Two Truths And A Lie About LTLs (An Honest Look At The Year Ahead)

Can You Tell The Truth Versus the Lie?

It’s time for another round of “Two Truths and a Lie” where you try to figure out which two statements are true and which one is false – hence the name.

Get ready to try your hand at our latest LTL-centric edition – and to learn more about how your LTL shipping experience is likely to play out in 2024.

Round One: Which one of these statements about LTL rates wouldn’t pass a polygraph?

1) LTL rates have risen by more than 58.9% since 2018 but by less than 1% since early 2023. 

2) Despite being lower than they were in 2022, LTL rates haven’t decreased nearly as much as Truckload rates.

3) As LTL capacity stabilizes, LTL rates are expected to emulate Truckload rates and undergo a significant decline. 

Answer: 3

The LTL industry continues to be a tight pricing environment, thanks to the fact that 80% of its capacity is controlled by a small number of players who have pretty much moved in lock step to ensure they get some form of a rate increase each year – even when demand promises to be relatively soft. In light of that, don’t look for substantial LTL rate decreases anytime soon.

Round Two: Which one of these statements about the consequences of Yellow’s 2023 closure doesn’t ring true?

1) Since Yellow closed, several companies like XPO Logistics, Estes and Saia, have purchased many of its terminals.

2) Most companies that purchased Yellow’s terminals have already made that capacity available to the marketplace – or provided details about their plans to do the same.

3) It’s hard to say when the companies that purchased Yellow’s capacity will be making it available – or in what configuration. 

Answer: 2

While we certainly wish that companies were being candid about what they plan to do with their newly purchased Yellow assets, most of them have been keeping mum. It’s quite likely that there’s still a lot of trading and negotiating going on behind the scenes – and a lot of strategizing about when, how or if each company will bring its new capacity online.

Round Three: Which of these observations about this year’s LTL capacity is falser than it appears?

1) The LTL industry has less capacity than it did a year ago. However, this condition is merely temporary, because the companies that purchased Yellow’s assets are expected to make all of that capacity available to shippers by the end of 2024. 

2) The LTL industry has less capacity than it did a year ago. But things should improve at least a little bit in the months ahead because the companies that purchased Yellow’s assets will probably make some of that capacity available to shippers by the end of 2024.

3) Even though many companies have purchased most of Yellow’s assets/capacity, it’s possible that some of that capacity will never make its way back into the marketplace.

Answer: 1

Although many of Yellow’s former assets will eventually find their way back into the LTL marketplace, it’s quite possible that some of them were purchased by companies who were looking to prevent competitors from buying them instead – and have no intention of deploying them anytime soon. Many companies also may plan to use their Yellow purchases to replace or upgrade some of their existing terminals rather than to expand their networks.

Round Four: Which one of the following statements about LTL pricing and invoicing doesn’t add up?

1) Don’t underestimate the power of LTL accessorial fees. Each one can add anywhere from $1,000 to $5,000 to the cost of a shipment.

2) LTLs have some degree of subjectivity when it comes to how and when they apply accessorial fees. Last year, when profit margins were down, this subjectivity resulted in them tacking a higher percentage of accessorial charges onto their invoices.

3) As a rule, LTL invoices are highly accurate.

Answer: 3

Anecdotal evidence suggests that as many as 20% of carrier invoices contain some sort of billing error like improperly applied accessorial charges – and we’re not talking about errors that are in your company’s favor. That’s why auditing every LTL carrier invoice – or having it done by a 3PL – is always worth your company’s time.

Round Five: Find the statement that offers the least accurate LTL prediction for 2024.

1) Expect an uptick in LTL shipments in the near future if the Federal Reserve makes good on its promise to reduce interest rates several times this year.

2) Look for a substantial rise in LTL rates as more industry players consolidate or close operations.

3) Expect to see increased LTL fuel surcharges if the current Red Sea crisis is prolonged.

Answer: 2

While it’s possible that 2024 could include more LTL mergers, consolidations or closures (transportation is, after all, an industry that’s always evolving) it’s highly unlikely that any of them will be as disruptive from a price or capacity perspective as those we saw in 2023. But that doesn’t necessarily mean your LTL budget is home free, because other big-picture market factors could easily drive LTL rates and surcharges up.

The Finish Line (For Now)

There are far more truths and lies we could tell about the LTL industry – including statements we could make about everything from which LTL markets are especially hot to why LTL shipment automation makes sense.

But we’ll leave you with this for now: If you’d like more information about any of the legitimate LTL events and trends we’ve mentioned above, give us a call. We’re proud to have helped numerous companies like yours manage more than $1.2 billion in LTL spend each year, and we’d be more than game to do the same for you.

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