Shipment term

The Growth of LTL and Shipping Collaboration

Volatility is the new norm in the transportation industry, along with consumer behavior and market conditions (read: inflation, fuel prices). Shippers and carriers are regularly challenged to cope with the impact, from limited capacity to delays and high costs. And even then, shippers, carriers and their customers increasingly prioritizing sustainability in the supply chain and are now looking for innovative ways to reduce their environmental impact.

LTL is an effective solution to many of these challenges and a cost-effective shipping service that most shippers have been using for decades. By leveraging LTL, shippers can take advantage of new pockets of capacity, increase overall lane speed and efficiency, and reduce dead miles for carriers, which promotes industry sustainability. LTL service tariffs have a major market window and growth opportunity because spot TL rates are falling. However, for LTL to continue to be a mainstay in the market, close collaboration between shippers and carriers will be required to ensure maximum transparency and efficiency.

Growing pains for the LTL market

Although LTL has been a fixture in many organizations for years, today’s market handles a significantly higher volume. The e-commerce journal recently reported that ODFL, the second largest LTL carrier in the United States, saw an astonishing 18.3% increase in daily LTL shipments from February 2021 to February 2022. Saia, another US LTL carrier, also saw its daily LTL shipments jump 15.8% in the same period.

LTL option costs now vary significantly in price, as this increase in the volume has overwhelmed many LTL services. Logistics Management’s first annual LTL survey found that 78% of logistics buyers surveyed said they expect LTL rates to increase from 2022 to 2023. Additionally, 50% of respondents said they sometimes have trouble securing capacity and 8% said that they almost always encountered specific challenges related to the shipping process. .

The effectiveness of LTL can also be limited by capacity and cost pressures. Its performance depends largely on having enough drivers and dockers, two groups that see industry shortages. And while LTL is an efficient shipping method for specific quantities, it’s not always practical from a cost perspective – the cost per cwt would still be higher than shipping by truck (TL).

Shipping Collaboration Creates More Efficient LTL Shipping

Maritime collaboration can help overcome these challenges and uncertainties in long-term LTL. Using data-driven processes, organizations can improve and streamline LTL processes for all types of moving requirements – and see shared success as a result.

Organizations see many benefits of collaborating around LTL, such as better network optimization and reduced carbon footprint. Optimized transit times, combined with less handling resulting in fewer claims, means organizations realize significant cost savings. By proactively taking control of LTL inefficiencies and growing demands, organizations can quickly see the cost and customer satisfaction results of using shipping collaboration.

For instance, GOJO Industriesa manufacturer of health and hygiene products, started using our LTL solution in 2021 (which is building full truck shipments to consolidation points from multiple shipper loads) to support its supply chain operations during the pandemic and ensure that its products, such as Purell hand sanitizer, were shipped to customers on time. Since adopting the technology, the company reports that it saved 7% on shipping that have been transported using the solution, helping the company transport important hygiene products more effectively and efficiently in the face of supply chain challenges.

Nathan Adams is Vice President, Transportation Procurement at Transplace. Learn more about how Transplace can create a shipping collaboration strategy for your organization.