The State of LTL Shipping in 2021

August 1, 2021 7:03 pm Published by Leave your thoughts

If you own, work for or partner with an LTL trucking company, understanding the current state of the industry is crucial for your operations. Here’s what you need to know about the outlook for the LTL market for the remainder of 2021.

Barriers to entry provide opportunity for LTL companies

Unlike their TL (truckload) counterparts, LTL (less-than-truckload) companies face greater barriers to entry, which means there’s less competition out on the roads. LTL carriers need more than a dedicated truck, driver and customer—they need real estate to build terminal networks, as well as innovative sorting and package dimensioning technology. Since it’s harder for new companies to enter the market, it means that LTL companies are seeing greater profitability.

The effects of the pandemic

Some industries actually thrived during the global pandemic, and the LTL trucking industry was one of them. During the pandemic, LTL shipments surged as consumers received government stimulus checks. The checks also had another interesting effect on drivers: it kept them out of the cab and at home. LTLs are continuing to have difficulty putting drivers in trucks, which allows for limits on capacity.

The pandemic has also kept drivers out of work due to social distancing concerns and potential COVID-19 exposures. If drivers need to quarantine for over a week’s time, it keeps them off the road. During the pandemic, there’s also been a great surge in e-commerce, which has been a boon for LTL carriers. They’re accustomed to delivering many separate loads in a single truck and only require minimal adjustments to accommodate e-commerce orders. The overall result has been a chaotic environment for a freight market that’s seeing an increase in demand. LTL companies responded accordingly, increasing their prices because they can.

Pricing increases

Rates are continuing to climb throughout 2021, which is a boon for any LTL trucking company. Carriers are expected to raise rates by mid- to high-single digit percentage points, allowing companies to expand their margins. LTL companies in general are raising their rates for a number of reasons, including COVID-19 requirements, driver pay raises and capacity shortages, as well as an increase in operational costs, including higher insurance premiums and highway tolls.

Shippers can mitigate cost increases by working with carriers to save driver time. LTL companies need to work closely with their customers to work out some of the pricing complexities. That way, both shippers and carriers are happy. It all comes down to maintaining positive relations between shippers and carriers. Many experts predict that there’s truly no end in sight when it comes to the bullish LTL shipping market, and it’s something that drivers and company owners can take advantage of.

Overall, the outlook for every LTL trucking company looks promising throughout the remainder of 2021 and into the future. Both LTL drivers and shippers should pay attention to trends and changes in the industry to support their operations. Contact the specialists at K-Way Express, Inc. for professional freight management and transportation solutions, as well as expert insight into the industry.

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