The utilization of less-than-truckload (LTL) shipping has varied over the years as companies find opportunities to overcome transportation challenges. An LTL carrier is defined as a carrier that consolidates and transports smaller shipments of freight, while utilizing a network of terminals and relay points1. Stifel Inc. predicts that the already $36 billion LTL industry will continue to grow this year2.
According to David Ross, a trucking analyst at Stifel, the growth can be attributed to lower taxes, reduced regulations, increased capital spending, and a new administration’s focus on domestic jobs, infrastructure, and manufacturing. However, the LTL growth is also reflected by the overall changes in the greater supply chain industry3.
Industries Utilizing LTL
In the past, LTL shipping was primarily used by the industrial sector to manage the transportation of items that exceeded a certain weight or size. These weight and size constraints would ultimately eliminate truckload (TL) models from being a viable delivery option and cause shippers to transport products in multiple LTL shipments. However, with the growth of ecommerce, more industry verticals are turning to LTL carriers to meet consumer demand and innovate their delivery methods. Retailers specifically are utilizing more LTL shipping methods to transport transloaded inventory for delivery to their distribution centers or directly to stores. Retail imports are expected to increase through the first half of this year, which will reflect on the demand for LTL shipments4.
Determining a Rate
LTL pricing can be complicated as each carrier may price differently. Some LTL carriers may price based on weight alone, while others may take into account freight classifications, fuel surcharges, and other variables when determining a rate. As demand for LTL shipping and cost of fuel increases, shippers can expect to see that increase reflected in their rate5. When determining if LTL is the right option, shippers should ensure they have a complete understanding of how the rate was determined.
Regulations Aren’t As Restricting
Regulations are also impacting capacity. In particular, electronic logging devices (ELD) are a hot topic across North America with enforcement dates nearing. One of the biggest concerns with the transition to ELDs is how it will impact available resources and capacity. Some TL carriers have even gone out of business as a result of the regulations. To meet capacity, shippers may turn to utilize LTL to continue to keep freight moving and maximize hours of service. Shippers can work with supply chain providers that have both TL and LTL capabilities to optimize the routes and time to move their freight.
Finding a Carrier
As shippers demand for more integrated services, third party logistics companies with a brokerage component are handling more LTL shipments6. In fact, Canadian Shipper has said that these carriers are now being labeled as “3PLTLs.” The shippers that have 3PLTL partnerships benefit from having a network of supply chain experts with relationships to find the optimal transportation solutions7. These companies have the assets, such as specialized equipment, and other resources available to be flexible. In many instances, these providers can strategize and determine when to use a TL or an LTL model. 3PLTLs can successfully help meet demand for faster delivery and fulfillment while providing transparency.
The LTL industry continues to provide shippers with effective transportation solutions to meet capacity, ship items to more complex destinations, and provide unique services to keep freight moving. With the right supply chain solutions partner, shippers can gain the flexibility and resources to be successful.
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