There are two distinct ways that LTL shipments are transported in North America by LTL Transportation Companies.  Most people don’t appreciate the difference.  Here’s an explanation of the two systems and their advantages and disadvantages.

Hub and Spoke LTL Transportation Companies

When LTL freight moves through a Hub and Spoke system it moves from one terminal to another and ultimately ends up at its final destination.  This system of moving LTL freight is typically used by large LTL transportation companies like Roadway, Old Dominion and Fedex.  It is the method most used in the US, by US Carriers  to move LTL freight.  It works like this.

1.  A local pickup and delivery (P&D) truck picks up various shipments from shippers in a very close geographic area.  When the truck is full, or it’s time for the sort at the distribution center, the truck returns to the terminal.
2. At the terminal the shipments are sorted and grouped together by the next terminal they are going to.  For example, shipments picked up in Atlanta for destinations in the north, may next travel to a terminal in South Carolina.  These shipments are then loaded on a truck going to the next terminal.
3. The shipments are line-hauled to the next terminal.
4. At the next terminal shipments are sorted again and grouped for the next terminal en-route to destination.  This process of sort-linehaul-sort continues till the shipment reaches it’s destination city.  Depending on the distance from the origin, a single shipment could go through five or six terminals.
5. At destination the freight is sorted again and sent out on a local P&D truck for a peddle run.
6. Shipment is delivered.

Advantages of Hub and Spoke

• Inexpensive for small shipments.  This is because many small shipments can fit on the linehaul truck and the cost to pick up is insignificant because the carrier is picking up many small shipments in a close geographic area.
• Pick up is quick.  Because a local P&D truck is never far away, your shipment will be picked up quickly, usually within a couple of hours.
• Damage and Claims.  Damage generally occurs when a shipment is handled.  The hub and spoke system requires a shipment to be handled many times.  This increases not only the chance for damage, but loss as well.
• Larger and heavier shipments become very expensive.  Because most of the cost of this system is in the line-haul and the handling and not the pick up, larger shipments become very expensive because they use up the capacity of the line-haul.
• Transit times.  Long transit times are typical of a hub and spoke system.  Usually, it takes a day between each terminal plus a day for pickup and delivery.  This can lead to extended delivery times.
• Poor information.  Because the shipments move through many terminals and pieces of equipment, it’s easy for a shipment to miss a scan somewhere in the process.  The actual location of the shipment can disappear from visibility until it eventually shows up as delivered.

Disadvantages of Hub and Spoke

Direct Service LTL Transportation Companies

Direct Service is a unique way of transporting LTL.  Direct Service is typical of how a Canadian carrier moves LTL.  Typically, a truckload carrier fills their backhaul with 4-6 LTL shipments.  The shipment then moves as a full load to destination where it is delivered, typically, on the same truck.

1.  Full load carrier drives directly to pickup and loads the shipment.
2. Same truck may drive to another pickup to get more freight until the truck is full.
3. Truck drives to destination
4. Truck delivers the shipments.

Advantages of Direct Service

• One truck, one driver, less chance for miscommunication
• One truck, one driver, less chance for loss or damage
• Less expensive than Hub and Spoke on larger shipments because the cost is in the pickup, which is amortized over the linehaul cost which is significant for larger shipments.
• Faster transit times.  Because the shipment travels straight through from origin to destination, it doesn’t have to stop at terminals.  This is often much faster as compared to hub and spoke.
• Can be expensive for smaller shipments.  Because most of the cost is in the pickup, the cost of pick up is significant as compared to a small linehaul charge for a small shipment.  If damage concerns outweigh costs you should choose Direct Service even for small shipments.
• You might not be able to get a pick up same day.  Because direct service requires intense coordination between shippers and carriers, the pickup order is very important to minimize travel distance.  The “right truck” might not be in your area for pick up today.

Disadvantages of Direct Service

• Can be expensive for smaller shipments.  Because most of the cost is in the pickup, the cost of pick up is significant as compared to a small linehaul charge for a small shipment.  If damage concerns outweigh costs you should choose Direct Service even for small shipments.
• You might not be able to get a pick up same day.  Because direct service requires intense coordination between shippers and carriers, the pickup order is very important to minimize travel distance.  The “right truck” might not be in your area for pick up today.

Head To Head Comparison

	Hub and Spoke	Direct Service
Transit Time		Direct Service is generally faster
Cost	Better for small shipments under 1000 lbs.	Better for larger shipments over 1000lbs
Damage		Much lower claims and damage
Off my dock	Generally, you can get it of the dock quicker with hub and spoke.
Status and Information		Direct service only has one person to communicate with, the driver.  Often much better information.
Special Requirements	Poor at adhering to special requirements because many people are involved.	Much better at adhering to special requirements because typically only one driver involved.

 

What’s Right for You?

Contact the logistics experts at DSN Chemical transportation.  They are experts in direct service and the intense coordination this requires.  They can help you decide which LTL service is right for you and execute it flawlessly.