Less-than-Truckload (LTL) peak season takes place during the holiday shopping season each year, and if last year’s shoppers are any indicator, the LTL peak season for 2018 will excel past all records.
This is even more likely thanks to tight capacity, fewer drivers on the road and even refusals to ship freight from full truckload carriers.
Freight rates are up in anticipation of the 2018 peak shipping season.
According to William B. Cassidy of JOC.com, UPS has already announced freight sales events and expectations for higher package volumes.
Unfortunately, John Haber, CEO of Spend Management Experts, believes that numerous barriers to meeting surging demand, mainly, available shipping capacity, will result in considerable spikes to freight spend.
The effect will be felt in LTL shipments as well. Rate increases for parcels are expected to hit 5 percent, and LTL rates will surge up to 6 percent within the next two months. Accessorial charges may rise to double-digit rates.
The last year has been a continuation of freight rate hikes, with increases hitting the market in seven out of nine months in the past year.
As a result, average LTL peak season freight rates will be much higher than anyone could imagine.
Of course, there are additional factors, reports iContainers, that will drive freight rates higher, including:
The only way to safeguard against rate hikes is to know they are coming and reduce other costs where possible.
This may include rethinking existing facilities management processes, re-evaluating vendor lists, working with more carriers, considering outsourcing of staff and the burden of hiring employees and much more.
Everything is on the table, so shippers must begin preparations for higher freight spend. Moreover, passing the higher costs over to consumers is a terrible solution and will alienate your customer base.
Instead of risking the success of your business, start by analyzing every redundant or costly action in your company from the ground up. Leave no process or activity unreviewed. Then, move onto how you can change shipping processes to save money.
Understanding the driving forces behind LTL rates during peak season is great, but knowing how to manage freight spend without dramatically increasing spending is another animal. Shippers should follow a few tips or steps to make their freight more attractive and easier to handle, resulting in lower LTL average freight spend.
The shipping industry kicked it into high gear in anticipation of the 2018 peak seasons at the onset of October.
Major carriers announced GRIs, and higher fuel costs compared to this time last year warned of a potential fuel surcharge in all modes of transportation, including air, ocean, rail, and OTR.
Shippers need to pay heed, knowing that today’s rates may only be a fraction of those that will be charged as the significant holidays' approach.
To truly understand what the peak season will mean for the future of LTL, our next post will review the factors driving growth in the LTL market. We’ll explore the reasons LTL has some of the highest costs with lowest profit margins, the impact of the capacity crunch on the industry, particularly driver retention, and even how choosing whether or not to ship freight from Amazon and Walmart will affect freight rates for shippers. Stay tuned.
Related Article: Less-than-Truckload Market Analysis Insight Q4 2018 & 2019
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