Most LTL freight shippers choose this shipping option because it’s affordable and convenient compared to parcel or full-freight. However, there are a variety of factors that contribute to the overall economy of using this service even in the LTL freight shipping world.
Carrier, shipping method, and pickup and delivery location can all affect cost in different ways. To compare these accurately, you’ll need to use and understand the four key LTL freight metrics.
Cost Per Pound
In LTL freight shipping, the “Cost” metric refers to the cost per pound and is the best metric for determining cost performance. To get cost per pound, a simple formula can be used:
Cost of Shipment = $500 = $0.33 per pound
Shipment Weight 1500
Cost per pound is one of the most important metrics because it’s easy to calculate, and accurate across the board. The cost of LTL shipments varies greatly depending on a number of factors, including carrier, freight class, and delivery and pickup location. But Cost Per Pound takes all of that into account and gives you an accurate metric for analysis. It can also be used to compare LTL freight shipments and LTL carriers.
How often are shipments delivered on schedule? Does one carrier or another have a habit of extending their transit time? The On-Time Performance metric offers an opportunity to compare different carriers, freight classes, and even pickup and delivery locations. To get On-Time Performance, a quick formula can be used:
Number of Shipments On-Time = 48 = 96% on-time
Total Number of Shipments 50
For LTL shipping, On-Time Performance is important for determining which carriers are the best at sticking to a schedule. For example, if a customer has a specific delivery date requirement, going with a carrier that only has a 75% on-time performance rate may not be the best option for that shipment.
If the accounting team spends an extra 2 hours rectifying bad bills, who pays for the time? Does the added cost go to the customer? Unless a shipper provided incorrect shipping information, the added cost is more likely absorbed by the company, which can badly affect the bottom line. For this reason, Billing Accuracy is a popular LTL freight metric accountants love. To get Billing Accuracy, another simple formula can be used:
Number of Correct Bills = 48 = 96% correct billing
Total Number of Bills 50
In terms of LTL freight shipping, Billing Accuracy makes it easy to see where the issues are. Bad bills are costly both to the company and the customer. Getting it right the first time builds trust between all parties and saves time and money in the long run.
If a shipment is delivered on time and on budget but is completely ruined, it has no use to the end customer. But how often does that happen with each carrier? For this, you can use the Freight Damage metric, which will tell you how often a carrier or shipping company delivers damaged shipments. To get Freight Damage, here’s one last formula you can use:
Number of Damage-Free Shipments = 99 = 99% damage-free
Total Number of Shipments 100
Freight damage has a lot of contributing factors. A bad packaging job or low-quality product manufacturing can cause damages. Damages can also be caused in the loading and unloading process. Regardless of how a shipment is damaged, measuring and cataloging freight damages is essential for choosing the best LTL freight carrier and shipping company.
Save More with Amware
Amware is a full-service freight and logistics provider centrally located in Cleveland, Ohio. For more than 60 years, we’ve helped LTL freight shippers save time and money. To get a free quote on your LTL shipment, contact us today, or download a free 30-day trial of Amrate, one of the industry’s leading LTL software platforms below.