In our shipping and FBA prep business, I often ask clients the question: “Do you want us to ship UPS or LTL?” More often than not, most people aren’t even familiar with the Amazon LTL (Less than Trailer Load) inbound shipping option.
Most FBA sellers are familiar with the built-in UPS shipping option in Seller Central. In this post, I want to briefly discuss the pros/cons, budgetary “break over” point, and some other considerations
The bottom line is this: In the right situation, LTL can save you money!
UPS Parcel Shipping via Seller Central
When you log into Seller Central and set up a new inbound shipment to FBA, people typically use Amazon’s UPS rates, which are very competitive. You buy the shipping from AMZ, they deduct it from your seller account, you slap a label on the box, and away it goes to the FBA fulfillment center. This is pretty cool! Better rates then most people can get themselves, built-in tracking so you can see your stuff, and it is usually pretty quick.
One nice thing is that when shipping in cases, you can easily split the shipment up into different shipments going to different fulfillment centers. This speeds up the process of getting your goods available for sale because transit times via UPS are generally just a few days, and they will be distributed more quickly to different FBA centers in different regions.
For an example, let’s say we have a case of 20 action figure toys. That case weighs 15 pounds, is 18″ square, and going from your home in Wisconsin to the FBA center in Dallas. That one case will cost you around $11 to ship. So that is $0.55 per unit inbound shipping. Not too shabby to carry those more than 1,000 miles. If you have 3 cases, AMZ might send all three cases to different regions, still costing about the same price per case.
The UPS option is great for people working from small offices or homes as well, because there is no special equipment or site requirements to worry about, such as a forklift or a large area for trucks to turn around in. If UPS doesn’t come to your home frequently and you don’t want to pay for a UPS pickup request, you can usually throw a few cases in your vehicle and drop them off at your nearest drop-off location on the way to run errands.
For most FBA sellers doing various types of arbitrage or small shipments of items, this is generally the most efficient way to operate.
When to use it to save money:
Let’s say that you have moved up in quantity on arbitrage, or you are now rocking wholesale products or even stepped up to decent volume in Private Label products. You are staring at a pile of cases that will NOT fit in your car, and the UPS driver would have to rearrange his entire truck to make room to fit all your items. Or, you are buying wholesale from a supplier and you think it might be better to ship that large quantity straight from the supplier to FBA. It’s time to consider LTL.
LTL will ONLY save you money when the volume or weight meets a certain threshold. There are some considerations and exceptions that need to be addressed, which I will do further down, but for now, I want to discuss the basic idea of determining when LTL is going to be less expensive and/or offer some advantages over parcel shipping.
Let’s go back to our example of the action figures. You have cases of 20 units each. For the sake of this argument, let’s say you have 15 cases of them. So you are looking at 300 units. You create a shipment in Seller Central, and it tells you it wants all 15 cases sent to the same FBA center. Awesome! Let’s do some math here.
Shipping the cases (as mentioned above) will cost you around $11 each, so for 15 cases, you are looking at $165 to ship via UPS. But wait! You can stick all 15 cases on a pallet and shrink wrap them. You enter the weight, dimensions, load value (let AMZ automatically determine the freight class), and it quotes you about $90. WOW! Now we are looking at $0.30 per unit. You just nearly cut your freight cost in half (in a basic sense).
Now let’s say you have more than 15 cases, the items are heavier, or the items are larger. You can QUICKLY cut your freight costs down MASSIVELY over UPS.
BUT……… it is not that simple….. Let’s look at some considerations below to help determine if LTL is right for you, in addition to just the price example above.
In the example above, AMZ wants you to send all the cases to the same FBA fulfillment center. Unfortunately, that is not always the case. Lots of factors determine where AMZ wants your goods to go, such as demand in certain areas, what type of goods they are, and silly things like weather or seasons.
