If you run a small business that frequently needs to ship smaller quantities of inventory or materials, you may have heard of “less-than-truckload” (LTL) shipping. But what exactly is LTL and how does it work?

LTL freight refers to a shipping service for relatively small loads or quantities, rather than filling an entire truck or container. LTL shipping is offered by many large parcel carriers as well as specialized logistics companies. It provides an affordable solution for businesses with frequent small batch shipping needs.

The main advantage of LTL is the cost savings and efficiency it offers to smaller volume shippers. LTL allows multiple partial loads headed to the same region to be combined or “consolidated” together in one truck. Each company only pays for the space their shipment takes up, sharing the cost of the full truck. This creates economies of scale that substantially reduce the per-shipment freight rates compared to paying for an entire truck.

The main trade-off with LTL is typically longer transit times. It takes longer for logistics providers to plan, consolidate and load multiple shipments together. The truck will also likely make multiple stops en route to drop off portions along the way, rather than a direct point-to-point route. More touches mean increased potential for damage as well.