What is the difference between LTL and FTL?

LTL (Less-Than-Truckload) means your pallets share a trailer with freight from other companies. The truck makes multiple stops, increasing transit time and the risk of damage. FTL (Full Truckload) means you rent the entire trailer, which goes directly from your facility to the destination.

What is a freight broker?

A freight broker (or 3PL freight forwarder) acts as an intermediary between your brand and the actual trucking companies. They leverage their aggregate volume to negotiate better rates than you could get on your own, taking a small margin on the spread.

How do fuel surcharges work?

A fuel surcharge (FSC) is an additional fee added to your base freight rate to account for the fluctuating cost of diesel fuel. It is typically calculated as a percentage of the base rate and changes weekly based on the national average price of diesel.

How to Reduce Freight and Logistics Costs for Food Brands

For many food and beverage brands, moving the product costs almost as much as making the product. Heavy, low-margin items like beverages, sauces, and canned goods are particularly vulnerable to freight costs. If you don't actively manage your logistics network, inbound and outbound freight will silently consume your gross margin.

1. Optimize Your Pallet Configuration (Ti-Hi)

You pay for freight by the pallet space (in LTL) or by the truckload (FTL). If your pallets are mostly shipping air, you are burning money. Your "Ti-Hi" (Tier and High) is the number of cases per layer (Ti) and the number of layers per pallet (Hi).

Work with your packaging engineer to adjust your case dimensions by fractions of an inch. A slightly tighter case might allow you to fit 12 cases per tier instead of 10, increasing your pallet density by 20%. That is a permanent 20% reduction in your outbound freight costs per unit.

2. Consolidate LTL into FTL

Less-Than-Truckload (LTL) freight is expensive, slow, and highly prone to damaging your product. Full Truckload (FTL) is cheaper per unit, faster, and much safer. The goal of your supply chain should be to consolidate shipments to reach FTL volumes.

If you are shipping three LTL pallets to a distributor every week, work with your demand planner to ship one 12-pallet FTL shipment every month instead. The savings on freight will often outweigh the cost of holding the inventory slightly longer.

3. Leverage Distributor Consolidation Programs

Major distributors like UNFI and KeHE offer consolidation programs (often called cross-docking or forwarding). Instead of shipping LTL to five different UNFI distribution centers across the country, you ship one FTL to a central consolidation point, and UNFI manages the final leg.

While the distributor charges a fee for this service, it is almost always cheaper than paying for five separate cross-country LTL shipments, and it dramatically reduces the administrative burden on your team.

4. Co-Locate Your 3PL and Co-Packer

The most wasteful freight expense is the "shuttle run". shipping finished goods from your co-packer to your 3PL. If your co-packer is in Chicago and your 3PL is in Dallas, you are paying a massive freight penalty just to put the product into storage.

When selecting a co-packer, look for one that offers on-site warehousing and fulfillment services. If that isn't possible, find a 3PL within a 50-mile radius of the co-packer to minimize the drayage cost.

5. Track Landed Cost Rigorously

You cannot reduce what you do not measure. If you book freight as a generic "shipping expense" in your OpEx, you will never know which SKUs are actually profitable. You must allocate inbound freight costs directly to the inventory lots (Landed Cost) to see the true margin impact of your logistics decisions.