The world of transportation and shipping is not as simple as it once was. With carriers expanding and new processes and services being implemented, there is an increasingly wide range of methods for moving and delivering your shipments.
To find the most cost-effective and efficient transport method for your business, it’s crucial that you pick the right shipping service for the actual weight of your products. Outside of small parcel shipping, you have a few standard alternatives: LTL parcel, UPS hundredweight, and FedEx multiweight.
This blog will provide a quick overview of these primary shipping services and their specific advantages, giving you all the information you need to confidently make the best choice for your business.
Understand Your Business Needs First
Evaluating your current supply chain or your transportation makeup can effectively reduce costs, either by reducing shipping costs or the labor costs involved. Deciding what shipping works for your business is crucial to your supply chain. Consider all your options when choosing your shipping carriers and modes.
The standard rule of thumb is that if your shipment is 150 lbs or more, it goes via LTL. If it’s less, send it via parcel. However, it’s not that simple. Although this is a good rule in most cases, FedEx and UPS have designed programs that target LTL shipments between 150-750 lbs that are multi-carton shipments going to the same location, and are shipped on the same day. Let’s dive into these topics more.
LTL carrier (Less Than Truckload) Freight
LTL — or Less Than Truckload — freight is a commonly used service, especially for larger and more frequent shipments. Because of this, many businesses switch from small parcel carriers to LTL freight as they grow and their orders increase. Here are a few signs it may be time for you to change LTL.
1. You Don't Mind Sharing Space with Other Orders
One of the main differences between LTL carriers and other shipping services is the method of transportation. Instead of being sent on their own, LTL shipments are combined with other orders and travel with them in the same truck to the exact location. Not only does this make LTL shipping cheaper, but it also makes it more environmentally friendly. If your business is committed to lowering its carbon footprint, it is advantageous to choose LTL.
2. You Have Larger and Heavier Shipments
If your shipments weigh more and are larger than roughly one pallet, LTL freight is likely your best choice. This method allows for bigger and heavier shipments at a lower total cost, even if they’re shaped differently. While other carriers may have more stringent restrictions and additional fees for these types of packages, LTL rates (in most cases) will offer more flexibility and a better price. As a general guideline, LTL is typically optimal for larger businesses that ship packages with a higher average weight and size.
3. You Get More Orders and Send More Frequently
If your business receives a lot of orders and has a full warehouse of packages ready to be sent, making the switch to LTL shipments allows you to save money, time and space by sending more at once. You can ship without having to fill up a full truckload and get more out to your customers faster. Plus, with the ability to pack and send packages quickly, your business may be able to hold out on investing in a larger warehouse or more storage.
4. Recipient and Delivery Location
Not only does LTL freight make shipping and transportation easier, but it also boosts the efficiency of delivery. If your order recipient is in an inconvenient location, such as a top floor or small entryway, LTL offers professional inside delivery options that make the process quick and painless.
UPS Hundredweight and FedEx Multiweight
UPS offers a service called Hundredweight, with a few distinct advantages not found in LTL shipping. Similarly, FedEx provides an alternative called FedEx Ground Multiweight. Multiweight (FedEx) and hundredweight (UPS) are comparable services billing at a cost per hundred pounds for parcel carriers. When does it make sense to use these services?
For the sake of this illustration, we will look at multiweight in more detail and then show a UPS example.
Per the FedEx Ground Multiweight guide for 2022:
“FedEx Ground Multiweight rates are available by contract only. Contact your FedEx account executive for more information. FedEx Ground® multiple-piece shipments may receive multiweight rates if the total shipment weighs 200 lbs. or more. A shipment average minimum package weight applies and varies by contract. Multiply the per-pound rate by total shipment weight and divide by 100.”
FedEx Multiweight Example
- 10 package shipment
- 220 lbs
- Distance: 250 miles (Zone 3)
With the FedEx Tier 3 pricing and a 25% discount on the service your charges would be as follows:
- $56.65 * (220 / 100) = $124.63
- $124.63 – 25% = $93.47
- $93.47 + 12.75% fuel surcharge = $105.39
In the above example, your total cost would be $105.39 for a 220 lb shipment going to a location in Zone 3. (Note: In our original post from June 3, 2019, which we updated in February 2022, this cost was just $76.88!)
