LTLs losing share to competitors, study says

By Staff -- Logistics Management, 11/1/1999

The U.S. less-than-truckload (LTL) industry lost ground in 1998 as businesses either shipped less freight or converted more of their LTL traffic to premium-priced air cargo or time-definite ground-parcel services. That was one of the main conclusions of an annual study of U.S. transportation trends, titled U.S. Domestic Surface Traffic and Yield Analysis by Competitor and Market Segment, issued by the Colography Group, the Atlanta-based transportation-market research firm.

According to Colography's research, the number of LTL movements fell from 156.1 million shipments in 1997 to 152.4 million in 1998. LTL tonnage dropped from 164.3 billion in 1997 to 161.5 billion in 1998. Revenue for LTL carriers, however, did increase slightly from $19.5 billion in 1997 to $19.9 billion in 1998.

Based on its data from surveys of more than 100,000 shippers, Colography found that the domestic LTL market was extremely fragmented. The report noted that the industry leader, Roadway Express, held no more than a 9.3-percent share of the LTL shipments in 1998. Roadway Express also was the leader in revenue, with an 11.6-percent share of the market. Yellow Freight System, however, was the market leader in tonnage hauled with an 8.4-percent share.

Colography President Ted Scherck says that the conversion of LTL traffic to air, air-hybrid, and enhanced ground-parcel services is continuing. "The recently reported 8.1-percent increase in 1998 in deferred aircargo shipments, when compared to the LTL results, indicates clearly that air cargo is still taking market share from surface competitors," Scherck reports.

He adds that it is still too early to measure whether the recent launches of guaranteed, time-definite services by a number of the major LTL carriers can reverse the downward trend in their segment of the transportation market. "The U.S. LTL market is splintered more dramatically than we thought," Scherck says. "This presents opportunities for the 'Big 11' truckers to pursue and perhaps gain market share from smaller competitors. The trick will be to keep that business from shifting to air cargo carriers and freight forwarders, which the marketplace perceives as delivering a better service than the traditional LTL sector."