Less-than-Truckload (LTL) Rates on the Rise

Have you ever heard the saying, “If you don’t like the weather in (insert location here), wait five minutes and it will change”? The same could be said for the transportation and logistics industry; nothing stays the same for long. This especially holds true for rates and trends. Experts in the field have been saying that rates are on the rise, in excess of 5 percent or more. As with many cause and effect scenarios, there is no single culprit to increased rates. We’re here to talk about the contributing factors and what to expect.

Why the Increase?

Demand

So, what is one reason for the increased LTL rate season? Demand, demand, demand. We are experiencing a combination of pent-up demand, which is described as the general public’s strong return to consumerism following decreased spending, and increased e-commerce deliveries (the demand and convenience of door-to-door shipping – my personal favorite). In addition, the industry has seen new government regulations and is experiencing an increase in driver shortage.

Driver Shortage and LTL Shipments

“At the 2018 SMC3 Jumpstart Conference, we were consistently hearing that the spill over from the truckload sector is affecting the weight per shipment for LTL carriers,” said Stacey Howell, Vice President of LTL for Trinity Logistics. “We heard average weight increases of 10 to 14 percent.” This means, if the weights per shipment are increasing, there is less opportunity to include more orders on a single LTL truck.
Additionally, many shippers are breaking up full truckload shipments into smaller, LTL shipments to get their products from point A to point B at a better rate or more quickly since full truckload capacity is tight. However, this adds to the capacity issue on the LTL side due to the increased need for trucks and LTL drivers.

ELD Mandate

The majority of LTL carriers are already compliant with the new ELD mandate and have been for quite some time, however, industry sources predict that shippers can expect a 4 to 7 percent impact on truckload capacity. In addition, beginning April 1, non-compliant carriers will be placed Out-of-Service. This impact is likely adding the spill over in the LTL sector.

Current Rate Trends

If you’re a shipper, you already know rates and capacity are a big-time challenge. At this given time, expect rates to continue to increase. According to the most recent Logistics Management surveys from November, LTL rates increased 6.6 percent from the same month in 2016. When all the data is tallied for 2017, the LTL sector is expected to see an annual increase of up to 5.4 percent.

How we can help

Utilizing Relationships

Maintaining strong relationships with our carriers is something team members at Trinity Logistics pride themselves on, whether it’s through the Carrier Relations Department or as a Logistics Specialist. With a network of over 32,000 carriers, it seems impossible to have relationship carriers, right? If you were to walk through our operations floor, you would hear conversations between our Logistics Specialists and carriers and know that building relationships is an important part of what we do.

TMS Options

Did you know that with a transportation management system you can optimize routes by analyzing a batch of shipments based on a variety of parameters? This will help to determine the most cost-effective route plan. Trinity offers different TMS plans that fit a variety of needs and budgets. You can learn more about Trinity’s TMS options by downloading our free whitepaper.