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Navigating Through the Unpredictable LTL Market

03/11/2016

There are many questions surrounding whether rates will hold in a soft economy from a shipper’s perspective. This includes speculation about larger acquisitions and the impacts they may have, along with an overarching question on LTL’s long-term strategy to thrive and be a viable partner. I am honored to express my thoughts on the LTL market and write the inaugural blog for Unyson. I will address rates, LTL dynamics and a specific initiative that is in the pipeline that will support Unyson’s long-term LTL management strategy.

RATES
During the 4th quarter of 2015, analysts forecasted that capacity would continue to tighten in the LTL market. LTL carriers have done a tremendous job of rightsizing and maintaining freight that fits their network. With the recent change in the industry, LTL carriers are challenged to sustain and grow their market share. LTL carriers do not want to lose momentum with customers who benefit their network through capacity and proper utilization. As we move through the 1st quarter of 2016, we are beginning to see slight softness in the overall LTL market. Unfortunately the market’s softness does not correlate to LTL shipper’s rates. Capacity remains tight due to fleet ages, driver retention and continued focus of profitability by carriers. These factors lead me to believe that LTL rates will show modest increases throughout the remainder of 2016.

NEW INITIATIVES
Recently, one of the finest initiatives I have seen is the implementation of electronic dimensioning within LTL carrier operations. Electronic dimensioning accurately measures pallets or packages length, width and height with digital technology. This helps carriers understand precisely what to charge shippers, instead of relying on historical data that may be inaccurate. Also, electronic dimensioning allows carriers to use real-time data to strategically plan their network because carriers are able to strategically apply pricing across multiple lanes and commodities. This is truly a win-win situation for carriers and shippers. Shippers benefit from larger scale pricing because rates aren’t inflated based on historical data. Carriers will still make a profit and can provide savings to shippers across their networks. I look forward to seeing this initiative roll out across the board for all LTL carriers in the near future.

CONCLUSION
In an ever changing economy, transportation can swing mid-year or hold true to analysts’ predictions. It’s important to keep a pulse on the market and to challenge your providers to keep you up-to-date on market dynamics. Please feel free to reach out to me with any questions, I’d love to hear from you and learn from your insights. If you would like to subscribe to our Executive Vice President’s newsletter, please email info@unyson.com and you will be added to the monthly distribution.

Let’s keep moving!

Art Nourot
Vice President, Carrier Procurement
anourot@unyson.com