Less than truckload (LTL) shipping is a cost-effective and efficient way to move orders that do not take up a full truck's worth of space.
If you're shipping six pallets or less and up to roughly 10,000 lbs., LTL is a great option for your freight. That said, determining when to use full truckload or LTL is only the beginning.
Not all LTL carriers have the same business model, and the best option for your freight will vary depending on where you're located, what you're shipping and what is most important to you (i.e. speed, service or cost).
In this article, we:
- Give an overview of the LTL carrier market
- Define the 7 types of LTL carriers
- Highlight the pros & cons of each carrier type
- Outline how LTL shippers and carriers benefit from using freight brokers
LTL Carrier Market Fundamentals
LTL’s core value is cost savings. Consolidating smaller shipments by destination allows LTL carriers to provide the best possible service at the lowest cost.
Compared to the full truckload market, the barriers to entry into the LTL market are much higher.
In full truckload shipping, the same driver picks up the shipment and delivers it straight through to the destination. A carrier can enter the full truckload market with as little as one truck.
LTL carriers use multiple trucks to transfer shipments between several terminals. To maintain operational efficiency, LTL carriers need to build lane density, operate a balanced network of terminals and run sophisticated operations.
All of these require significant resources and scale (i.e. capital expenditure), and as a result LTL carriers tend to be larger than most full truckload providers.
That said, LTL carriers range in size, with some providing national coverage, while others only cover a single metro area.
The top ten full-truckload-focused carriers only claim about 5% of total industry revenue. Compare that to the LTL market, where there are around 200 carriers and the top ten control about 72% of the market.
Generally speaking, this leads to much less volatility in pricing and capacity, though networks are not as flexible.
The U.S. LTL market is also a much smaller subset of the trucking industry. In terms of revenue, it’s an approximately $45 billion market, while the wider U.S. truckload market is closer to $800 billion.
One Carrier, Multiple Hubs: How an LTL Network Operates (in 5 Steps)
Though models vary by carrier type, many LTL carriers operate on hub-and-spoke models, which means shipments travel through a network of “hub” facilities, with the first-mile pick ups and final-mile deliveries handled by “spoke” drivers.
Here’s an overview of how an average hub-and-spoke LTL network operates.
The 7 Types of LTL Carriers
Even though the LTL market has far fewer carriers than the full truckload market, there are several different business models, each creating a unique blend of cost, service and speed.
Most shippers work with several different LTL providers to create the right balance of capacity and rates.
There is no magic number — your ideal carrier mix will depend on your network, but understanding each type will help you set a better strategy.
Keep in mind that each carrier’s network is different, and they may not cleanly fall into one category.
1. National LTL Carriers
National LTL carriers provide coast-to-coast and border-to-border coverage. They operate dense freight networks that run on hub-and-spoke models of drivers and terminals.
Some carriers’ networks may have coverage voids where no service is provided — in these cases, they may rely on partner carriers to provide seamless service.
National Carriers are large, often publicly traded companies with sophisticated business operations. Along with Regional carriers, are the most common type of LTL carriers.
Examples: ABF Freight, YRC, Old Dominion Freight Line
When to use National LTL Carriers:
With their large, expansive networks, it is generally a good idea to use at least one National carrier in your mix to maximize coverage.
Their density and scale can lead to competitive pricing in certain lanes, but the key benefit is coverage.
National carriers make it easier to consolidate and streamline your LTL freight — instead of finding the right carrier in each region, this offers a one-stop-shop approach. This is particularly beneficial for shippers that move LTL freight all over North America.
Bigger isn’t always better. Though they may provide coast-to-coast coverage, each National carrier’s networks will have strengths and weaknesses — rates and service levels in certain lanes may not be as strong compared to more specialized carriers.
Also, if you are a smaller shipper with low volume, you’re a little fish in a big pond and it will be harder (or or potentially impossible) to secure preferential pricing.
2. Multi-Regional LTL Carriers
Multi-regional LTL Carriers service large areas made up of two or more regions. In terms of coverage, they fall between a National and a Regional carrier (see #3).
Examples: AAA Cooper, Averitt Express, Dayton Freight Lines
When to use Multi-Regional LTL Carriers: this is a good way to split the difference between a National and a Regional provider.
You can add increased coverage and capacity while still taking advantage of the carrier’s more focused network strengths. Multi-regional carriers are a great option when you have shipments spanning a few states, but do not need full coast-to-coast coverage.
Potential drawbacks: though you can access the benefits of both National and Regional carriers (wider coverage, more focused network), you also get some of the cons (you’re a small fish in a bigger pond, and if you have freight outside their coverage, you need to use another provider).
3. Regional LTL Carriers
Regional LTL carriers service a group of states within a defined area.
They will typically have a strong presence and a dense network within their region, operating several facilities. Outside of their region, they generally do not offer coverage. They are a very common type of LTL carrier.
Examples: Reddaway, Pitt Ohio, Ward Transport
When to use Regional LTL Carriers: if you have freight picking up and delivering within a Regional carrier’s coverage area, you may be able to access competitive pricing and higher service. This is especially true if you have consistent LTL freight in a Regional carrier’s area.
Potential drawbacks: it can be more difficult to manage which carriers service which regions, and if you have shipments outside of their coverage area, you will need to source another provider.
Also, compared to National carriers, Regional carriers are usual smaller, and may not have as much capacity or as sophisticated technology.
