981. #TFCMS - Everything You Need To Know About LTL Freight!

So you can take that information, apply it, utilize it, and see a meaningful difference in your business and your life. All right, you guys, I got a very special guest that we are going to bring up right away. You guys, we're talking about all things ltl today and we're just going to break some of this stuff down and the importance of having an LTL offering inside of your brokerage. So I got my mandev, Robert Cowton, in the house with Spi logistics. Robert, what is going on?

So we started doing it and we're moving a couple of ltl shipments now and building up that familiarity with it. So, like, from your perspective, man, like, why is it so important to offer that?

But as you hear, you've interviewed Mike Mikalek, you've met him, you spent some time with him. And his big message, as always, he says it at rendezvous. He says that all his interviews, his email correspondences, articles he puts out. What's he say? Build deep relationships. And how do you do that? You got to start small and you build that deep relationship. Now, when you get, like, my theory is whenever a sales rep comes back to the office at their company, manufacturing, a distributor or whatever, says, we just landed this big contract, we're going to need trucking. So there's a meeting, and you want it so that when they're in the boardroom or in the back room having this meeting about this, someone puts up their hand. I'm calling Chris, I'm calling Rob for those projects. I know exactly who to call.

We can trust that, get that job done. That's what you want. You want your name to be that person. So where that comes in with ltl. So if you're always just doing flatbed freight and they do project work, well, sometimes they have to order pal to parts, a pal to this, pal to that. When you can build that trust and they realize, oh, one phone call, I can call Chris. So we need to bring in all these parts, we need to do an assembly of this machine, and then we're going to put it on a flatbed and then ship it to the site. And we can do that all through Chris. Wow. Because now with the value out of the ltl, when I say ltl, there's two types. There's partials, which goes on a private carrier, non tariff.

So it could be one to four skids. And many people do that. But I would, when we, when I refer to here on this show, ltl freight, I'm referring to the common carriers who have tariffs. Yeah, partial would be along the lines of someone says, I got two skids, I want to pay it as a truckload, or I wanted two skids as a partial non transfer. There's private carriers that do that service, but we're specifically talking about this. So now take, imagine this. You have your customer might be in, say, Texas, and all of a sudden they got a pallet in Chicago. A pallet. No, two pallets in Ohio, a couple in Wisconsin or something. And then you could either ship them separately or you can turn around and say, you know what? Where's the central point?

I can bring all that freight to one central place, put them onto one truck and ship it to the customer. So you got multiple options to work with that. But what it does, it helps you build your, you're building yourself within the network of your customer supply chain. That's really the goal. And that when you can provide cross dock consolidation, utilizing truckload partials and LTL freight, intermodal rail, all combination to accommodate price strategies, time deliveries, all those, and you're an integral part. That's a winning long term relationship.

That might work for a little bit, but I truly feel like it's only a matter of time before somebody who can do full truckload ltl and drage comes in and they can do it all at a high level, and then it's only a matter of time before they'll work your way out of there because they want those providers who can do multiple things. And then again, it's like, it's a great way to separate yourself out there because that's your way to prove that there's stuff out there that you're going to do that other people are not willing to.

But the point was, I didn't just say, well, I can't do that. I didn't turn that right away. My customer knew they can call me and they relied on me to come through, and I did, and that was the key point. And so see some brokers, when they get into this industry, they say, I'm a reefer carrier that does this lane. That's what I'm focused on myself and I think you're kind of in the same ballpark. We're more customer driven. I focus on my customer. I don't worry. And then I take their needs. And this way when they have a expedite or they have, they say, hey, this is a warranty return. We want the cheapest possible. I don't care if it takes two weeks to get there. I meet those needs.

That's what my job is, to meet the needs of whatever they have moving at that point in time. And I take those parameters and I present it to them and I manage it from start to finish.

So it, you know, it is very customer specific out there where it's like when I get in the door with somebody, if they come to me with an opportunity, unless I have zero clue about it at all, that's the only time I will say, hey, I think that there's a better person out there for him. I will even go as far as recommending them. Somebody that I know can accommodate that at a higher level that I can, because I feel like it's in the best interest of my customer at that point. But for the most part, yeah, man, I'm going in there and I'm going to work every opportunity and then I'm going to talk to them.

