What’s the Real Story Behind Recent U.S. LTL Rates?

By Rob Achtzehn | Senior Manager, Transportation | Chainalytics

The Chainalytics & Cowen Research truckload (TL) transportation demand index has continued  to trend lower over the past few months. But our recent experience with less than truckload (LTL) freight procurement events tells a slightly different rate tale:

  • The LTL sector is not struggling as much as TL. While there is still pressure on the LTL market due to reduced freight volumes (there’s less spillover from TL and still-high inventory levels), the pressure on the LTL sector is certainly not as great as it is on the TL sector.
  • LTL savings are not as prevalent. Some LTL incumbents in bids are pushing rate increases on certain lanes. The smaller number of LTL carriers (largely due to almost eight years of LTL carrier consolidation in the sector) breeds more discipline, as remaining carriers are committed to maintaining prices to achieve their profitability goals. While we are still seeing savings in LTL events, they are not as deep or “easy” to secure as in TL events.

The most effective LTL sourcing strategy we have seen Chainalytics Freight Marketing Intelligence Consortium (FMIC ) members employ is a tiered lane definition to their sourcing event. This approach basically:

  • Groups lanes by differing layers of geographical specificity based on volumes/density (higher volume/density areas would have more geographic specificity)
  • Allows for collection of more targeted pricing where higher volumes exist
  • Enables shippers to focus negotiations on the lanes that will have the greatest impact to their costs and customer service

We’ve also seen that there has to be some shipper willingness during the bid to entertain new carrier assignments in the network. On the whole, these approaches in recent LTL sourcing events have meant shippers have been able to drive significant savings.

Now that the LTL market is at one of it softer patches in recent years, we advise clients to look at their LTL contracts and their cost position relative to the market. Chainalytics’ next run of its LTL Freight Market Intelligence Consortium is happening now and will be a great starting point for evaluating LTL carriers and networks.

View the FMIC premium analytics video, to learn how FMIC insights benefit shippers around the world:

A senior manager in Chainalytics’ Transportation competency, Rob Achtzehn is responsible for the delivery of transportation consulting projects according to the project plan, Chainalytics’ methodology, and client expectations. Acting as the primary contact point with the client and managing all aspects of a successful project to ensure business insights and improve clients’ profitability and overall supply chain success.

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