When to use contract carrier vs. a common carrier for LTL shipments.
LTL (less than truckload) freight is any freight that is too large for the parcel carriers (UPS or Fed Ex), but that does not require a full truckload.
This could range from a few boxes weighing more than 100 lbs / 45 kgs and exceed 130 inches / 330 cm overall per box, to as much as 18 pallets.
When shipping LTL freight, you have two options:
- Common Carriers
- Contract Carriers
Common Carriers take shipments on common routes (hence the name). They have terminals, or hubs, and pre-determined routes instead of “contract” carriers who pick up multiple LTL shipments based on where the truck is going.
Although any common carriers will accept your shipment for delivery, not everyone will handle your shipment from beginning to end. To increase their bottom line profitability, many common carriers only serve specific geographic regions.
If your shipment needs to be sent to a location outside that carrier's normal service area, they will arrange to transfer the shipment from the edge of its service area to another common carrier for final delivery. This practice is called interlining.
Here’s why this is important to you:
The more your shipment gets interlined or transferred to another carrier, the better the chances are it will get delayed, lost, or damaged.
The carrier might also charge more because they cannot efficiently deliver your shipment. But there’s more...
Let’s say your shipment never shows up and you call the carrier to find out what happened. The carrier assures you they delivered it – but what you don’t realize is that they delivered it TO ANOTHER CARRIER who was responsible for making the actual delivery. Now you have to track down that carrier and find out what happened.
Depending on the size, weight, and items being shipped, a contract carrier might be a better choice. Freight that is loaded on a contract carrier’s truck usually delivers off the same truck. This decreases the chances of something going wrong.
Another advantage is that the flat, spot pricing that “contract” carriers charge is typically less than the “common” carrier class rates.
But “contract” carriers are not always readily available unless you have spent a lot of effort developing this type of carrier base. Also, most “contract” carriers are better suited to handle shipments that don’t require the special services such as lift gate or inside deliveries. They are better for business to business, dock to dock deliveries.
Knowing the different types of modes available also plays an important part in determining the right choice of carrier to use.
Shipments traveling over 1200 miles / 2000 Kms may be more economical moving on the rail rather than over the road.
This is where transit time would be an indicator of which mode to choose.