Why LTL Shipping Is Becoming More Popular
The LTL shipping market has exploded in the past few years. Despite being blindsided by the pandemic, which resulted in driver, dock, and warehouse worker shortages, tighter capacities, high demand, and steep general rate increases, the LTL industry has become increasingly popular with shippers looking for a better option to move their goods. Businesses that traditionally used full truckload shipping to move cargo are finding it too rigid and inefficient for the increased demand. Many are opting to move smaller LTL shipments more frequently to keep pace. In addition, new restrictions from major parcel service carriers have led to shippers bundling items together and shipping a pallet via LTL rather than individual parcels. The flexibility of LTL has made it a preferred choice amongst large and small businesses to keep up with supply chains and meet the new demands of the market.
The Rise of E-Commerce
As consumer demand shifts further toward the online shopping experience, supply chains are struggling to keep up. In 2016, e-commerce was responsible for 7.5% of all retail sales. By 2021, that number nearly doubled, as e-commerce accounted for 12.5% of all retail purchases. Accelerated by the pandemic, this sharp shift toward online shopping has left many businesses scrambling to keep up with the consumer demand and the supply chain versatility to meet it.
Freight that used to move in full truckloads is now being broken up into multiple LTL shipments to increase the frequency of deliveries. With the heightened demand for e-commerce, businesses’ inventories have needed to extend to the freight that hasn’t arrived yet. For many, portions of shipments have already been sold online before the retailer gets it off the truck and into inventory. Having consumer demands affecting the supply chain that early has created an increasingly complex landscape for shippers and carriers alike.
Only LTL has the logistical flexibility to accommodate these changes in the e-commerce market, and businesses are flocking from truckload service to LTL to take advantage of its versatility.
Tighter Truckload and Parcel Capacities
Full truckload, less-than-truckload, and parcel service all play a vital role in transporting goods that keep commerce moving forward. With LTL freight, cargo shares space with other shipments heading toward the same destination, which allows for more flexible rates split between shippers to make up the cost of the whole trailer.
With rates skyrocketing for parcel, TL, and LTL in recent years, shippers must increasingly rely on analytics and advanced planning to find capacity and negotiate rates. This is harder to do in the more rigid modes of parcel and truckload shipping. With LTL, where shipments are smaller and more frequent, shippers have more opportunities to adjust their freight loads and work with carriers to secure rates and capacities that meet their needs.
LTL Shipping Flexibility
The LTL industry was birthed out of the need for more flexibility in shipping. If only truckload freight existed, shippers would have to wait until demand reached a point where they could send a full trailer, or risk wasting time, fuel, and money on a half-filled truck. LTL freight consolidates freight loads with those of other shippers to allow smaller and mid-sized shippers to meet their supply chain needs without breaking the bank. LTL solutions provide greater flexibility when it comes to service options as well. Specialized services like inside pickup and delivery, special handling, liftgates, and refrigeration can better meet each shipper’s unique needs. When building a supply chain strategy, this type of flexibility is critical to staying ahead of the curve.
To fully understand and take advantage of LTL shipping, shippers must consider the entire supply chain network. The supply chain is a complicated, interconnected web of shipping modes, lanes, and methods. What happens to one chain link can affect every other link down the line. If shippers utilize proper planning and analyze freight capacities, pay attention to market trends impacting freight rates, and utilize innovations, technologies, and third-party experts, they can find ways to secure the best LTL rates. Modern automation and data analytics are most effective in the LTL market, where agile and flexible shippers can save money over TL and parcel service rates
Like all modes of freight, LTL shipping is currently struggling to meet the influx of demand while still recovering from a pandemic that created labor and equipment shortages, new safety protocols, and tighter capacities. However, this is expected to change. As more technologies and innovations are implemented and labor rebounds, LTL is likely to improve its efficiency and remain the best option for shippers that need to maintain flexible supply chains and strict freight budgets.
One of the best ways to navigate the complicated world of LTL shipping is partnering with a 3PL like Koho. Koho employs cutting-edge technology, automation, and expertise in the freight quote process, providing you with the data, analytics, and expertise to help you secure the best rates with the most trusted LTL carriers. To get the most from your shipping budget, contact Koho today.