If your recycling business can’t afford to wait for full truckloads to develop, less than truckload (LTL) shipments can prove to be a useful tactic to keep both your freight and cash flow rolling.
By way of example, this might include an entrepreneurial non-ferrous metal recycler wishing to ship LTL quantities of baled aluminum to the aluminum mill in order to generate quicker cash flow than would be possible by waiting to accumulating full truckload (FTL) quantity. Likewise, on the inbound side, companies generating scrap may not have space to accumulate full load quantities, and may wish the recycler to pick up on a more frequent basis. In reuse applications, a pallet rental company may wish to retrieve LTL quantities in order to avoid dwell time at locations, thus reducing the need to purchase additional inventory of rental pallets to fill customer orders.
Freight is typically broken down into three categories:
- Parcel shipments (less than 150 lbs.)
- LTL shipments (150 – 20,000 lbs.)
- FTL shipments (greater than 20,000 lbs.)
A typical LTL model involves a freight operator with a number of vehicles involved in picking up shipments from various customers. After finishing the collection, the shipments are moved to a terminal for unloading. After being weighed and rated, various LTL shipments are consolidated onto an outbound trailer for shipment to the appropriate geographic area. Upon arrival at the regional terminal, shipments are unloaded and sorted for local delivery.
In the case of the newly established recycler looking to ship LTL quantities of baled aluminum, there are a number of options that could be pursued, according to logistics experts questioned. One option is partnering up with an LTL service providers and using their expertise in the field to facilitate LTL shipments,” offered Sasha Yovanovich, consultant at Gerson Lehrman Group, and Vice President at the Canadian Materials Handling & Distribution Society. “Giving them the ability to pick up your freight as it fits their capacity, as opposed to trying to expedite the freight can result in a significantly lower rate per pallet and still have it delivered within a reasonable time frame.”
Yovanovich also suggests explorting the possibility of pooling demand with other similar entities in order to generate more cost effective full load quantities in a shorter time frame. “One of the entities could act as a pooling station to accumulate freight to the FTL capacity. Due to the nature of material it could be in a yard, as opposed to a facility.”
This point of view is similar to that offered by Holly Schubert, About.com's Guide to Freight & Trucking, who suggested contacting companies nearby and see if they have the same recycling to ship to the same place. "If so, they might be able to enter into an agreement whereby they hire a carrier and split the cost," she offered.
Schubert also recommended contacting contract truckload carriers to see if they might have capacity. "Sometimes we have to send them full somewhere and they deadhead back," she said. "A truck load carrier would rather have even a partial load than none at all to come back with. So, if a truck load carrier might have someone empty in the company’s area, that carrier might be willing to pick up a partial load so that they do not have to pay a driver to dead-head back to their home base, which is quite costly."
Also weighing in on the topic of LTL for recyclers was Glenn M. Merritt, President and CEO of First Alliance Logistics Management. “There are a number of good options available to relatively new recycling companies,” he offered.
“Some of the better 3PL's (Third Party Logistics Providers) have shipment tendering software available to weigh freight costs by classification and multiple pickups,” Merritt stated. While First Alliance Logistics Management specializes in helping clients plan, manage, and monetize their pallet and recyclables programs, including LTL movements, Merritt additionally spent the first 20 years of his career in transportation and logistics management.
On the inbound side, Merritt also shared some thoughts. “They can collaborate with raw material suppliers to drop recycle streams off for a small financial incentive or rebate,” he suggested, as well as working with haulers to drop off recyclables at the recycling business to circumvent freight and tippage charges associated with a trip to the landfill.
Also on the inbound side of recycling, one option is a milk run approach, where the recycler makes multiple stops on a run in order to fill inbound loads. One tactic favored by some pallet recyclers is to utilize smaller vehicles for picking up old pallets. This allows for more timely inflow of pallets for processing, in addition to reducing the amount of manual labor often associated with sorting and separating stacks of old pallets shipped in FTL quantity.
In the final analysis, one of the key challenges for recycling entrepreneurs is to optimize their freight program when dealing with low volumes. Getting it right can be an important step in moving your business to the next level of success.