The 2013 LTL trends that will likely impact LTL shippers are listed below.
LTL Trend # 1 – Density-based pricing will make inroads in the LTL industry
The current freight class shipment pricing is antiqued and overly complex. The LTL freight class system is based on density, stowability, handling and liability. The system breeds mistakes, extra cost and distrust among shippers, carriers and consignees. With density based pricing, shippers pay for space used similar to ocean and air freight shipping. The changeover process will be a little painful, but once it takes hold, both shippers and carriers will be happier. Click here for a great article by Joe Hanna (www.worldtradewt100.com) on the subject.
LTL Trend # 2 – The driver shortage will hit the LTL industry, but not too hard
The driver shortage will impact the LTL carriers, but it will hit the truckload carriers much harder. LTL carriers will be less impacted because LTL drivers are typically better paid and they enjoy a better work life balance. The driver shortage is driven by tougher government safety regulations and an aging workforce. The driver shortage will most likely increase TL and LTL carrier cost. Given the existing low margins, carriers will most likely pass the increased cost on to shippers. Click here to see Mark Solomon’s keen insights on the subject at dcvelocity.com
LTL Trend # 3 – Sustainability will influence shipper buying behavior
Both consumers and corporations are making purchasing decisions based on sustainability. The trend is here to stay. Corporations are using more sustainable solutions especially ones that offer both cost savings and appeal to their customers. The SmartWay Transport Partnership is collaboration between freight shippers, carriers, and logistics companies. The program goal is to achieve improved fuel efficiency and reduced emissions from freight transport. The program is managed by the EPA. Click here for a great summary of Smartway provided by Wikipedia.com.
LTL Trend # 4 – LTL Prices will increase slightly as carriers focus on profit
LTL pricing is probably going to increase in 2013. Estimated increases are 2-5%, but it will be higher for less profitable accounts. Over the past few years, the slow economy and weak pricing has hurt carrier profits. The reduced profits have prevented investment in new trucks to replace the aging fleet. The top LTL carriers are now committed to improved pricing. The increased pricing will return carrier to their historical operating ratios. The carriers also face increased costs due to government regulations, driver shortages and environmental challenges. Click here to see a great article on the subject by freight yoda, John D. Schulz (logisticsmgmt.com).
LTL Trend # 5 – LTL carrier consolidation will mean fewer carriers with bigger footprints
The LTL industry consolidation is being driven by the driver shortage and increased government regulations. Additionally, the difficult past few years has left some carriers with weak balance sheets. The consolidation will help some carriers expand their service offerings and fill some service area holes. John D. Schulz (logisticsmgmet.com) wrote a great article on the subject. Click the here to learn more.
Bottom line: The LTL industry is dynamic marketplace with lots of changes on the horizon. Stay informed, ask questions and be ready to move fast to avoid the pitfalls and take advantages of the opportunities.
Questions: Do you agree with the LTL trends listed? What other LTL trends belong on the list?