Maybe you have an excellent regional LTL carrier that can provide minimums this low, but the benefit of shipping via multiweight is that the shipment incurs no LTL accessorials and ground tariff fuel surcharge. Inside delivery, liftgate, limited access, detention, and re-delivery fees are all standard charges added to LTL invoices. These charges don’t exist in the parcel world, which mitigates risk, allowing you to anticipate better and price products and services to maintain effective costing.
UPS Ground with Freight Pricing (GFP) Example
- 8 packages
- 220 lbs
- Class 60
- Atlanta to Nashville
- $54 minimum shipment charge
- LTL rate example: $550 List Rate
In this example, we will apply an 85% discount to the list rate for LTL costs:
$550 – 85% = $82.50 + 8% ground fuel = $89.10
Per package minimum cost does not apply
*A UPS Zone 2, 1 lb package has a minimum cost of $9.90
Multiweight Shipping Pros and Cons
Multiweight Pros:
- Quicker delivery times
- Reduced accessorial fees vs. LTL
- Automation
- Discountable service
- More predictable costing
- Carrier will bill the lesser cost of ground vs. multiweight/hundredweight.
Multiweight Cons
- Dimensional weight
- Minimum total shipment weight of 200 lbs
- Minimum per package weight average of 20 lbs
- Doesn’t fit all businesses
The alternative: Ground with Freight Pricing | UPS
GFP Pros
- Utilizes the same rate and discount structure as LTL for easy comparison
- Low minimums available
- Surcharges replace high-cost LTL accessorials
- Faster transit times
- Predictable shipping costs
GFP Cons
- Ground per package minimum applies
- High package count shipments can increase charges if weights, distances, or costs are low.
- NMFC Class codes can increase charges significantly
- User must manually select GFP when selecting service, or it will be billed as a ground/hundredweight shipment which could negate savings
Signs to Consider Multiweight or Hundredweight
1. You Need to Send Multiple Packages on the Same Day
These methods allow for same-day shipping, so if you’re looking to send out smaller packages sooner, your best bet is to opt for either UPS Hundredweight or FedEx Multiweight.
2. You're Only Shipping to Receiptients in the US
UPS Hundredweight and FedEx Multiweight benefits are available for all 50 US states. You’ll meet both requirements if you’re shipping nationally rather than internationally.
3. Your Packages Have a Lower Average Weight
Unlike LTL shipping, UPS Hundredweight and FedEx Multiweight shipping require packages to be no more than 150 pounds each, with a total shipment weight of 500 pounds. Because of this, if your business generally has a lower quantity of orders or smaller items, it would be worth switching to either of these options rather than LTL.
4. Your Packages Don't Need to Be Palletized
Most heavy-duty shipping services for big orders must go through a comprehensive packing and sending process. They are palletized, which involves shrink-wrapping packages, securing them with straps, and loading them with a lift gate. Not only does this process take more time, but it also increases the weight (and the cost) of each shipment.
UPS Hundredweight and FedEx Multiweight items are non-palletized, making the packing and shipping process quicker and easier. It also means you can send a partial delivery if needed.
5. You Don't Want to Stick to a Fixed Delivery Schedule
If you’re a smaller business without many orders, you might prefer to skip the fixed delivery schedule and just ship orders as they come in. UPS Hundredweight and FedEx Multiweight make this easy. Unlike LTL carriers, you don’t have to schedule shipment times in advance with these services. Instead, UPS and FedEx carriers offer same-day pickup, so you can get your orders on the way as soon as they’re ready to be shipped.
6. You're Shipping Multiple Packages at Once
These two methods are primarily for shipping multiple packages to the same location on the same day. However, if you have a variety of orders, you can pack them into one shipment as long as each fits the size and weight requirements.
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The takeaway: Think outside the box
Henry Ford, the father of the automotive industry, was forced to change his thinking after bankrupting multiple automotive companies. But, by partnering with the right people and changing his processes, he created what we have today, the Ford Motor Company — and, more importantly, the assembly line.
The services discussed in this article are specialized and will not reduce costs for all shippers. Undertaking a project to implement new shipping services and successfully optimize mode selection is very specific and takes expert knowledge and technology to be foolproof and successful.
Think outside the box. Consult a professional who can evaluate your current supply chain and shipping processes. You may be surprised to find significant opportunities where you previously thought margins were already as tight as they could be.
