The 2:00 Minute Warning

If you have the same strategy for sourcing truckload and LTL carriers, think again. As recognized experts in conducting transportation sourcing events, one of the biggest mistakes we see shippers making is treating truckload and LTL the same when it comes to conducting their annual RFP sourcing events.

Given what is happening in today’s transportation marketplace, knowing the difference between what is happening with truckload carriers versus LTL carriers is essential—especially if you want to get the best possible rates.

For example, it is estimated that in the LTL marketplace the top 25 carriers control about 85% of the capacity. In the truckload market, it would take a significantly higher number of carriers to make up the same share. Overall, shippers have fewer options for LTL carriers in the current market—and there are no signs of this changing in the foreseeable future. As Rob Estes, the CEO of Estes Express mentioned in a recent interview, there hasn't been a significant opening of an LTL company since the 1990s.

Since the LTL carriers have been managing their capacity well, they haven’t suffered from the same surge in capacity followed by a dip in demand that hit truckload market. And that is why we recommend that shippers have data which identifies the type of freight they are tendering to LTL carriers, how it flows through the carrier networks, and the demands they must meet to fulfill their obligations.

While some of these attributes are the same for truckload carriers, when shippers are sourcing their truckload freight, it is extremely important to understand and address how that truckload carrier’s equipment is being used and the length of time that it takes for their trucks to move into and out of your facility or your suppliers' and customers' facilities.

In our interview with Rob Estes he noted that everyone has talked about developing ongoing relationships with your LTL carriers for a long time. However in today’s marketplace where programs such as OTIF or MABD are placing tighter demands on carriers, having close relationships with your carriers can make a big difference. So if the only time you are talking to your carriers is during the annual bid process, it’s unlikely that you’ll find ways to save together. He suggests holding a quarterly meeting, and building an ongoing relationship where communication is open throughout the year.

Want more information on conducting LTL or truckload sourcing events? We encourage you to get in touch with us to hear tips for your company or get help conducting a sourcing event.