What Are the Trends in LTL for 2019?

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The year ahead will shake up the long-held standards for controlling freight spend and meeting customer expectations. For 2019, the trends in LTL will focus primarily on demand, rates, carrier and trucker expectations, the needs of shippers and more. Let’s get started.

1. E-Commerce Demand Will Drive Trends in LTL for 2019

E-commerce growth is a double-edged sword in modern freight transportation. While it provides a substantial boost to all carriers, it comes at the cost of less capacity in the industry. A strong economy overturned previous assertions of a 10-percent market-share for e-commerce; e-commerce growth, making up 17 percent of retail today, is expected to climb to 35 percent by 2020. That effectively means a doubling of e-commerce size by the end of 2019. This will place massive pressure on LTL carriers and shippers seeking to find available capacity. Along with the demand for a record-breaking peak LTL shipping season, and LTL e-commerce solutions will require more trucks, more shipping lanes, more time on the road and more resources.

2. Capacity Crunch Measures Become Part of LTL Management

LTL freight is more complicated than Full Truckload, and as FT has reached a severity of 8 out of 10 for carriers, freight turndowns have become common. The same turndowns are starting to apply to LTL shipments too; some carriers are turning away high-volume LTL freight in favor of smaller shipments.

3. The Trucker Shortage Will Worsen

Lacking talent is a critical driving force in the capacity crunch, and the demand for more truckers will expand significantly in 2019. Retiring drivers and those moving to other, more lucrative fields will exacerbate the problem. Wage increases will help, but the average age of today’s trucker is 49, seven-years older than the average worker. More drivers will retire, and the vacuum left in their wake will claw away at shipping profitability.

The Evolution of LTL Shipping Practices

Addressing Capacity Woes, Use of Last Mile & How to Choose the Right LTL Carrier

4. LTL Will Attract More Talent and Drivers

Since the focus on reducing the capacity crunch lies in addressing the driver shortage, the simplest solution will be attracting more drivers. Unfortunately, full truckload drivers lack a point of entry that does not require a CDL. In other words, they start and finish at the company as drivers. LTL carriers, on the other hand, can attract talent as material handlers, packagers, dock supervisors and more. Entry-level team members can move up with time and become drivers. This defining characteristic will be used to attract the next generation of talent to LTL in 2019.

5. Technology Will Become Key to Controlling LTL Freight Spend

Automation in transportation, including integration between ELD, labor management, WMS, TMS, ERP, SaaS, WES, EDI and API systems, among many others, will be essential to managing LTL freight spend. This will be the leader of the trends in LTL for 2019 as more carriers and shippers look to technology to keep freight spend under control and enhance efficiency.

6. LTL Trends Indicate Freight Rates Will Skyrocket

LTL freight rates have traditionally suffered a disease of deficits. Disproportionate weight bands and rating freight at a higher weight to offer better rates (try saying that five times fast) are pushing LTL profitability behind the industry. As costs of moving freight increase, LTL carriers will be forced to abandon deficit ratings finally. More importantly, additional factors, like demand for last yard service and the use of dimensional (DIM) pricing models, will change how carriers calculate freight class and assign rates. Between the beginning of 2018 and end of 2019, overall LTL rates are expected to climb between 15 and 20 percent. In response, shippers will need to reduce wasted packaging, condense freight as much as possible, take advantage of intermodal shipping options, renew use of drop shipping and cross-docking, and stay competitive with the growing threats of Amazon and Walmart. Traditional approaches, like preventing bottlenecks and eliminating supply chain black swans through evolving transportation networks and processes, will still be par for the course.

7. Mobile Tech Will Make a Bigger Impact Than EVER BEFORE

One of the final things shippers should watch for in 2019 has roots in the Uberization of Trucking. App-based systems and mobile-optimized web interfaces are replacing standard methods of scheduling, quoting and Less than truckload freight management. Until the industry stabilizes concerning capacity, drivers, and use of all modes of transportation, LTL freight rates will soar. One of the best ways everyone can reach an untapped value of independent, small brokers, carriers and freight managers will be through mobile technologies, eliminating the overhead of big-brand vendor solutions and streamlining freight management. Even 3PLs will start to get in on the act, incorporating Uber-like systems into their TMS platforms and offering more options to shippers seeking available capacity.

2019 Will Be Exciting, Revolutionary and STRESSFUL

Shippers need to face facts. Capacity, rates, stiff surcharges, growing demand from customers, expectations for last yard delivery and hundreds of other factors will push the industry closer to the brink of oblivion. However, knowing what’s coming is still the best way to plan and prevent unnecessary disruptions. In January, we will start our full, annual rundown of what to expect industry-wide for LTL, FT, intermodal, e-commerce, technology, drones, TMS and new processes that will further refine global and domestic transportation and supply chain management.

We look forward to taking this journey with you, even if it means going to hell and back in some cases.

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