How Logistic Providers Have Increased LTL Shipping
It wasn’t that long ago when carrier direct seemed to be the only option for LTL shippers. This, of course, advantaged carriers mostly, since they held the high ground in determining rates. There just wasn’t much action on the broker side of things. In 1998, revenue from 3PLs and brokers came to only 2 percent of all revenues from the LTL shipping business. But by 2013 it rose to almost a quarter.
So what happened?
Well, for starters, a small little aside known as the Great Recession. When the downturn came, it threw things off course. Dips in the market, spikes in fuel costs and an imbalance of commodities and goods pricing caused a recalibration in the ways in which much of transportation is done.
Most LTL carriers will tell you now that they rely on shipments from third party providers as a way to gain more freight and improve operational efficiencies. It’s also easy on carriers because they don’t have to invest in sales personnel across the country when they can just use brokers to get the freight in. But lets take a fast look at where these operational efficiencies come from.
Freight Carriers Improving Standards
The first thing to point out is that the refining of standards benefits shippers. The second thing to point out is that the refinement was done because brokers were pretty much a pain in the butt to carriers. When 3PLs wanted carriers to track every shipment, special numbers would be assigned to those shipments. A bit of tedium for the carriers since everything tracked was done so manually. So one company built a system that used special numbers and gave information in real time and this relieved much of their hand cramping, at the same time augmenting industry standards of real time tracking.
Another system established by one of the first carrier companies to solicit a 3PL service provider was designed to monitor and report missed pickups – a very important standard for shippers, as we know. It was this early partnership that led to more effective problem solving within the LTL industry.
Lower Shipping Costs For All Services
The added revenue carriers receive from brokers allows companies to open new service lanes quickly. This isn’t just good news for LTL shippers. Carriers now expand their portfolios of freight to include truckload and intermodal shipping. With an increase in full truckload and intermodal providers, this lowers the rates shippers pay.
An Increased Share of the Market for Small and Medium-Sized Shippers
How is it that LTL shippers benefit directly from brokers then? Most shippers will tell you it is the technology they provide. 3PLs and brokers are also unbiased. They give options. The fact that most clients use more than one carrier, depending on shipping needs, means that there’s a need for a good broker to match the strengths of carriers with the specific needs of the shipper.
Because the manageability of dozens of carrier relationships is now possible, and there is a portal given for shippers to instantly compare pricing and track shipments or run reports, the LTL sector has seen a huge increase in the small and medium-sized shipper markets.
Some analysts say that the amount of freight procured through brokers and 3PLs is expected to reach 50% of total freight volume in the LTL sector. As technology makes it so that collaboration is easier and closer between carriers and shippers and intermediaries, this trend is likely to continue.
Though the high ground for determining price is now shared with the shipper, carriers too appear happy with the results, if their increased revenues are any indicator.
Get a free shipping quote today from Action Transport, Inc. – the one company you need to handle all your freight shipping. We’re a family-owned business with over 40 years experience. Our commitment is to your accomplishments and we do this with our twofold approach: The business-end is the lowest rates customers have ever paid. The service-end is the best one-on-one attention customers have ever received.