LTL Freight: How has tight capacity, truckload rates and parcel modes impacted LTL?

Adam RobinsonFreight Market Blog

ltl freight

Truckload rates have a significant impact on the industry, whether intermodal or single-lane shipping modes get utilized. Full truckload (TL) and less-than-truckload (LTL) are popular methods that shippers use to move goods and products from one point to another. The transportation of freight not needing the entire space of a truck is LTL freight.

On the opposite side of the coin are TL shipments that utilize all available space in the trailer. Both play a vital role in shipping and the transportation of goods. Trucking rates vary depending on the type of freight, load size and destination. All of this needs careful consideration when shippers are looking at tight TL and parcel modes and availability. 

Why changes in parcel or truckload rates impact LTL Freight

With LTL freight shipping, the cargo that needs to be transported from one shipper shares space on a truck with cargo from another shipper. It is much like rideshare for freight shipments. The benefit of using LTL shipping is that the load doesn’t need a TL to be picked up and delivered. LTL freight shipping enjoys flexible rates because shippers can track multiple orders to reach a TL, so each partial load may not have high transportation trucking rates. With over-the-road TL shipping, the freight that makes up the shipment requires using the full truck trailer. 

This is why it is known as a TL shipment. Generally, TL shipping is used when shipping larger orders that are all going to the same destination or the items are heavy and will quickly max out the entire space or weight allotment for the truck. With TL shipments, the freight rate is paid by a single shipper rather than split up between multiple smaller shipment loads. 

There are many other differences between LTL freight and TL, and some companies specify in their routing guides which modes are allowed or accepted. However, when it comes to rates and calculation and how the load sizes and types affect those fees, shippers must visualize the entire supply chain network.

OTR modes are highly dependent on one another for rate changes and volatility

The supply chain is a complicated and interconnected web of lanes, channels, shipping modes and methods. Each one is connected and reliant on what happens beforehand to establish trucking rates and protocols. What happens in one area can quickly impact everything farther down the line within the chain. The majority of OTR shippers are intensely aware of how quickly fees and additional charges can add up and increase overall shipping and operational costs. 

And according to a report by Parcel, accessorial prices keep growing year after year and are now estimated to account for a staggering 40% of shipping costs and expenditures. This has caused TL and LTL freight rates to shoot sky-high, despite efforts to embrace proactive planning and budgeting. To survive trends like these and to cut costs as much as possible without cutting quality or losing capacity, changes must occur. It is vital that shippers analyze freight capacity, how the market impacts shipping rates, and use supply chain technology and innovations.

Increase data-driven decision-making with freight forecasting

Both TL and LTL freight shipping methods play a vital role in shipping and the transportation of goods throughout the local, national and global supply chain network. Changes within the transportation lanes can impact the LTL freight rates that are incurred with any shipment load. 

Embracing modern digitalization trends, automated processes, intelligent machines, and data-based planning can keep shippers ahead of the market. Freight forecasting is critical for predictive freight rates, effective planning, smart budgeting and substantial capacity bidding. It is essential for shippers to understand freight capacity, calculate LTL freight rates and make the best use of modern automation and data analytics. Automation and smart data make it all possible. 

And part of that begins with putting the power of an advanced freight analytics engine to work in your enterprise. Request a FreightWaves SONAR demo today to learn more about how your organization can increase its understanding and insight into both LTL and TL freight rates. And if your enterprise is also in need of advanced processes and data to manage RFP processes, consider requesting a SONAR SCI demo too. Get started via the buttons below today.