Landstar Logistics
OPEC and the FMCSA Are to Thank for Disappearance of Cheap Freight Quotes
A profitable bottom line has not been realized within the freight marketplace by carrier executives for quite a while. The freight marketplace environment of 2011 certainly suggests that most freight carrier executives will see their profits increase.
The last a couple of years have been very difficult on freight carriers as the entire transportation marketplace has undergone huge constrictions. Transportation professionals have reported that from 2008 to 2009, the transportation marketplace has shrank by more than twenty-give percent from the 2008 level of $34 billion to just under $35 billion during 2009. A very little amount of that lost business had started to return during the second half of 2010 as the results had shown the revenue of less than truckload (LTL) carriers rise to just under $28 billion.
A significant portion of that lost business in 2009 was caused by financially troubled LTL giant YRC Worldwide. Due to closed or sold units and a reduction in its national marketshare, YRC has shrank from about a $10 billion company two years ago to about $5 billion today. It wasn’t just YRC’s downsizing that affected the freight marketplace. Parcel giants UPS along with FedEx continued to identify the best LTL business as well as offered deep discounts to its existing parcel shippers, manufacturers, distributors, along with wholesalers. In addition, truckload carriers and 3PLs such as Landstar and C.H. Robinson had begun helping customers consolidate individual less than truckload shipments into more efficient and less costly full truckload shipments.
The horizon is starting to look bright in the eyes of executives from many of the top less than truckload freight carriers within the marketplace. Already, an unprecedented two general rate increases have taken effect in the past twelve months, with a majority of those five to six percent rate hikes sticking with most customers. Major legislative restrictions affecting the entire freight marketplace will continue to impact truck drivers along with freight carriers, causing several to go out of business. Suggested laws could take as many as ten percent of truckers off the road as sleep apthnea laws, hours of service revisions, electronic onboard monitoring, comprehensive safety analysis, (CSA 2010) as well as several other rules take impact. Pending reduction in the number of available truck drivers along with owner operator trucker on the horizon, the tightened capacity will push freight quotes rates higher and increase profits for larger freight carriers. Numerous factors affecting the Less than Truckload Freight Carriers (LTL Carriers) at this time are an uncertain overall economic futureand the pending CSA 2010 regulations, which many carrier executives and transportation consultants believe should reduce the number of available truck drivers in by as much as ten percent conservatively. Less than Truckload (LTL) Freight Carrier Pitt Ohio has reported an overall increase overall rates in 2010 roughly four percent due towards the tightening of capacity and also increase in demand for services. Many less than truckload carrier company executives have reported similar stories as freight rates have sky rocked off of their anemic 2009 levels. This spike in less than truckoad LTL rates has caused Supply Chain Executives and also Transportation Consults to say adios to cheap creight Shipments from both truckload carriers along with less than truckload LTL carriers.
Even though many transportation experts believe overcapacity has been hurting the LTL freight marketplace, freight and also Logistics experts are heartened by the fact that several leading less than truckload LTL carriers have introduced a series of general rate increases which occurred during the peak season between August along with October of 2010. The freight rate increases during the second half of 2010 had affected between twenty and also forty percent of the shipper customers of less than truckload freight carriers.
All of this indicates pricing strength changing back towards the LTL carriers following the recent period of shipper dominated freight rate negotiations which could continue into 2011 if the United States economy starts to rebound. There can unquestionably be a tightening of capacity in the transportation marketplace which may force another four or five percent freight rate increase over the course of 2011.
Currently, truckload along with less than truckload freight capacity is currently beginning to tighten. There does not appear to be large capacity worries at the moment, but supply along with demand are starting to shift. The current results during the last sixty days are supporting transportation specialists along with supply chain expert’s predicitons of higher rate expectations throughout virtually all areas of transportation in 2011 as well as going forward. The overall U.S. economy is precisely what is driving the freight marketplace conditions of the truckload, less than truckload along with intermodal freight marketplaces. The question is whether the economy is growing wealth or simply rebounding due to the artifical inflow of stimulus into the United States Economy.
Other trucking analysts do not see economic conditions in 2011 getting any much better compared to the levels attained during 2010. These types of less optimistic freight marketplace experts don’t forecast any recognizable improvement in goods volumes or tonnage for 2011. Due towards the economic drag, these supply chain gurus are predicting LTL rate increases lower than the four to five percent forecasted by more optimistic transportation professionals.
The underlying price war should continue into 2011 between light LTL shipments between parcel shippers and also less than truckload carriers. Both Fed Ex along with UPS have become very aggressive attracting light LTL shipments by offering brand-new pricing programs aimed at winning these types of bulk hundred weight shipments. The wild card in the LTL equation is the future of YRC Worldwide, the financially ailing $5 billion giant which has shrunk in size by 50 percent over the past three years. The Freight Marketplace believes YRC carriers (the former Yellow along with Roadway long-haul units as well as the Holland along with Brand new Penn regional carriers) need considerable rates increases of at least 10 percent soon in order to endure.
Should YRC somehow fail to continue operations along with forced into a bankruptcy proceeding or liquidation, which naturally might cause LTL freight prices to skyrocket as some 12 percent of the sector capacity would likely be eliminated by almost any YRC’s exodus. Other transportation professionals believe that YRC only survives the storm as well as stabilizes operations if the ltl carrier giant receives at least a 10 percent rate increase during 2011. If YRC can get ten percent in freight rate increases, which would be great news for the rest of the LTL Freight Carriers like Old Dominon Freight Lines, Saia and also Conway which would get at least ten percent increase in freight rates.
It can certainly be an interesting year for the freight industry as new regulatory pressures continue to effect freight carriers along with drive as quite a few as five percent of truck drivers along with owner operators out of the freight marketplace.
By Brad Hollister
About the Author
Brad Hollister is an Knowledgeable Transportation Executive with Freight Access (Freight Access.com ). Hollister possesses a interest for Business Development interest in newest technology. Contact him with at BradHollister.com. (Brad Hollister ).
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