What’s (Literally) Up With LTL Carriers’ Rates?

If you’ve been feeling a little bit larger lately, join the club. According to a recent study, many Americans have gained anywhere from 22 to 37 pounds since the pandemic began.

It’s a similar situation in the LTL market, with current rates tipping the scales at 6-12 % more than they did a year ago.

Like people’s increased BMI, much of the blame can be placed squarely at the feet of COVID-19, which exacerbated the ongoing truck driver shortage/capacity crunch by:

  • Creating a massive surge in initial consumer demand as shoppers made a run on store shelves for toilet paper and other necessities
  • Preventing some drivers from reporting to work due to virus exposure or concerns about the same
  • Temporarily closing down truck driver schools, slowing down the pipeline of qualified drivers who were being added to the workforce
  • Providing economic stimulus checks that gave some would-be drivers the means to stay home rather than going to work
  • And inspiring a record number of eCommerce orders

The net result was a full year of peak season-like pressures that could give the film Groundhog Day a run for its money – and a pricing market that has today’s LTL carriers firmly in the driver’s seat.

The fact that the LTL pool is a relatively small one, with the top ten LTL carriers controlling about 75% of the market has made matters even more challenging, as has UPS Freight’s recent acquisition by TFI International, which we reported on last month.

So where does this leave things as we begin to anticipate a return to a new, post-pandemic normal? Unfortunately not as close to getting great LTL rates as you might hope.

For one thing, now that the dust from a hectic 2020 has settled, many companies are in a busy inventory replenishment/restocking mode. For another, the National Retail Federation expects 2021 to be another year of significant retail growth. And let’s not forget that there’s another round of economic stimulus checks being distributed.

In light of this, look for LTL capacity to continue being outstripped by the market demand for some time to come and for LTL rates to continue rising accordingly. (For more about this, check out our Side By Side feature from this month’s AFS Exchange issue.)

Good or bad, AFS will be sharing the latest news about these rates – and passing along viable strategies for keeping your overall freight bills as low as possible under the circumstances – in future articles.

Meanwhile, do what you can to stay in good graces with your carriers, because in a market like this, it’s never been more important to maintain positive relationships or to position yourself as a preferred shipper. And for the record? It’s probably also a good idea to start laying off the donuts and potato chips.


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