Even as the American economy improves and the country's dependence on foreign energy wanes, the summer tradition of astronomically high gas prices remains. It's usually the average consumer at the gas pump who gets quoted in a news story, but the effects of fuel price hikes hit many sectors of the economy just as deeply. Businesses that rely on frequent shipments of merchandise are especially likely to feel the pinch. For these kinds of businesses, LTL trucking can be an appealing cost-saving shipping option.
LTL stands for Less than Truckload, which refers to the fact that certain producers must ship their products in quantities that are not large enough to fill an entire freight truck or shipping container. LTL freight companies prevent this from being a problem by consolidating multiple medium- or small-sized orders into a single load. These loads are then brought back to a distribution center, either to be stored or immediately sorted into new outbound shipments.
An LTL firm will then conduct deliveries of multiple shipments by geographic area. What makes LTL cost-effective in times of rising gas prices? The terminal-based distribution method described above is cost-effective because it combines one set of resources for transportation, storage, and sorting under one roof, and keeps producers from having to handle these operations themselves. Instead of each individual producer dedicating equally large amounts of resources toward freight delivery, they can pay their portion of shipping expenses to an LTL trucking firm and focus their energies and resources on making products that consumers want to buy.
Another reason LTL is a good choice for many producers is that it lowers the need to constantly make truckloads of materials in order to fill a full TL shipment. Consumers tend to buy fewer products when gas prices rise, so producers should do their best to avoid making items that will not be purchased. Going instead with market-appropriate quantities of goods and having them shipped via LTL is a more cost-effective choice until the pressure of gas prices is relieved.
This is not to say that LTL firms experience greater profits while producers and consumers suffer - in fact, it's quite the opposite. LTL firms must also factor fuel prices into their operating costs, and many of them take the hit on fuel prices before passing on the cost to clients. Nevertheless, LTL remains an attractive option for all levels of the economy, especially in challenging economic times when every chance for partnership, collaboration, and efficiency-seeking must be explored.
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Article Added on Sunday, April 14, 2013
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