There have been times in the LTL industry when it seemed that nothing significant was happening in terms of market share, freight diversion, and rate leverage. Now is not one of those times.

“This is a good time to put your LTL bids out,” says Satish Jindel, who tracks the LTL sector as principal of SJ Consulting. “Earlier in the year was a better time, but now is a good time too.”

Taking advantage of an overall soft market in the $33.6 billion LTL sector, shippers are voting with their feet. They are abandoning the large, unionized, national carriers in favor of a host of alternatives that are filling the market place. Non-union competitors, eager to capitalize on the ongoing talks with the Teamsters union, are pulling out all stops in an attempt to win freight from the unionized carriers.

“There is some shifting going on,” says Fred Boehler, vice president of logistics for Borders Group. “Those carriers who aren't able to execute from a service standpoint are losing market share because competition is able to match them on price and able to deliver a better service product.”

The winning carriers are those able to capitalize on the still-growing regional markets by offering top-flight service at competitive rates. Pitt Ohio Express, the Northeast regional carrier, expects 10 percent tonnage growth this year, partially as a result of geographic expansion. A. Duie Pyle, another Northeast regional, reports that it expects a 7 percent revenue gain with virtually no expansion.

Con-way, a perennial leader in profitability in the LTL sector, is reporting increases in tonnage and reports seeing year-over-year increases in volumes. The company also reports that its recovering business lost during its yield improvement initiative in late 2005 and 2006.

And even though shippers are still demanding consistency and reliability from their time-tested carriers, many don't expect to pay a whole lot more for high-level service due to current market conditions. A survey of more than 100 shippers by Bear Stearns showed shippers expect LTL rate increases of just 1.5 percent year-over-year. That's the lowest expected increase since the second quarter of 2002 when the LTL sector was at the end of the last freight recession.

Although virtually all LTL carrier executives describe pricing as “rational but competitive,” the reality is that the marketplace is perhaps the softest it's been in six years. Analysts contend that any shipper who is signing a contract for more than a 2 to 3 percent rate increase ought to be doing better in negotiations.

“The overall market is soft—that's what I'm hearing across the board,” Boehler adds. “Absolutely, you're seeing more market shifting. From a price standpoint, there's not a huge differentiation among the key players.”

A subtle word of warning: Shippers should keep in mind two dates: March 31, 2008, and July 31, 2008. Those are expiration dates for Teamsters contracts covering nearly 300,000 workers at UPS and some 60,000 workers in LTL. Union sources report solid progress in the UPS talks, but hardly any work on the National Master Freight Agreement.

The year before a contract year is always lively in freight. “It helps if a shipper is negotiating with the unionized guys who will fight to retain the business,” Jindel says. “But shippers can only use that leverage with the unionized carriers. The non-union carriers actually benefit from any uncertainty in the market place that comes with contract talks.”