[Understand in One Chart] The Three Core Models of the Less-Than-Truckload (LTL) Industry: National Network, Regional Network, and Large-Piece LTL

Release date:

2024-12-13

Author:

Jinhua Logistics

The less-than-truckload (LTL) freight industry is a quintessential network‑based sector, relying on networked operations to achieve efficient transportation. Diverse sourcing markets and industrial structures give rise to distinct LTL network models, which can be categorized into three types: national networks, regional networks, and dedicated‑line networks.

1. National Network

① Network Structure
National networks are typically dominated by large-scale less-than-truckload (LTL) carriers, employing a hub-and-spoke transshipment model and leveraging information technology and modern management practices to achieve the efficient, centralized allocation of various transportation resources. , to enhance the efficiency of networked transportation.

Representative companies include SF Express Logistics, Debon Express, Aneng Logistics, Best Express, ZTO Express, and Yimidida. These firms generally follow similar operating models, with variations in their settlement approaches and product strategies. Specifically, Debon Express and SF Express Logistics target the high-end small-parcel market, leveraging their strong, self-operated service capabilities to generate substantial profits, while Aneng Logistics, Best Express, ZTO Express, Yimidida, and Yunda Express capitalize on the advantages of their franchise‑based network to offer low‑margin, affordable small‑parcel services.

② Customer Acquisition Channels
The national network focuses on the small-ticket market, primarily targeting small and medium-sized enterprises. Primarily B2B customers.
Among them, more than half of the supply originates from manufacturing enterprises and industrial and commercial households, and can be categorized into mechanical parts, hardware components, building materials, auto parts, and other types. Twenty percent of our inventory comes from individual customers, who are the primary source of door-to-door shipments and also our most profitable customer segment.
③ Direct Operation vs. Franchising
The franchise model is the optimal choice for Kuaiyun Network to rapidly expand its nationwide coverage while reducing costs.
On the one hand, express‑delivery companies leverage their brand reputation to attract external resources, enabling rapid network expansion, market penetration, and nationwide coverage. On the other hand, the operating costs of express‑delivery outlets are higher than those of courier services, making it economically unfeasible to establish company‑owned branches in areas with relatively low shipment volumes or in more remote regions.

Local Area Network

①Network Structure
Regional networks typically adopt a radial or clustered, contiguous layout, with relatively limited coverage—usually confined to a single province with high cargo volumes or to economic clusters such as the Pearl River Delta, the Yangtze River Delta, and the Beijing–Tianjin–Hebei region, where multiple operators may coexist. Their transshipment hubs are generally located in the vicinity of provincial capitals.
Due to the small coverage area of regional networks and the limited number of transfer centers, some enterprises even have only… With one or two transshipment centers, this gives rise to a single‑hub radial or the classic hub‑and‑spoke network structure, exemplified by companies such as Yujia Logistics and Liaoxi Logistics.
Some enterprises have transcended the boundaries of a single province, extending their operations across multiple neighboring provinces to form a large-scale regional network, such as Yuxin Logistics and Changji Logistics.
The upgraded, block‑by‑block, contiguous model takes the form of regional network enterprise alliances across multiple provinces, creating a relatively loose, mutually supportive platform that achieves full‑network coverage; for example, AntChain. Those with even stronger integration capabilities can evolve into full‑network express delivery enterprises, such as Yimidida.

Regional‑network enterprises lack the capacity to deploy nationwide, so they have adopted distinct strategic approaches: deepening network coverage by focusing on in‑province operations and extending their outlets directly into third‑ and fourth‑tier markets such as counties and townships, thereby achieving seamless delivery across the entire province.
② Source Structure
The primary cargo sources for regional LTL transportation can be categorized into two types: short-distance shipments within the province and long-distance drop‑off deliveries to destinations outside the province.
The first category comprises goods whose origins and destinations are both within the region, with most customers being local manufacturing enterprises. Ninety percent of shipments are dispatched from the province’s core cities to all districts and counties within the province, while only about ten percent are sent to other provinces.
The second category comprises long-distance drop‑off shipments from other regions, primarily consisting of secondary wholesale goods dispatched from other provinces to core cities within the province. These shipments require large‑scale distribution across various locations within the province, as well as specialized‑route delivery of small‑batch, regularly scheduled, destination‑specific consignments.

Unlike enterprises across the entire network, which primarily target small… The sourcing structure of industrial goods differs significantly: the primary cargo for regional LTL networks originates from specialized markets, encompassing trade‑related categories such as footwear and apparel, food, daily necessities, and small household appliances. Furthermore, regional LTL shipments are predominantly low‑value, small‑ticket items, with an average shipment weight lower than that of the national LTL network and correspondingly lower per‑unit transportation rates. Consequently, profit margins for regional LTL operators are generally very thin.

Large-ticket LTL

① Characteristics of Full-Truckload and Less-Than-Truckload Freight
Large‑ticket LTL is a term used in contrast to network‑based express freight; its operating model primarily relies on non‑networked, point‑to‑point transportation. Typically, a company’s core business consists of just one or a handful of dedicated transport routes.
Its customer profile is characterized by: manufacturing or large-scale wholesale enterprises; high shipment volumes and price sensitivity; and strong demand for customization.
② Full-truckload and less-than-truckload types
Based on the operational model of less-than-truckload (LTL) freight, it can be categorized into six types: point-to-point one-way, point-to-point mainline, point-to-point two-way, point-to-region, point-to-national, and region-to-region.

③ Dedicated Line Platform
In the current dedicated‑line market, representative platform operators include Dekun, Sanzhi, and Jumeng. Although all integration platforms ultimately aim to achieve the same objectives, their strategies and operational models still vary considerably.
Dekun adopts a model of establishing subsidiaries through joint ventures with local companies, taking controlling stakes in dedicated routes and overseeing all sorting and trunk‑line operations. Building on the transformation of its existing business, it has added franchised outlets to boost cargo volume.
San Zhi adopts a strategy of equity release, establishes subsidiaries with local dedicated lines, attracts route franchising, and achieves standardization. The “San Zhi” brand has adopted a direct‑operation model to rapidly expand its route network.
JuMeng: the central platform manages secondary platforms, while regional secondary platforms establish their own hubs and onboard dedicated lines. By consolidating traffic on the same routes, it enables route capacity expansion and further deepens service penetration, enabling direct point-to-point delivery.