Before going to the topic let you know what LTL meant?
LTL indicates to less-than-truckload. This means when multiple shippers freight is on the same trailer rather than having a single company’s freight exclusively on an individual trailer. Several LTL shipments are connected into one truck to load it as near to capacity as possible. This is an excellent option for shipments that are between one and six pallets or any load that is less than 14 linear feet because it makes the most out of the possible shipping space on a given truck. This is beneficial for the shipping needs of small businesses.
The LTL shipping industry will continue to grow the costs due to an increase in e-commerce sales and tighter capacity as a result of the Covid-19 pandemic restrictions. Many businesses both large and small are reacting by shifting more of their focus to the online marketplace which has driven an increase in sales that must be achieved by less-than-truckload. Additionally, As the LTL shipping industry continues to adjust to these changes, it is expected that LTL shipping services will improve or be expanded. We will cover some of the emerging industry trends that are shaping the LTL landscape.
Customer acquisition costs, largely due to a robust freight market, have never been cheaper, but driver acquisition costs have never been higher. Several expense lines will grow in 2021 and beyond. Driver recruitment and hiring is the top priority as driver shortages are impacting the industry and many carriers are still in need of additional dockworkers. Health and wellness visits, which plummeted during the outbreak, need to be caught up and sales forces will begin to travel and entertain again.
Like many industry areas, LTL shippers underestimated the e-commerce boom resulting from the COVID protocols. In response, LTL carriers are investing in straight trucks with lift gates for smaller businesses, strip malls, and residential areas. They're also integrating with local cartage agents and white glove carriers specializing in commercial and residential deliveries of oversize items, like furniture and exercise equipment.
Shippers should expect price increases from 2020 to 2021. If you ship desirable high-density freight, expect to see rate increases in the 5-8% range. Shippers with less desirable freight, such as big and bulky items, should expect LTL freight rates to increase 5-10% to offset the lower density.
When a driver gets a positive COVID-19 test, the carrier's terminal is shut down for safety measures, removing capacity from an already tight market. Carriers anticipate this will continue to impact LTL capacity until a vaccine is widely available. LTL driver positions are typically sought-after because most drivers are home every night. However, that factor alone is not attracting enough drivers to handle the surge in capacity.
Carriers faced a whipsaw effect through the year as they struggled due to low volumes during the height of COVID-19 shutdowns. However, volumes are extremely high now, and carriers are struggling to keep up. Volumes are expected to remain elevated through Q1 2021 at least. If strict shutdowns return, volumes could drop if many shippers are forced to close. Or, they could spike again in response to higher consumer demand.