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.1 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).
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:
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:
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:
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.
To get the list of “Preferred Shipper Best Practices,” and learn more about Transplace’s multi-shipper collaboration solutions and managed transportation services, connect with a Transplace expert.
*The above article first published in Talking Logistics.
1. “FedEx Freight prunes 1,400 customers to protect service level,” Eric Kulisch, FreightWaves, 6/13/21