Six Challenges Faced by LTL Carriers
As with so most industries, the transportation and logistics industries are undergoing enormous changes. Between more frequent and increasingly smaller orders, rapidly changing technologies, and receivers’ demands for shorter lead times and delivery windows, shippers and carriers alike frequently find themselves scrambling to adapt. Amid these changes, few have been affected more than the less-than-truckload (LTL) carrier — trucking companies serving the transportation needs of smaller shippers or those whose orders do not require a full trailer. Let us take a look at 6 challenges LTL carriers currently face in today’s market.
1. LTL carriers fight higher costs.
Simply put, the cost of fuel, tolls, and wages for one truck making multiple stops is higher and less efficient than sending the entire load to one destination. In addition to higher costs, LTL carriers rarely either weigh out or cube out the trailer. Frequently, there is additional unused capacity in the trailer despite the best efforts of the LTL carrier.
2. LTL carriers also face fluctuating and unpredictable costs.
Due to a greater number of variables impacting less than truckload orders, LTL carriers have a difficult time predicting from week to week and month to month what their capacity needs will be, putting additional pressure on their overhead expenses. Yet the marketplace expects pricing to be consistent in order for LTL customers to know the transportation costs to build into their pricing.
3. Delivery windows are shrinking.
Due to increased shipping volumes and static receiving capacity at most of their receivers’ dock, LTL carriers face the increased challenge of having to wait for an open door at their destinations. When this occurs at any point in a multiple delivery load, drivers have difficulty meeting the remaining delivery appointments. This increases the risk of non-compliance in an environment where carriers are expected to meet tighter and tighter delivery windows.
4. LTL carriers face higher risks of damaged goods.
Logistically speaking, the more stops a carrier makes and the longer products sit in the trailer; the more likely product will be damaged due to shifting and/or crushing. Likewise, when an order passes through multiple LTL terminals on its way to its destination, the pallets face additional handling. Every time an order is handled it increases the risk of damage.
5. Longer transit times can cause backups both at the shipping and receiving points.
When LTL carriers cannot meet today’s delivery demands, it can result in higher inventories raw materials, work-in-process, and finished goods at the manufacturer’s plant or the distribution center. This will eventually impact the shipper’s or receiver’s bottom line, making LTL carriers a less attractive shipping option.
6. The above challenges result in faster rate hikes for LTL carriers.
Shipper pressure to maintain pricing, the rising costs of recruiting and retaining drivers, and the tightening windows of delivery appointments are putting pressure on the least efficient carriers to raise prices or get out of certain lanes or the LTL business altogether.
While these challenges are significant, they are not insurmountable. Shippers need to look for carriers with available capacity (drivers and equipment) who have a history in the lanes or region they need handled. Overcoming this requires looking for alternatives and/or new transportation models in order to compete. Many shippers are discovering third-party logistics (3PL) companies which may offer a number of options to address these challenges. To learn more about Colonial Cartage, contact us today.