The 2:00 Minute Warning

We have some important information to share about things that are happening in the LTL industry, but first, we need to address what’s happening at the East and Gulf Coast ports.
 
Yesterday, a historic strike began when the contract between the ILA and the USMX ended at midnight. With the strike ongoing there, we've heard from several folks asking: How long will the strike continue? With the Biden administration having stated that they have no intention of invoking Taft-Hartley in order to bring the strike to an end, no one knows how long the strike will last.
 
That said, we have a great network so we've reached out to the experts in the ocean markets and learned the following: Expect at least a one week shut down, but don't be surprised if the strike lasts 2-3 weeks.
 
At a breakfast this morning, one senior supply chain executive with global supply chain responsibilities noted that this may be the most significant supply chain event in her thirty year career. She was especially concerned about the "tail" impact of the strike, a.k.a. if there is an extended strike, it may take several weeks before the East Coast ports can resume normal operations.
 
The Wall Street Journal noted that while many shippers anticipated a strike and pulled orders forward, there is a large volume of inbound freight that needs to be rerouted. We will keep you posted as we learn more about what to expect.
 
While the port strike is getting all the attention there are some very important things you need to be aware of in the LTL sector. With more LTL carriers moving to "Density Based Pricing" several shippers have asked:
 
What should we expect from our LTL carriers in 2025?
 
To answer that question, we’ve had a ton of meetings with senior executives from several carriers. Here are a couple points that shippers should know as they head into 2025 since they could have a significant impact on your rates.
 
First, each and every carrier has said that they have much better data than their shippers. Shippers for the most part don’t know their freight dimensions down to the inch or the amount of time associated with moving their freight down to the minute. But with dimensionalizers and ELDs, your carriers know how much space and time is used to move your freight - and they are using it to price their services.
 
Second, your LTL bids should be as specific as possible. The more specific the bid, the less impact that their "insurance factor" will have on your rate pricing. What is the insurance factor? When carriers get a shipper's RFP that is too vague or unreliable, they put that fudge factor into their pricing to cover their costs in case they are having to do something that was not covered in your RFP.
 
Third, after doing business with you for 90 days or 120 days, expect the carriers to review the profitability of their pricing. They’re going to look at the operating ratio and if that operating ratio isn’t good, you can expect another conversation with your carriers.
 
Fourth and finally, several carriers noted that when shippers use a quality 3PL like TranzAct, they will likely get better results. TranzAct is in the freight market every day, has conducted billions of dollars worth of sourcing events, and uses a proprietary sourcing model to help our customers get the best possible outcome from a sourcing event.
 
If you’re interested in an assessment of your LTL operations, or have questions about the port issue, simply give us a call, send me an email, or schedule a short conversation.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

CONNECT ON LINKEDIN

LET'S TALK! BOOK TIME WITH ME