If it is one of those situations where, you know, I don't have a ton of knowledge on it, I'm gonna ask him, hey, what does this opportunity look like? How many of these are coming? I will work on this and I will come to you with a solution. I'm not just gonna let it go to the wayside on the long term, because I, I feel like in some of these instances, man, it's only a matter of time. At least this is what I tell myself. Maybe I'm psychotic. It's only a matter of time before somebody who's better than me is gonna get in the door and they're gonna fucking eat my lunch.

Like you're not going to make as much, you know, you can't just put 10% on a $100 order so you're going to have some minimums there. But again, when you're not, when you're booking a truck for 2000, you're putting a profit on it. You're not making the same kind of dollars per transaction. So it becomes a volume thing. But where it comes in is that sometimes when you, if your customer is working direct with carrier, with the common carriers, what I'd bring up to them is saying, let me analyze your business a little bit because I can guarantee right now many of the major, there's regional LTL carriers and then there's the nationals and they also, we'll get into some of the details here shortly.

But the thing I just want to address is that many of these carriers remember what an LTL freight common carrier who has a tariff job is. Their job is to pick up and deliver LTL freight to consolidate and as efficient as they can to service within their network. They can get freight from Florida to seattle or Florida to Vancouver in a pretty efficient way. And so they have to maximize capacity in their trucks. They have to maximize, be as efficient as they can to keep their costs down to offer us the pricing. And what's happening now to do that, a lot of the carriers are starting to get their pricing teams and their data entry teams offshoring and near shoring employment services. So agencies, so when that happens, it's cheaper for them because it's kind of like a valve.

If their business picks up they can say, well, we need two or three more data entry people. And then when it quietens down. They can turn it off and say, well, we only need here. So they're saving money. But with that, the staff aren't trained near as much compared to how it used to be. So, therefore, I noticed in the last few months, like, I have actually, an freight auditor, that I pay 20 hours a week to help me with my LTL business. And we spend a ton of time on price corrections all the time. So where you can get your foot in the door is if you're knowledgeable about the LTL and you. You gain that knowledge, you can say to the customer, I'm pretty sure you're getting overcharged on, I will find you money.

And that's where all of a sudden they realize, oh, I. One, they can call you, simplify their procedures to use you learn their business and learn their products, and three, you're going to save them money and be consistent on it. Well, what? How can they lose out?

So, essentially, in Canada, what they're going to bill you on is the greater of cubic weight or actual weight. So if your customer says, Chris, I need you to ship one pallet, 48 by 48, 500 pounds. You're going to be billed at 640 pounds. So if the customer calls you back an hour before the truck is coming, hey, we have to add five more boxes. Is it the state? Is it still 48 by 48? Yep. What's the weight? 595 pounds. Oh, don't worry about it. It's the same price. So simple. The minute it goes over six, if all of a sudden they said, well, we added five boxes, now it's 48 by 54 and it weighs 600, 750 pounds, then you have, then they're going to get billed, that's a 750 pounds. Okay? So that's the simplicity there.

And then what happens in the canadian side that makes it simple is it's structured. They have a minimum charge in a lane. So say Toronto to Vancouver, there's a minimum charge. Then it goes from minimum to 500 pound. 10 00, 20 00, 50 00, some of them will have slight breakdowns, but let's just say 500, 202,000, 5000 and then it jumps up to 10,000 and then it goes up the truckload. So if you have a pallet, that's that 750 pounds. So say it's four by three by four. So the actual weight is heavier than the cube. So say it's 700, 555 pounds. You're going to get billed at the 500 pound rate. At the 750 pound rate, though, the computer systems that the LTL carers have are going to calculate the 500 rate, times it by the 750.

And it's also going to look at the thousand pound rate by and say, hey, it's cheaper to build them at the thousand pound rate. So you'll see on the invoices deficit. So they'll take the 750 and they'll put 250 and make it 1000 pounds and give you that benefit of the doubt. So that's how they, so it's really simple. So you're always getting the cheaper of, if that makes sense. Yeah, yeah, sorry, that, so that's, it's really simple. Now the only caveat is this. If a customer says this is top load, okay, but you have to look, you have to always know the freight. You have to study and go. Ideally visit your customers to see the freight. If they say, well, yeah, is this because you're going to get carriers asking is this stackable freight what that means?

