Regardless of the current political climate, e-commerce expansion continues, and the global supply chain has grown more interdependent than ever. Shippers need to understand why LTL freight shipments spikes will affect their operations and how the right partner can mean the difference between success and failure.
As e-commerce continues its march toward dominance over the entire retail market and now with wholesalers and OEMs going more direct-to-consumer, shippers remain nervous. The systems implemented as little as five years ago are outdated and incapable of handling the increased demand of modern e-commerce. Also, the size of e-commerce freight is changing. Shipments are no longer relinquished to small parcels, and customers can order entire appliances and furniture online. This drives a change in the shipping industry, increasing the volume of LTL freight shipments and forcing shippers to reconsider their options. The current less-than-truckload (LTL) shipping market is estimated to be worth $42.6 billion, notes William B. Cassidy of the Journal of Commerce, and even that value is expected to wax more than 5% in the coming year. To stay competitive, shippers need to understand the challenges of increased LTL activity, why an LTL partner is crucial to success, and a few tips to ensure such success.
Challenges of Increased LTL Freight Shipments and Overall Activity
The challenges of increased LTL demand are simple. They include:
- Higher demand for deconsolidation to move from full truckload to LTL. More demand on LTL freight shipments carriers amounts to increased freight consolidation/deconsolidation, leading to an increased risk for errors and damage due to more touchpoints.
- Increased parcel consolidation to reap LTL rates. A vital driving force behind the market demand lies within the increased need to ship parcels at a lower cost. Parcels have a high price tag, but if shippers consolidate, costs decline.
- Demand to move freight closer to consumers. Another factor influencing the market goes back to orders for faster delivery. Closer freight is cheaper freight. As shippers work to move freight closer to consumers, as seen recently with significant acquisitions and mergers, overall freight costs continue to drop.
- Limited capacity for LTL continues to weigh on the minds of shippers. Lastly, the ongoing changing of the market includes a way to manage limited capacity. The LTL capacity crunch is not as tight as 2018, but shippers are clamoring to secure more capacity at lower rates. As a result, more companies are turning to new services and technologies, including a dedicated TMS, to handle such demand.
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An Established LTL Partnership Safeguards Shipping Demands
Establishing a partnership with a third-party logistics provider (3PL) who also offers a focused over-the-road shipping TMS that handles parcel, to LTL, to Full Truckload, and vice versa, such as Cerasis, offers significant benefits over trying to navigate the LTL revolution on your own. Cerasis has the experience and skill to manage your freight consolidation and deconsolidation needs. Meanwhile, it’s imperative to review costs versus freight savings for LTL versus other fulfillment options, especially as the final mile market evolves to offer more ways to receive packages. The final mile aspect of LTL may stand out as the leading reason to work with a partner, giving someone else the burden of handling growing customer demands, which may range from debris removal to new product setup and installation. These added services are collectively known as white glove services. The easy way to think about them is to say, “would I want to do this or let someone else handle it for a small charge?”
Partnerships supersede the chaotic landscape of the shipping world. As e-commerce booms, everyone has an opportunity to grow operations. The path to success follows the way of the most efficient and cost-effective services. Lane-based rating systems and specific pricing models also affect freight spend, so any partnership must consider all options. Since LTL freight shipments were originally a mode where most shippers held out in moving freight, it is also an opportunity to tap new capacity, using real-world teams to understand and respond to market forces.
How to Further Protect Your Supply Chain’s LTL Capacity
The path to success is not finite. According to FreightWaves, billing errors make up a significant portion of shipping risks. After all, what good is LTL freight shipments if the shipments do not arrive on time or result in instances of freight invoice overbilling? Instead of trying to focus on a single mode, shippers should apply these tips to protect LTL capacity.
- Avoid becoming “that shipper,” who games the system and pays whatever is billed, creating a hassle for drivers along the way.
- Automate shipment tendering processes.
- Integrate your legacy ERP with modern technologies.
- Take advantage of a dedicated TMS.
- Build out supply chain functionalities to handle inbound through outbound logistics.
- Streamline dock activity with dock scheduling software.
- Communicate shipment details clearly and thoroughly.
- Take advantage of negotiations to secure lower rates.
- Use data to plan for changes in demand, including peak season.
- Approach all modes from an origin through delivery perspective, always considering every option.
Secure Additional Capacity and Build Better Shipper-Carrier Relationships With the Right Partner
The LTL market is unstable. The unrelenting push for more tariffs and stronger consumer demand creates a significant risk for shippers. Those that get LTL shipping right can reap substantial rewards, including lower freight spend, automated management, and more. Meanwhile, those that fail to invest in LTL freight shipment management will experience higher freight costs, poor visibility into transactions, and even the threat of bankruptcy. Avoid these problems by implementing a dedicated TMS now.
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