Subscribe to our free, weekly email newsletter!

LTL sector appears to be on solid footing as the mid-year point approaches

By Jeff Berman, Group News Editor
June 16, 2014

As the first half of 2014 is nearly complete, the less-than-truckload (LTL) sector appears to have a fair amount of positives working in its favor, including better-than-expected volumes and decent pricing, among others.

Stifel Nicolaus analyst David Ross outlined the current state of LTL affairs in a research note issued last week. Ross cited how publicly-traded LTL carriers Old Dominion Freight Line and Saia have reported strong annual tonnage gains through May and also observed that private carriers have also indicated similar sentiment, while adding they could be hauling more freight were it not for lack of available drivers (a constant theme to be sure these days).

Ross was also quick to point out that with the LTL market less than ten percent of the truckload market, a modest tightening in truckload capacity, which he said is occurring, translates into some truckload shipments being absorbed by LTL carriers.

Other notable observations from Ross included how LTL tonnage in the first quarter were up 4.3 percent annually even though the winter had a harsh impact on freight transportation productivity, and he added that second quarter tonnage is expected to be healthy, due to decent manufacturing activity, as evidenced in data from the Institute for Supply Management, pent-up demand from the first quarter, pre-shipping in advance of a possible West Coast port labor shutdown and market share gains as well.

And last week’s shuttering of New Century Transportation and last year’s Vitran and Central Transport merger also figure to increase LTL tonnage for public LTL carriers, and benefit market pricing, too.

Ross was not alone in observing the current strength of the LTL sector. Satish Jindel, president of Pittsburgh-based SJ Consulting, explained to me that LTL volumes are solid and seeing increases in tandem with pricing that is holding due to the fact that a good balance of LTL capacity remains tight in many cases.

“Carriers currently have a good mix of shipment and capacity balance in order to reap the profits and reinvest into the business,” Jindel told me. 

During our conversation, Jindel also pointed out that freight brokerages continue to create value in LTL, explaining that it is not only the “quality of customer” for brokers but also quality of freight, or the value proposition in terms of technology to secure and broker loads that enable the, to have a decent margin.

As previously reported in this space, there has been a significant influx of truck brokerage players that are active in the LTL market in recent years, which is reducing margins for carriers that are “struggling for pennies.” What’s more, industry estimates suggest it is fair to estimate that brokers are selling 25 percent of total LTL loads today and that figure is rising.

All told, given the slow pace of the economic recovery, it stands to reason the LTL sector is on strong footing for 2014. While things can––and often do––change quickly, industry stakeholders indicate that there is more than enough freight to go around, with carriers able to secure decent pricing, both two things that were missing in spades not all that long ago.

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

Seasonally-adjusted (SA) for-hire truck tonnage in October at 135.7 (2000=100) was up 1.9 percent compared to September’s 133.1, and the ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment was 139.8 in October, which was 0.9 percent ahead of September.

The average price per gallon of diesel gasoline fell 3.7 cents to $2.445 per gallon, according to data issued today by the Department of Energy’s Energy Information Administration (EIA). This marks the lowest weekly price for diesel since June 1, 2009, when it was at $2.352 per gallon.

In its report, entitled “Grey is the new Black,” JLL takes a close look at supply chain-related trends that can influence retailers’ approaches to Black Friday.

This year, it's all about the digital supply network. In this virtual conference, we will define the challenges currently facing supply chain organizations and offer solutions designed to transform linear operations into dynamic, automated networks that offer seamless communication, visibility, and the ability to respond and optimize processes at any given time.

In his opening comments assessing the economy at last week’s RailTrends conference hosted by Progressive Railroading magazine and independent railroad analyst Tony Hatch, FTR Senior analyst Larry Gross said the economy continues to slog ahead at a relatively tepid pace, coupled with some volatility in terms of overall GDP growth. And amid that slogging, Gross said there is currently an economic hand-off occurring between the industrial sector and the consumer sector.

Article Topics

Blogs · LTL · 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