Can they literally, you know, say you had a pallet with bolts and nuts and it's boxes, can they take someone else's freight and stick it on top? Is your customer okay with that? You have to educate that. If they say, if they have something where they're shipping some kind of cabinet and they just built it and they, it's all nice and wrapped, they don't want scratched or anything and it's only 4ft tall, but it's pretty heavy, 750 pounds, you're not going to put that on top of another skid. So you're going to have to tell the customer, they say well we don't want this stacked and we don't, you know, we don't, nothing on top is kind of funky. Okay. So you know what you have to do now?

You have to bill it at, say it's a five foot long by four foot but it's only 4ft tall and they want nonstack. You have to bill it at 96 inches, the height of the trailer. So you're buying that space. So remember before I mentioned that LTL's carriers jobs are to pick up throughout whatever given city, consolidate the freight, get every inch of that trailer. Like there's horror stores of literally terminal managers cutting something down to fit that other pallet in there kind of idea, right. But they want trailer stuff to maximize every inch of. So they, if you say non stack and they can't put nothing there now, then they have to buy the space. Some carriers will put what they call load tables where they put logistics bars and stack the skids on top. But you have to study every care.

There's a lot of studying involved. But that's the simplest thing about the canadian cubic weight or actuate, that's all you have to understand. And then unless you want to buy the space above it then you're taking up that whole height above it. Now we get into the United States a lot more complicated. So if you're shipping from Canada to the US or US to Canada, we have to follow the United states protocols for pricing. So the pricing is based off of the NMFC national motor freight classification, which is basically it's a standardized definition of products and it takes that product groups them. There's hundreds of groups. But then the, that group based on the definition of the product and there could be, then it goes by density or lengths or there's a variety of things.

We can touch it, we'll touch in a minute about. But basically you got your whatever the description, let's say it's plastic golf balls or something or metal sheets, right. Metal plates. Metal plates or nuts and bolts hardware. So you have to find the right grouping and then you take that, it might say densities. Okay, so what's the density of this shipment? And then it will tell you, okay that's a freight class 75 or freight class 55. So you got to know the NMFC and the freight class which is derived based off of density as well as handling stowability and liability. So they take all that. So obviously, and then there's 18 freight classes within the, within that turns it into, so from kind of class 50 to class 500.

And what's more favorable for carriers is to clap the lower classes like anything under 150 and less because that means it's more dense. Cost 50, 55, 60 are all density. That's what they like because it's heavy, low, and then they, so if you have a box of ping pong balls or toilet paper or paper towels, those are bulky and lightweight. So that's, so those are unfavorable unless they can be stacked on top of those pallets of bolts. So you're consuming a lot of space. So that's kind of the gist of it. So it's very complex to understand because you have to, like you'll phone a shipper and say, what freight class do you normally ship at 55? What's the NMFC? I don't know. And they'll say well, so here's what can happen.

Think of going to an LTL carrier, kind of like going to expedia. There's that rack rate. Yep, it's kind of the way. So you call, if you just called up best western in any city, what's your rate? They're going to say, well, it's $250 a night. Oh, I'm some member, I have a membership. Oh, well you get a discount now you get this price.

The other thing you have to know about is value of the goods. Length. Some of the, some of the group the NMFCs are based on length. Like if it's under 96 inches, it's this freight class. If it's over 96, is this if the thickness of the steel, if you're shipping, say, steel plates, if it's made of steel with this thickness, it ships at this freight class. Or you're shipping fiberglass rolls like that, you know, to make boats and golf clubs and things of that nature. There's about ten different versions there. Because if it's weaving or there's different styles of fiberglass. So you have to know those and if they're in rolls or, and what the lengths of the rolls are. So there's, it's complex. Once you figure out for shippers, you have a standard, it makes it pretty easy.

But it just, the initial can be daunting how to do it. So that's kind of the right there. That's the first big difference is the pricing structure.

And they always back those things up. Like, yeah, it does take a long time to get all these things. So it's like, instead of backing yourself into a corner and saying, yeah, we can do that. And then you don't ask the right questions to your customer or your prospects in those moments. Lt, you know, and then you bid it, right? Say you bid it and then the LTl carrier goes and picks it up and they're like, oh, we got a reclasse. This, this isn't anything what you said it was going to be on the initial quote, guess what? You're not going to be able to bill your customer for that. And then that pallet might be double the price now. And now you're losing dollar 400.

