The capacity crunch has been a core concern of shippers for several years, but with the 2018 holiday shopping season in full swing, it has become a bigger problem.
LTL capacity has routinely been used as a source of added capacity when full truckload becomes unavailable.
Unfortunately, the worsening of the driver shortage is pushing more full truckload carriers to turn existing trucks into LTL space.
LTL capacity is quickly becoming harder to find, and full truckload carriers have already started to turn away freight.
Meanwhile, LTL carriers struggle to meet on-demand needs, so shippers need to know a few LTL capacity best practices to ensure their freight can be moved on time and without added costs
As explained by Jeff Berman via Logistics Management/Supply Chain 24/7, LTL capacity woes are increasing.
LTL carriers have always been seen as a way to navigate tight capacity in full truckload, but the increased use of LTL capacity today means the ability to respond to on-demand shipping is diminished.
Also, up to 75 percent of major LTL carriers, forming 90 percent of the LTL market, are turning down freight due to lacking capacity.
At the same time, FT carriers, incapable of providing FT service are turning down freight in favor of diverting resources to the LTL market.
The added competition will help mitigate rate gains, but it is only a bandage over the problem.
Part of the reason for increased use of LTL freight rests on driver wages and treatment.
In LTL, drivers can make significantly more in annual salaries than FT drivers, and as noted by John D. Schultz of Logistics Management & Supply Chain 24/7, benefits for LTL drivers may also be higher.
Some of the top 25 LTL carriers are now offering $10,000 bonuses to drivers who stay with the company for at least one year, and the same tactics are being in used FT.
Unfortunately, there are not enough drivers to go around, so knowing how to navigate the shortage through LTL is essential to controlling freight spend.
According to Todd Johnson of Supply Chain Brain, shippers need to start thinking about how to ensure drivers and carriers want to continue the relationship.
It is a real relationship, requiring fairness, kindness, and respect, and being a preferred shipper, also known as a shipper of choice designation, is a great start.
Some of the critical characteristics of a preferred shipper include:
E-commerce growth for 2017 was just shy of 3 percent, but that number has already been exceeded in 2018.
With the holiday shipping season expected to bring even stronger gains for retailers, demand on carriers for more capacity and faster shipping will reach its tipping point.
Shippers that have not yet created a plan and implemented LTL capacity best practices will be hit hardest with record-breaking spot rate hikes and even refusals from carriers.
However, the surge in e-commerce could benefit small and mid-sized LTL carriers and bring renewed competition to the sector.
Related: 9 Indispensable Tips on How to Choose the Right Regional Less-than-Truckload Carrier
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