LTL Management for Freight Shipping
The transportation industry is faced with a severe capacity crisis that could take months, if not years, for a full recovery. There aren't enough available trucks to meet the demand of orders being transported. So when you're trying to ship goods in this environment, how do you keep costs manageable?
In this blog post, we'll explore why FTL shipping is becoming less viable during the capacity crisis and how LTL transportation management offers a cost-effective solution for your business.
This capacity crisis is in large part due to the e-commerce boom. More and more retailers are springing up online, and more and more customers are ordering packages to their doorsteps. This is increasing the volume of international and national shipments at an exponential and unprecedented rate.
E-commerce is also increasing the velocity of packages sent. Your customers are demanding fast, reliable, and cost-effective shipping. In order to keep up with competition, you're forced to find new and innovative ways to meet these demands.
With an increase in volume and speed, paired with a reduction in truck supply, more and more retailers are moving away from the FTL model of transport to meet demand.
What Is FTL?
FTL or "full truckload" is the traditional method of shipping. This is when one company uses a full truckload to send their shipments from one location to another. With an FTL model, one shipper or retailer "rents" the entire truck to fill with their own goods. They then move that freight from one warehouse to the final destination.
FTL is simple to organize. One shipper sends one load from one warehouse to one destination. However, despite the simplicity, FTL can be highly inefficient. Without proper route optimization, it generally wastes a lot of distance and gas.
The price of FTL is also skyrocketing exponentially with the capacity crisis. A high demand and low supply of trucks mean that taking up space of an entire truckload is a privilege few can afford. You would have to fill your truck to the brim with goods in order to optimize the cost for an FTL shipment now.
Why is FTL ineffective for this new and growing capacity crisis?
The Concerns of FTL
Before e-commerce, the majority of shipments went from the retailer's warehouse directly to the store. A retailer could pay to fill up an entire truckload (FTL) to deliver an entire season's inventory in one shipment.
Now, though, fewer customers are shopping in-store. As online retail is growing, retailers aren't focusing their transport on moving full truckloads of inventory to their physical storefronts. They're focused instead on moving individual packages from warehouse to the customer's door.
When you're managing transportation in today's e-commerce landscape, you face several critical challenges with FTL:
Disjointed routing: E-commerce is complicating the organization and mapping of transport. This disjointed routing is innately more attuned to the flexibility of LTL as opposed to the simplicity and rigidity of FTL.
Speed demands: Your customers want shipments right now. Two-day shipping has become the average. You can't afford to wait to fill an entire FTL with goods when you need to send out your items overnight to a number of locations across the globe. Shipments need to go out immediately, no matter how big or small.
Smaller retailer challenges: There are a number of smaller retailers popping up online. These smaller retailers generally can't fill an entire truckload of commerce, especially with the current FTL prices during the capacity crisis.
Carrier rejection: With a low supply of trucks, transport companies are actually rejecting small businesses and retailers to prioritize their larger clients. In the long run, this could seriously damage the online retailer economy. In an effort to uphold the transport of small businesses, a number of companies are looking for new ways to offer shipping solutions to low-volume shippers.
The Solution: LTL
The cost-effective alternative to FTL is LTL or "less than truckload." Retailers or shippers pay for a certain space on the truck, not the entire truckload. This consolidates shipments from a number of clients and utilizes a network of terminals and hubs.
Especially during the capacity crisis, LTL is highly efficient and cost-effective. This system allows retailers to quickly send smaller shipments to a variety of locations. With the right organization, LTL can help meet the growing demands of the consumer: speed, reliability, and price efficiency.
The Bottom Line
FTL is quickly losing favor with shippers and carriers alike. What was once a simple and effective solution has become cumbersome, inefficient, and costly.
LTL is stepping in to offer solutions for the growing e-commerce shipping market. LTL allows for faster, low-cost shipment of goods to a greater number of locations. This allows for quicker delivery right to your customer's door.
Are you looking for trucks to transport your goods? Do you want to be immune from the capacity crisis? Contact us now to optimize on the greatest LTL solutions and technologies in the industry!
FAQs
What is a full truckload capacity crisis?
A full truckload capacity crisis happens when freight demand exceeds the number of available trucks. In the current market, DAT Solutions reports about 10 loads waiting to move for every 1 available truck. That imbalance makes shipping harder to schedule, pushes costs up, and reduces the practicality of using full truckload service for many shippers.
Why is e-commerce contributing to the truck capacity crisis?
E-commerce is driving the truck capacity crisis because it has increased both shipment volume and shipment speed expectations. More retailers are shipping more orders directly to consumers, which creates a constant flow of smaller, faster-moving deliveries. At the same time, truck supply has not kept pace, so available capacity is being strained across national and international shipments.
Why is full truckload shipping becoming less effective during the capacity crisis?
Full truckload shipping is becoming less effective because it works best when one shipper can fill an entire truck with freight moving to one destination. In today’s market, many shipments are smaller, more frequent, and routed to multiple locations, which makes FTL less efficient and often more expensive. High truck demand also means unused trailer space wastes money.
What challenges does FTL create for e-commerce retailers?
FTL creates several challenges for e-commerce retailers, including disjointed routing, slower shipment timing, and higher costs for companies that cannot fill an entire trailer. Many online sellers need to move smaller orders quickly to multiple destinations, which does not match the rigid one-load, one-destination structure of full truckload shipping.
Why are smaller retailers especially affected by the full truckload capacity crisis?
Smaller retailers are especially affected because they usually cannot fill an entire truckload, and current FTL prices make partial use of a truck even harder to justify. In a tight capacity market, carriers may prioritize larger clients, which can leave smaller businesses with fewer shipping options and less reliable access to truck capacity.
Why are carriers rejecting some small business shipments in a tight freight market?
Carriers may reject small business shipments because available trucks are limited and larger freight commitments often take priority. When capacity is constrained, transportation providers focus on maximizing utilization and revenue, which can leave smaller loads harder to book. That can create service gaps for smaller retailers trying to compete in the online marketplace.
What shipping model does the article suggest is more cost-effective than FTL during a capacity crisis?
Less-than-truckload, or LTL, transportation management is presented as a more cost-effective option during a capacity crisis. LTL is better suited to smaller, more flexible shipments because it does not require one shipper to fill an entire trailer. That makes it a stronger fit for e-commerce freight patterns and distributed delivery needs.