Hypothetical example on that move now, because you didn't ask these questions on the front end and get all of this stuff lined up. And I know, like, LTL has since evolved, where it doesn't really let you get rates without entering certain information now. But what if, you know, like I want to add, like, honestly, what if that this is going to make you sound like a subject matter expert out there when you're prospecting all these customers? I mean, Cody says Robert needs to write on, write a book on LTL. This is gold.

And just like, for example, I just had a shipment this past week where I booked it through one of those sites where you can, you know, book multiple carriers that choose multiple carriers at once. So I had a carrier that picked up in Wisconsin. They transferred to the canadian carrier. That canadian carrier brought it to Vancouver, who passed it to another carrier. So four carriers were involved. And then there was an, they were trying to classify this business as a limited access. So I did the proper channels and I got it removed, but there's steps I had to do, and I know we're running out of time, but something else I wanted to really touch on before we get off is that they're aware of the difference between Canada and United States.

Big one, because I know it's, we're in the heat of the summer right now, but in six months we're going to be into the freezing temperatures. The difference between Canada, us with heated service, and see, in Canada, carriers will, in their tariff, will list heated service and they'll say their standard for heated service in Canada will be, they'll do all efforts to maintain at least at zero or slightly above United States. On the other hand, it is truly a carrier by carrier situation. If you say, if you call up to a customer LtL care and say, I need a quote, can you offer me heated service? You know what they do? They're not going to tell you. They're just going to say, okay, protect from free service.

There's a difference and literally some carriers in the United States, when they say you put on their heated service, when they see that they're not going to call you saying, well actually we don't actually put heat. You know what they do? They take a blanket and throw it over top of your palate. And then you also have to be very careful when you're booking.

Like, I encourage my customers, I look at the transit times, I have to, I look back at the weather trends, what's happening, and sometimes you have to really look at the carriers because if there's a freeze embargo, like if there, you have to look at their websites and read their tariff and their policies around their programs because some of them will save if we pick it up and the temperatures are within this range because if the product arrives frozen, but you picked up in a zone that was in an embargo and then it gets delivered, well, you're kind of out of luck. So you have to, it's a buyer beware. When you get into this heated service business, is all I can tell you is that you really have to work with your customers and educate them.

And sometimes, I'll be honest, I really just don't do heated service in the wintertime with LTl carriers. I just don't. There's a couple I will. There's a couple I will. And you know, because especially if you're shipping all the way from, say, Ohio to Alberta, you know, sometimes you need it, but sometimes you know what your better choice is. If you have to, I'll pick it up and I'll bring it to. Because in Ohio the temperatures might be warmer and Ontario might be warmer. So you know what I'll do? I'll bring it toronto. Then I'll put it on a heated carrier from Toronto to Alberta with a proper heated trailer.

So those are the things you have to do to protect your customer and protect your own business, you know, and then the other thing to be aware of is if you're going to get into the LTL and you do dangerous goods, you need your training. You need to be dangerous goods certified in Canada for TDG, transportation of dangerous goods. And in the United States you need your CFR 49. You need to understand every carrier is different, unique. You have to, you're studying a lot when you're taking on the LTO world and you're getting at the dangerous goods. This is red carpet service and you need to understand each carrier's requirements because I've had drivers show up and say, I'm not taking it. This doesn't meet my standards. So you have to study this and understand.

And your job is to educate your clients and customers about this. And there's a lot more to this, but, you know, the pricing differences, the heat differences, the dangerous goods differences, we can get in. There's obviously the customs, and then, you got to read the tariffs for each carrier in Canada and the United States and understand their tariffs and how it applies to your. If you have any accessorial charges and services you're offering your customers.

Because mistakes cost money in the real world and you really need to be very careful. I'm not going to say don't take risks or anything like that, but, you know, just ask questions. Like I say all the time, ask questions. Ask as many questions as you possibly need in these scenarios because it will be your fault if it isn't done properly.

Like, it's way more intensive than any full truckload business can ever be except for heavy haul.