Speculating on LTL’s Future — Competing on Solution Differentiation?

Over on the Strategic Sourcerer, there's a useful recent post that speculates on the future of the LTL market. Using the much publicized Yellow Roadway Corporation (YRC) ups and downs as basis to look at the market, Joe Payne, the author of the post, speculates that despite the changes some major players are making, while "the economy is still hurting ... [there is] no real recovery on the near horizon". Joe suggests that YRC's major competitors, FedEx, Con-Way and UPS Freight (with 14%, 9% and 6% market-shares respectively as compared to YRC's 23%), have the most to gain and are moving to differentiate their solutions to customers.

In this regard, "FedEx recently implemented a guaranteed Next Day before 10:30 AM expedited service, similar to their offering in the small parcel arena" and "UPS announced improvements in standard transit times for over 1,000 lanes Southeast and Southwest". Con-Way is also getting into the differentiation game by capping "pricing on large LTL shipments" insuring that no LTL shipment "will cost more than a truckload shipment in the same lane -- a major beef for many shippers". However, these moves most likely arose as much out of near-term revenue desperation as long-term strategic ambitions given the "overall excess capacity in the market". Moreover, it's not just the big national players that have the most to gain at the moment. Joe suggests that "Regional's and Super-Regional's have the most to gain, as it appears the national market can only absorb a certain number of major players providing the same basic point to point options, transit times, and costs".

The bottom line for transportation sourcing professionals is that now remains as good a time as any to go out to market and benchmark your current pricing. With the specter of increased fuel surcharges on the not-to-distant roadmap, lowering costs in controllable LTL spend areas makes more sense than ever before. And in this regard, if you're not expert in sourcing LTL spend yourself, consider working with someone who is. This is one category where leaving it to a third-party often makes more sense than not.

Jason Busch

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