The history of LTL shipping: from regulation to competition

Image of trucks lined up in a parking lot

The History of LTL Freight Shipping

 

What is LTL Shipping?

Less-than-truckload, or LTL shipping, is a form of freight transportation that handles cargo that is too large for parcel services like the post office, UPS, and FedEx but too small to fill an entire 53-foot trailer (referred to as full truckload, or FTL). LTL loads typically fall between 150 and 2,000 pounds, constitute less than 14 pallets of goods, and are grouped together on a single trailer heading in the same direction.

LTL carriers will usually pick up shipments in an area, load them onto a truck, and bring them to a local terminal to be consolidated based on where they are going. From there, shipments are organized and loaded onto another trailer to be long-hauled (usually by truck or rail) to the local terminal of their destination city. Once the cargo has arrived in the destination city, shipments are again unloaded at the terminal, organized, and loaded onto local trucks for the final leg of their journey.

 

When is LTL Shipping Used?

This form of shipping benefits shippers that need to move smaller, more frequent shipments than those that would fit a full truckload, but don’t want to break down loads into individual parcels under 150 pounds. By using LTL carriers that consolidate shipments together on a single trailer, shippers save money by not contracting the whole truck to move their goods and are able to keep their shipments together by palletizing and shrink-wrapping them for delivery.

When Did LTL Shipping Start?

Initially, most cargo in the United States was moved via the railroad. LTL trucking companies operated via the “Common Carrier” authority granted by the Federal Motor Carrier Safety Commission, a separate administration of the U.S Department of Transportation. The Motor Carrier Act of 1935 extended the railroad’s authority over the trucking industry as well, which introduced restrictive measures that made it easy for existing trucking companies to get licensed but nearly impossible for new companies to do so. In addition, price tariffs and fixed schedules had to be approved by regulators. This applied to public airlines, bus lines, taxi cab companies, cruise ships, motor carriers, and other freight carriers, making it very difficult for anyone but already existing companies to operate.

This regulation led to high rates and ineffective trucking networks throughout the country. For example, a trucker could haul one type of commodity between two locations but often was not authorized to haul anything back, forcing them to make the return trip empty. These inefficiencies led to extremely high rates and a lack of competition in the highly regulated trucking market.

The Motor Carrier Act of 1980 began the process of changing regulations in the trucking industry. With restrictions lifted on routes, commodities, and tariffs, LTL carrier competition and efficiency skyrocketed, leading to the improved pricing and capacity conditions on which the industry is built today. 

 

How Koho Makes LTL Better

Today, LTL freight shipping is undergoing another set of changes, but they are technological rather than regulatory. Companies like Koho are reinventing the industry through the use of more efficient tools and systems that connect shippers and carriers more directly. Koho’s online platform provides shippers with instant quotes from a trusted network of carriers, increased visibility on their shipments, and more streamlined documentation and communication. For carriers, this system allows for better organization, a broader range of shipments to bid for, and more efficient use of capacity. Using new technologies to automate and streamline shipping processes, Koho and other tech-conscious logistics providers are working to bring the LTL industry into a new era of efficiency and agility that will benefit shippers and carriers alike. Contact our LTL experts today to find out more about how Koho can improve your LTL shipping performance.

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