Note: Today’s post is part of our “Editor’s Pick” series where we highlight recent posts published by our sponsors that provide practical knowledge and advice on timely and important supply chain and logistics topics. In this post, Greg Umstead, Vice President, Fleet & LTL Services Transportation Management at Transplace, discusses the move to density-based pricing in the less-than-truckload (LTL) industry and the new challenges it creates for shippers, particularly those who have lightweight shipments or bulky items that take up a lot of trailer space.
Within the last few years, less-than-truckload (LTL) rates and capacity have fluctuated. Many carriers have shifted from the traditional National Motor Freight Classification (NMFC) rate-setting formula to density-based pricing, which prices freight according to the amount of space the shipment uses in the truck. This new pricing model, along with other recent industry trends, has had a significant impact on shippers – making it important to understand the new pricing methods for LTL shipments, what’s currently happening in the LTL industry, and some of its key market challenges.