Subscribe to our free, weekly email newsletter!

LTL execs discuss industry challenges at NASSTRAC

By Jeff Berman, Group News Editor
May 07, 2012

While the freight economy is faring better now than it was during the depths of the recession, there are still many hurdles to cross, especially for the less-than-truckload (LTL) industry.

That was the general consensus among four prominent LTL executives at last week’s NASSTRAC Logistics Expo & Conference in Orlando, Fla. The executive panel included Rob Estes, president and CEO of Estes Express, Jack Holmes, president of UPS Freight, Bill Logue, president and CEO of FedEx Freight, and, Roy Slagle, president and CEO of ABF.

“We are hopefully emerging from the most challenging tie we have hard in my 35 years in the industry, aside from de-regulation in 1980,” said Estes. “2007 through 2010 was certainly challenging for the industry and has made all the LTLs stronger. We have had to adapt to challenges, the ways we do business, and ways to improve costs.”

With roughly 60 percent of LTL costs labor-related with fixed costs for schedules, pickup and delivery, and overhead, Estes said the recession created a challenging environment and forced LTLs to look at different ways to make operations more efficient and be more productive.

And with improved business conditions comes increased competition, said Estes.

“We are competing with thoroughbreds now and always need to bring our A game when doing business,” said Estes. “I see 2012 being a good year but with some clouds on the horizon with elections in November.”

UPS’s Holmes explained that the last five years in the freight transportation sector has been an interesting ride.

And like back then, today, he said, there remain a lot of revenue-related challenges for both shippers and carriers.

“We all were forced to do a lot more with a lot less during that period, and what you hear when you come out of this is that companies came out stronger, because they had a lot of capabilities they did not know existed.”

In discussing some of the differences between a few years back and now, Holmes noted that fuel is back in the spotlight due to higher prices, and so is sourcing, although Mexico is now the main topic of sourcing discussions, whereas China got more attention before. Other topics he cited were the potential impact of the Panama Canal on the cost of doing business and mode-shifting up from smaller shipments to larger ones and moving from LTL/parcel to truckload.

The average weight of an LTL shipment is still less than 500 pounds, with less than half of all LTL shipments under 500 pounds, however the greater than 10,000 pound sector has grown 16.8 percent in recent years, said Holmes.

“That shows you there is a move there,” said Holmes, “with some of that impacted by less capacity in the truckload sector than there was in the past. But there is always a move towards consolidation wherever possible.”

The topic of industry regulations was prevalent throughout the panel, with FedEx’ Logue noting that over regulation in the transportation strains the ability of carriers and providers to make changes and move towards progress.

“Taking time to educate legislators on how over regulation in the transportation industry impacts the real world is an important responsibility for [shippers and carriers,” said Logue.

Logue also delved into sustainability and energy security, adding that getting off of foreign oil and using fuel more effectively are vital for the transportation sector.

FedEx Freight, he said is very interested in looking at LNG-powered vehicles for its long-haul fleets and is currently evaluating and testing LNG-powered vehicles to get a better idea regarding its long-term efficiency.

“Another area we need help in is long-term efficiency for things like 33-foot trailers, which we have pushed hard for,” he said. “We have tested 33’s, and our drivers have found them to be very effective, and it brings 18 percent more capacity to the highway with the same amount of trucks. This is akin to double-stack trains and wide-body airplanes. It could be a breakthrough opportunity to reduce congestion and emissions.”

And regarding the urgent need for a new federal transportation bill, Logue said the national supply chain is at risk without needed improvements in the form of a new bill, with the current system showing signs of wear.

ABF’s Slagle said that the trucking industry is willing to pay higher taxes for diesel to repair its crumbling infrastructure and build new lanes.

“In some cases, Washington gridlock can be viewed as a good thing, but in this one it is not,” said Slagle. “We need to see rule makers and agencies get engaged with our industry and convince them to listen to industry experts to come out with a better plan. We need to let our voices be heard.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Logistics managers have always been under pressure to strike the right distance between specialized intermediaries and the markets they want to serve. That challenge is becoming increasingly complex, however, as mega-brokerage enterprises capture more share.

There are so many ways to analyze the state of truckload capacity, and on top of that there is, perhaps, no other facet of freight transportation that is so directly impacted by myriad moving parts, whether it be driver availability, rates, demand, weather, the economy, and, of course, federal regulations, among others.

The ATA said that the annualized turnover rate for large truckload carriers, which it defines as truckload fleets with more than $30 million in revenue, increased 3 percent to an annualized rate of 87 percent in the second quarter.

If you want to meet some of the most ticked-off people on the planet, talk to any trucking industry retiree who received that letter from the Teamsters’ Central States pension plan notifying them of their potential financial haircut coming in retirement.

Global express delivery and logistics services provider DHL introduced a new flight geared towards Michigan-based importers and exporters out of the Detroit Metropolitan Airport.

Article Topics

News · UPS · FedEx · ABF Freight · Less-Than-Truckload · Estes · All topics


Post a comment
Commenting is not available in this channel entry.

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA