What's Ahead for LTLs in 1998?

By Staff -- Logistics Management, 1/1/1998

The less-than-truckload segment of the trucking industry has been easy to define in the past: Regional carriers do well in overnight and second-day, or direct, markets. National truckers excel at longhaul service. Multi-regional carriers overlap both markets. All have grown in the past year, all are cyclical, and all are critical pieces of the complete LTL puzzle. That said, the industry continues to change, influenced by both economics and evolving shipper demands. Here are our predictions:

* There will be no LTL strike in 1998. The issues are not as heated as they were in 1994. There is too much at stake for both organizations. Both sides know that shippers have emergency plans to divert freight in case of a strike. And, besides, LTL management and the Teamsters have worked for over five months on a new agreement. Anything less than an early settlement would be a loss for both sides.

* Further consolidations are likely. Both shippers and carriers expect a shakeout among LTL carriers in 1998.

* The lines between regional and longhaul carriers will continue to blur. As carriers scramble for more business, the shorter long hauls and the longer short hauls will be fair game for any number of carriers. Customers today care less about labels and more about transportation solutions.

* The single-carrier concept will get another look. In the recent past, it was cheaper and easier to do business with fewer carriers, says Pitt Ohio's Geoff Muessig. However, he says, "information systems have removed that barrier." In addition, shippers hurt by the UPS strike are questioning again the business sense of sole sourcing.

* Any rate increases should stick at least through the first half of the year. Both shippers and carriers have become more cost and benefit conscious, so an increasing number of shippers are prepared to accept increases where they see benefits in lower total operating costs.

* LTLs will continue to add value-added services to their menu of offerings. Shippers will depend on their LTL carriers for information, logistics services, international delivery, and time-definite services. Carriers will be challenged to make these offerings profitable.