As online shopping continues to soar, small packages are moving to less-than-truckload (LTL) freight and LTL continues to receive truckload (TL) spillover freight. The demand for LTL shipping is far exceeding capacity. Logistics and supply chain experts report the imbalance is higher than they’ve ever seen, causing shipment delays and rising LTL freight costs.
The historic levels of LTL over capacity compelled FedEx Freight to temporarily suspend service to a portion of its customer base this summer. As the largest LTL carrier in the U.S., FedEx attempted to recover service quality by removing shipments with more costly freight in high-density shipping zones. FedEx spokesman Jim Masilak said FedEx Freight implemented targeted volume controls designed to minimize network disruptions and balance capacity and demand to avoid backlogs across the country. Many other carriers have implemented temporary embargoes for specific terminals based on spikes in demand and are limiting their exposure to extreme length pieces of freight (a handling unit that is over 8’ in length).
LTL Imbalance and Backlogs
For most carriers, creating LTL capacity is a complex, time-consuming process requiring an integrated network of terminals, available trucks and drivers, and extensive investment and planning.
These networks are being disrupted with an LTL freight imbalance caused by several factors:
- The industrial manufacturing sector, which relies heavily on LTL freight, is experiencing tremendous growth.
- A substantial driver shortage due to COVID-19 and a new federal Drug & Alcohol Clearinghouse that removed 70,000 commercial truck drivers.
- Continued supply chain disruptions forcing reallocations across transportation modes, including massive backlogs at California ports, an over-saturated truckload (TL) market, and shifts in parcel, rail, ocean and air.
Reducing the Impact of Delayed Service
Shippers should be prepared for this market to remain tight through the beginning of next year, if not longer. To maintain LTL capacity and minimize schedule disruptions, shippers can follow these tips:
- Send accurate pickup information in advance, at least one day before pickup.
- Engage locally with your primary LTL carriers and drivers to ensure consistent capacity.
- Increase the utilization of electronic pre-assigned pro numbers.
- Improve driver and equipment (trailer) utilization when loading / unloading.
- For critical shipments, ship 1 – 2 days early or ship with guaranteed service to ensure timely delivery.
- Review lanes that are consistently late and make targeted adjustments to your lead time.
- Enhance pallet loading by improving stacking ability, reducing overhang, increasing density and reducing pieces over 8 feet in length in order to improve handling. This will enable a more efficient flow for loading, unloading and cross-dock operations, as well as reduce the number of lost and damaged goods.
Preferred Shipper Best Practices
By following this guidance, one shipper with two high-volume LTL locations in the Midwest experienced considerable LTL capacity improvements.
At two Midwest locations, carriers have a maximum number of dropped trailers they can accommodate daily. To maintain schedules, the shipper adjusted the ship date by day of the week and region for the majority of its network. As a result, the shipper saw improved load optimization while reducing freight costs, maintaining or decreasing transit times and raising overall on-time performance.
The load optimization allowed:
- Additional multi-stop TLs for large mark LTL shipments. This resulted in reducing shipments tendered to traditional LTL carriers over 10,000 lbs., which are undesirable in these market conditions
- Pool consolidations going to the Northeast, Southeast, South, and West Coast
- Additional cross-shipper collaborations through Transplace OptiPro and LTL collaborative pooling.
The shipper was also able to reduce reliance on traditional LTL carriers, which avoided missed or late pickups due to the reduced volume.
With ongoing LTL freight over capacity, supply chain professionals should collaborate with logistics technology and solutions partners to minimize schedule disruptions and manage transportation costs.
To learn more about LTL capacity demands, key economic indicators and the latest supply chain trends to improve logistics planning, join Transplace’s Fourth Quarter 2021 Logistics Market & Outlook Webinar on November 3, 2021 at 12pm CT.
Nathan Adams is VP, Transportation Procurement, and Matt Lowery is Director, LTL Procurement, at Transplace.