After last week’s Two Minute Warning that addressed what’s going on in the parcel market and the changes that UPS and FedEx are making that could inflate your parcel costs, we heard from several shippers.
These shippers asked for our advice on how to mitigate the impact of these changes and to learn more about how tools such as various parcel analytics and negotiation strategies could reduce their parcel costs. And then they asked: “What about our LTL costs?”
Great news! On January 9th, 2025, TranzAct will be hosting an important webcast that will address the changes that are occurring in the LTL marketplace and how these changes will affect your freight costs and budgets in 2025.
As LTL sourcing and pricing experts, we’ve conducted billions of dollars in sourcing events and have a wealth of experience and expertise in addressing valuable strategies that shippers can use to manage and reduce their LTL costs.
TranzAct also has a great network and we’ve reached in to that network and had discussions with several senior executives from some of the largest LTL carriers to learn more about how they see the LTL market in 2025. Here are a few of the lessons we've learned.
First, density-based pricing is where the market is moving.
Recently, a carrier explained something to me that seems obvious: “What we and every major every LTL carrier is trying to do is to maximize the revenue on each and every trailer that’s moving through our network.” Historically, the LTL carriers have billed based on the weight of the shipment. Today LTL carriers are also charging shippers for space. Specifically, they are looking at the size and weight of the shipment to determine the freight charges.
During our webcast on January 9th we will look at how this will affect your freight costs. For example, there could be opportunities to lower your LTL costs through internal changes, such as pallet configuration. If you’re shipping a class 70 product, the rate isn’t the same for every shipment regardless of what’s on the pallet. A 300-pound pallet with class 70 has a higher pounds per cubic foot than a class 70 product for a 500-pound pallet and will be priced accordingly. That’s why it’s important to know the factors driving your LTL costs.
Second, stowability is critically important.
While you may not be looking at how your pallets fit on LTL carriers' trailers, the carriers are definitely looking at this factor. If you’re a shipper that likes to put cones on that pallet to say don’t stack, you’re going to pay more. If your pallet can not support being stacked on top, or if there is overhang and it isn’t quite 48x48 or 40x48, you’re also going to pay more.
Third, NMFTA changes will increase variability.
As we've shared in some recent Two Minute Warnings, the NMFTA will be making changes that affect how around 3500 items are classified under the NMFC. These changes, which will become effective in July 2025, will be among the most significant changes ever in the LTL industry. They will support the move to density based pricing, plus create variability and uncertainty in determining your actual costs for LTL shipments.
Unless you’re a shipper that knows the dimensions on each and every pallet that goes to an LTL carrier, your company could lose money. How could that happen? If your actual freight charges exceed the amounts you are billing your customer on prepaid and add, or delivered costs shipments, these discrepancies could add up to a big number and significantly impact your bottom line.
Join us for a new webinar
Add it all up and you’ll understand why it is important for you and your team to join us for the webinar on January 9th, 2025 as we take a look a the LTL market to see what’s coming, how to manage it, and how it could affect your freight budgets.
Before then, if you’d like to learn more about valuable strategies to control your LTL costs, simply give us a call, send me an email, or lets get together on Calendly. We are always delighted to share valuable information about how you can control your transportation spend and improve your supply chain capabilities.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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