Freight shipment costs are rising, and smart strategies are needed to keep your logistics costs from cutting too deeply into profits. For many companies, this involves embracing Less-Than-Load (LTL) strategies – combining smaller shipments together to fill up a truck, to reduce the number of individual trucks being used.
There are two major strategies for leveraging LTL options: pool consolidation and pool distribution logistics. These are often best implemented by partnering with a good 3PL or 4PL to handle the management side, but it’s important to know the differences between the strategies, as well as their pros and cons.
I. Pool Consolidation Logistics
Pool consolidation is the basic model from LTL shipments. When you have a shipment that takes up less than a full truckload, it’s wasteful to dedicate a truck to just that shipment, unless there are other more important factors such as speed. However, in most cases, combining shipments via pool consolidation results in significant cost savings.
In many cases, this is handled automatically by shipping companies or 3PLs/4PLs because it simply makes sense. If a particular warehouse is expecting shipments from two different vendors, and those shipments combined add up to a full truckload, combining them saves everyone money. In some cases, related partner companies may even organize their own LTL shipments.
However, pool consolidation strategies do require more coordination and communication, and they typically cannot help with reverse logistics.
II. Pool Distribution Logistics
Pool distribution is the UPS model: First bringing all orders together at a central location, typically a warehouse, and then distributing those shipments across multiple trucks to maximize efficiency for large orders. Some of these trucks may be fully loaded, and others may utilize LTL strategies when the deliveries are small enough to qualify.
Pool distribution happens at the shippers’ origin point, and is typically focused solely on the shipper’s orders. LTL combinations with other companies in this strategy are rare. On the other hand, LTL providers may often use this strategy to optimize their service offerings.
However, pool distribution logistics require a certain homogeneity among the items being shipped. In other words, if too many shipments have drastically different requirements – such as a few frozen items requiring a refrigerated trailer – pool distribution may not have much economic advantage. There need to be enough products of the same type that pooling shipments makes sense.
US Logistics Solutions Provides Optimal LTL Solutions
US Logistics Solutions is one of the top 3PL/4PL providers in the country, focused on helping you optimize and streamline your logistics. We can handle everything from data tracking and KPI reporting to high-level overhauls of your shipping solutions to maximize cost savings.Contact us for a consultation on reducing your logistical costs.