Less than Truckload (LTL) market in high gear

This is an excerpt of the original article. It was written for the March-April 2018 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2018

"Inflation creeps into U.S. Supply Chain.” So said the headline on a Wall Street Journal article I read this morning before writing this column. The Journal went on to write that U.S. companies are grappling with rising material and ingredient costs on top of pressure from higher wages—a potential double whammy— and noted that companies like Whirlpool and Ford have already issued warnings to the market.

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After nearly a decade of so-so profits, the $36 billion less-than-truckload (LTL) sector of the trucking industry is poised for impressive—if not spectacular—growth in 2018.

Nearly all trucking analysts agree that consistently steady industrial and retail demand, the tightening of overall trucking capacity throughout the industry, and LTL’s special operational niche all are factors in creating sparkling market conditions unseen in that sector in at least 10 years.

As Stifel Inc. analyst David Ross recently summed it up to the investor community: “Structurally, LTL still is set up really well for success.”

For example, unlike truckload (TL), there are few new entrants in LTL because of the steep initial economic outlay to replicate most carriers’ complex hub-and-spoke, brick-and-mortar terminal networks. At the same time, shortening supply chains, more emphasis on smaller and lighter loads, tighter capacity throughout the entire trucking industry as well as the e-commerce boom all point to more business for LTL carriers.

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