is contributed to incentives from parcel carriers, or it won’t.
While there wasn’t an explicit LTL or CWT answer to this issue, comparing the advantages and disadvantages of each will hopefully help shippers start to see when LTL shipping or small parcel shipping with hundredweight is the best option for them. Ultimately, different shippers have different circumstances, and individually different shippers may choose different shipping methods in the same situation. Between what your customer wants and your personal shipping constraints, comparing the good and the bad of each of these should help you reach the best solution to help you save money shipping and improve your logistics management.