Exploring the Effect of LTL Pricing Discounts in the LTL Versus Multiple‐Stop TL Carrier Selection Decision

Abstract

This paper explores the carrier selection problem of choosing either a less‐than‐truckload (LTL) or a multiple‐stop truckload (TL) motor carrier to deliver products. Specifically the paper presents a methodology for analyzing the cost implications of different carrier selection decisions. Shippers and carriers can use this methodology to analyze how changes in input variables could affect a shipper's carrier selection decision. To illustrate the methodology, the paper reports the results of a case study showing how changes in one variable, an LTL carrier's price, influence carrier selection. This selection shows how a cost minimizing shipper assigns shipments to each carrier, LTL or multiple‐stop TL, at different LTL pricing discounts. Results from this study indicate a direct relationship between LTL pricing discount and LTL shipment volume in the context of multiple‐stop TL competition. While results from this application only directly apply to the shipper in the study, this application does show how shippers and carriers can use the methodology to make/study decisions in the LTL versus multiple‐stop TL problem.