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Expanding into Less-than-Truckload Services with Asset-Based Lending

Less-than-truckload (LTL) shipping is increasingly popular in the trucking industry. This cost-effective method provides clients with an alternative to full freight services and allows for increased fuel efficiency in getting their products to market on time. LTL shipping arrangements offer significant benefits for trucking firms as well; by combining smaller shipments on one truck and delivering them to a centralized distribution site for last-mile service, freighting and transportation companies can boost the overall efficiency of their operations and can provide added value for their retail and manufacturing clients at every step of the process.

What Is Less-than-Truckload Shipping?

LTL shipping allows multiple firms to use the same truck and route to transport smaller loads to their destinations. By sharing the ride, these companies can reduce the costs of fuel and labor in managing their freighting and shipping needs. Advanced inventory and tracking systems can ensure the safe arrival of these smaller shipments to distribution points or centralized warehouses. Retailers and commercial firms can then arrange for short-haul deliveries or can pick up their goods and transport them to the point of sale or local warehousing facility. Although truckload shipments are still the most cost-effective choice for large-scale transportation of goods and products, smaller freight deliveries can provide added flexibility for clients and increased profitability for shipping firms.

Boosting Profits with LTL Shipping

A 2011 article in BusinessWeek noted that the LTL shipping industry was recovering more quickly from the recent economic downturns than other elements of the transportation sector. The added flexibility provided by these shipping arrangements may be a contributing factor in their economic resiliency. Smaller trucking companies can often benefit financially by adding LTL shipments to their existing portfolio of services. LTL processes require a number of financial investments, however, that may require added cash on hand to implement. Key elements include the following:

• Inventory management systems that track shipments from point of origin to warehouse or distribution center
• Centralized distribution points that provide convenience for customers
• Increased security and employee training to manage the demands of multiple clients in one truckload

Companies that adopt these new technologies can expect added customer satisfaction and increased business from smaller companies and specialty firms that require more frequent and smaller shipments on a regular basis.

Funding for LTL Implementations

The current credit crunch has left many trucking firms short on cash and low on financial resources. Worse yet, many of these companies have already reached their limits in the traditional credit marketplace. Finding new sources of funding can help these freighting and trucking firms to develop the added revenue streams available in the LTL sector. Purchasing and implementing the inventory tracking systems and added security measures can be a solid investment in future growth. Asset-based lenders can provide the funds necessary to make the move into LTL shipping by collateralizing accounts receivable, purchase orders and other assets. These lending arrangements are available to companies that have already exhausted their existing traditional credit options and require added funds to expand and remain profitable.

The business lending professionals at 1st Commercial Credit and other asset-based lending companies can provide valuable options to trucking firms in need of immediate cash to expand their services. Decisions typically take one working day; funding can be in place in as little as five days after approval. By opting for asset-based lending, freighting and transportation companies can increase their profitability and improve their portfolio of services to boost customer satisfaction in the competitive trucking industry.