4. Sub-Regional Carriers
Sub-regional LTL carriers service a distinct part of a region.
Examples: Southwestern Motor Transport, Pace Motor Lines
When to use Sub-Regional LTL Carriers: These carriers are a great option when you have LTL shipments that are not travelling long distances.
If you are within their service area, Sub-regional carriers can offer competitive service and rates. Since they tend to be smaller in size, it is more likely that you can secure preferential pricing for consistent volume.
Potential drawbacks: Sub-regional carriers have a small coverage area, so they will likely only play a niche role in your LTL network.
5. Asset-Light LTL Carriers
Asset-light LTL carriers try to maximize their coverage area while minimizing the amount of trucks, drivers and terminals they own. They do this by relying on driver capacity of smaller LTL providers.
Asset-light carriers will also often share space at terminals with other, much larger LTL carriers.
Asset-light carriers will usually complete long-haul hub transfers using intermodal or full truckload shipping, then outsource the final mile deliveries to regional LTL carriers.
They are less common than national and regional carriers.
Because Asset-light carriers often use intermodal, transit times can be longer, slowing the final delivery.
Additionally, due to the extensive handling, there is a greater potential for shipping claims. That said, the low cost of asset-light carriers is hard to beat.
Examples: Clearlane Freight, Frontline Freight
When to use Asset Light LTL Carriers: By focusing on efficiency, asset-light carriers are one of the most budget-friendly options. When you want to have wide coverage, minimize the amount of carriers you use and save the most money, they are a good option to look into.
Potential drawbacks: Your product will likely change terminals more often, pass through more than one carrier and my ride on the train via intermodal. This will often add up to longer transits, more product handling and less control of your product while in transit.
6. Load-to-Ride LTL Carriers
Load-to-ride LTL carriers focus on easy-to-handle, long-range shipments.
These carriers operate somewhat similar to multi-stop truckload carriers, in that one driver will pick up multiple shippers’ freight and deliver them straight through — there are less (or no) stops at terminals, and more direct delivery routes.
Additionally, long-range shipments eliminate the need for excessive product handling, which is an added benefit for shippers with sensitive commodities.
Example: Sunset Pacific Transportation
When to use Load-to-Ride LTL Carriers: Whenever you have a long-range shipment (crossing over multiple regions) and are willing to be flexible to fit the carriers’ schedule, load-to-ride carriers can offer competitive rates, quick service and less product handling.
Potential drawbacks: Exact capacity and coverage is much more limited. Load-to-ride carriers will be a niche provider, adding value only on the opportunities that sync well with their network.
7. Reefer LTL Carriers
Reefer LTL carriers operate similarly to load-to-ride carriers, in that they focus on long-range shipments and rarely transfer product in terminals.
The main difference is that reefer LTL commodities must all have the same temperature requirements.
Examples: H&M Bay, DTS
When to use Reefer LTL Carriers: Apply the same logic as load-to-ride carriers, but for temperature sensitive freight.
Potential drawbacks: Due to strict food safety and temperature-sensitive product requirements, there is a very limited selection of carriers equipped to transport refrigerated commodities. Finding coverage and capacity for this service may be limited.
How LTL Freight Brokers (aka 3PLs) Fit in Your Network
As previously mentioned, the LTL market is much smaller and more consolidated than the full truckload market.
Relatively speaking, it is easier for shippers to manage direct relationships with their LTL carriers — so why do so many shippers use 3PLs for their LTL shipments?
Though the LTL market is less chaotic, it is not near as consolidated as, say, the parcel market (only 3 major providers). LTL still involves a great deal of complexity.
Whether you rely on a 3PL to manage 100% of your LTL freight, or use them to handle a strategic portion of your network, a good 3PL can make LTL shipping much easier.
Smaller shippers use 3PLs to:
- Secure discounted pricing that they would not have access to on their own
- Gain visibility to several different LTL carrier models when looking at options
- Rely on outside expertise to manage carrier relationships
- Access instant quoting and shipment-building technology
- Reduce complexity by using fewer providers
Larger shippers use 3PLs to:
- Leverage an experienced LTL team to manage a larger, more diverse carrier network
- Simplify internal operations
- Source consistent capacity
- Leverage instant quote and ship technology to streamline your LTL operations
Why Carriers Work with Freight Brokers (aka 3PLs)
LTL carriers maintain direct relationships with shippers, but 3PLs are still a valuable part of their network too.
The LTL business model thrives on density, and even large, national carriers will have network gaps — they do not have the reach to have all the freight they need, in every lane, all the time.
3PLs give carriers access to a wider range of shippers, across many business sizes and industries, all in a neat, streamlined package to fill their network gaps.
Additionally, LTL carriers will sometimes rely on 3PL truckload capacity for longer "linehaul" shipments between terminals.
3PLs give carriers access to a wider range of shippers in a neat, streamlined package to fill their network gaps.
Get Started with an LTL Quote
You can get instant access to on-demand LTL quotes and shipment booking with CoyoteGO®, our free digital freight platform. It’s designed to make quoting and booking freight simple.
You can view options from all types of carriers — from national to sub-regional — in one convenient platform.
Learn more in the CoyoteGO LTL guide.
Talk to an LTL Specialist
Convenient technology is great, but choosing which option is the right fit for your shipment requires some expertise.
Our dedicated LTL team is here for you — if you have additional questions and would like to explore how Coyote can help you source consistent capacity you can talk to a specialist today.