Following a year of big losses, the LTL industry continues to consolidate.
Carriers are shrinking their fleets and, in some cases, their service areas in an attempt to regain profitability.
Here’s how the industry’s consolidation is affecting shippers:
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LTL carriers have implemented general rate increases of 5% to 7%.
(In contrast, UTS is not increasing LTL rates at all this year.)
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Shrinking service areas are triggering coverage and pricing issues.
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LTL carriers are rigidly enforcing terms, triggering a wave of reweigh and inspection fees for shippers.
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Capacity shortages and pricing pressures loom as carriers hesitate to expand in the early stages of recovery.
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Industry consolidation will give surviving carriers greater pricing power.
Trends Similar in the Truckload Market
Truckload shippers are also facing capacity shortages, delivery issues, and pricing pressures.
The industry massively consolidated during the past two years.
Now freight tonnage is growing again, triggering capacity shortages and price hikes in key markets.
Regulations to Add More Cost Pressures
New federal safety regulations (CSA2010) take effect later this year.
These regulations will load expensive record-keeping tasks onto carriers.
Also, tougher pollution regulations have added about 15% to the cost of new trucks.
Spot Rates Up 30% in 2010
Forbes magazine (
Where Inflation Lurks, July 19, 2010) reports that spot rates in the shipping industry have jumped 30% this year as a lack of credit and uncertainty about the recovery discourage shippers from investing in more capacity.
"Capacity is so tight that even a slowing economy is unlikely to dampen rate hikes," reads a recent report from The Journal of Commerce (Slowdown Won't Brake Truck Rate Hikes, July 1, 2010).
Zero Tolerance on Terms
Please be aware that the LTL industry is now policing nearly all discrepancies between reported and actual freight characteristics.
Freight descriptions that you may have been using for years without problems might start triggering fees if they under-report any aspect of your freight’s true profile.
A complete and accurate bill of lading is your best defense against reweigh and inspection fees. Please be sure to correctly report:
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Shipment weight
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Freight classifications (NMFC#)
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Proper description of the product (not the product name)
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Freight dimensions (L x W x H are all important, especially with a density-classified product)
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A quote number on the bill of lading if one is provided
Be sure to measure the dimensions of your freight to the furthermost point in each direction.
Some shippers, for example, measure the pallet rather than the freight when calculating dimensions.
If the freight overhangs the pallet, the overhang must be included in the measurements.
(On a related note, overhanging freight is also a leading cause of damage in transit.
UTS strongly advises using pallets that match or exceed the dimensions of your freight to reduce damage claims.)
These items go a long way to helping make sure you are quoted and invoiced properly.
UTS is happy to help with any questions or issues regarding freight characteristics. You’re welcome to contact our Risk Management & Audit Services department at (866) SHIP UTS or audit@UTSnet.com.
About Universal Traffic Service
Universal Traffic Service executes three roles within the supply chain ranging from real-time operational execution to supply chain integration and long-term strategic planning.
500 companies rely on UTS to extract the highest total value from their supply chain activities.
We do this at no cost to the client and with a net savings on their direct transportation spend.
Some UTS clients report reductions in supply chain operating costs of more than 30%.
Plus they enjoy more effective controls and improved customer service.
Universal Traffic Service offers the most comprehensive portfolio of services available in the supply chain management marketplace.
Our services streamline functions throughout your organization.
These services are specifically designed to add value at every point in your supply chain.