If you plug in the same scenario above into SC to create a shipment and they split it into 5 different shipments going in different locations, you can opt to go into your SC settings and choose “Placement Service”. This is a feature that AMZ offers, where you send all of the inbound items into one fulfillment center. Of course, there is a cost… $.30 per unit. So if you do the math on the action figures above, you are still better off to UPS them all via UPS to the different fulfillment centers. Now, for the sake of argument, let’s say that those action figures are a bigger size now… For the same case size, there are only 10 units per case. So UPS would cost you $1.10 per unit. But you select Placement Service, and AMZ lets you ship to one fulfillment center. You have 150 units on that $90 pallet, which is $0.60 per unit and add $0.30 per unit for placement, and you save $0.20 per unit.
I used this example above to show a small overall saving to use LTL. Now, if you have more than 15 cases, or you have fewer units per case, then LTL will save more and more money. Hopefully, I am explaining the concept clearly…. In many situations, Placement service fees of $0.30 per unit is STILL going to save you money by allowing you to ship units via LTL. Especially with larger or heavier items. However, if you have cases of 40 small books each, it is still better to avoid the Placement fees and send UPS (unless you get lucky and AMZ wants the goods sent to one fulfillment center WITHOUT the placement service selected) because the placement service alone is going to cost $12 per case. Try different shipment settings and see what happens, sometimes you get lucky. We ship tons (literally) of automotive products every month from our facility, and AMZ 95% of the time sends the goods to Dallas in multi-pallet quantities WITHOUT Placement service selected. BOOM!
Unfortunately, LTL is not something you can choose to use from your everyday home…. LTL has some logistical requirements such as:
Space – You need to have a place where a truck with a 53′ trailer can get to. This does not even have to be a loading dock. They can even park on a side road in a business area if there is room, then just run the stuff out with a forklift. However, most residential streets won’t be big enough to get a big rig in and out of.
Forklift or Loading Dock – You need a way to get those goods into that truck…. They won’t send a truck with a lift gate. Don’t have one of these? Do you have a buddy with a business that does? Load up your stuff and haul it to his place and beg him to let you set the shipment up from there (you can change the “ship from” location in SC).
Time – LTL takes longer than UPS, so be OK with waiting a while longer for your goods to become available. Once you submit your goods for pickup, Amazon lines up a truck to pick the goods up, usually 48 hours later. Then, the goods have to get to a terminal near the AMZ center and wait on a scheduled drop-off time at the FBA warehouse. Typically, this can be a day to a week. So if you are in a hurry to get your goods available, LTL is not the best option. If you are on top of your restock game and plan ahead, the wait time isn’t an issue.
Materials – You gotta have good pallets (48″ x 40″, although we see minor variations and haven’t heard complaints yet). You also need to shrink wrap, and a way to weigh the whole pallet. You can weigh all items individually and add it all up, but a pallet scale is nicer….
LTL can be better EVEN IF it is more expensive!
Just yesterday we prepped a shipment for my buddy (shoutout to you, KD) of some semi-fragile items that needed to be handled well. I did the math with UPS vs LTL with Placement, and they came out exactly the same cost per item. Well, UPS would be faster, so that would be the first choice EXCEPT we want these things handled nicely.
UPS is NOT NICE on packages, especially heavy ones. If these goods were shipped UPS, they would arrive looking like they were drug through a ditch and run over by a pack of wild horses. NOT GOOD when we all know how picky AMZ is about the condition of the goods we sell…
So we sacrificed a few days of availability and packaged them for LTL. They won’t get flipped over, dropped on corners, or tossed on conveyor belts. They are currently stacked beautifully on a pallet, with edge protectors in place, and nice shrink wrapping. Those things should arrive in pristine condition….
Ok, so you don’t have a buddy with a warehouse or a forklift. Or, you just bought 96 cases of pumpkin shaped jell-o molds from China. Have that stuff shipped to a prep center!
We typically charge around $0.50 per unit (lots of variations of service so don’t hold me to this for every situation) to receive your goods, inspect them, and get them ready for FBA shipment. Now, if the size, weight, and quantity of goods work out correctly, you can add the handling fee of a prep center, let them arrange the LTL load, and STILL come out cheaper then having those units shipped to your garage.
If you have more stuff, larger stuff, heavier stuff, or more sensitive stuff: ship LTL.