Your SlideShare is downloading. ×
0
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Aardvark Supply Chain Solutions-The State of the LTL Industry 2010
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Aardvark Supply Chain Solutions-The State of the LTL Industry 2010

1,281

Published on

Founded in 2009, Aardvark is a transportation management consulting firm headquartered in Chicago, Illinois specializing in global trade network optimization and supply chain solutions. …

Founded in 2009, Aardvark is a transportation management consulting firm headquartered in Chicago, Illinois specializing in global trade network optimization and supply chain solutions.
Offering an extensive portfolio of carrier and customer services, Aardvark’s team of industry experts design and implement customized solutions to meet the organizational needs and industry requirements of each individual customer.
Providing the framework and support necessary to implement sustainable transportation management initiatives, companies of any size can now realize the significant long-term savings and benefits associated with supply chain visibility and carrier network optimization.

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,281
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
13
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. The Long, Slow Road to Recovery
  • 2. $26.5 Billion LTL Market in North America in 2009 Defined in Carrier Terms of Service: Next Day 2 - 5 Day <500 Miles $12.1 billion $14.5 billion 2 Day 3 –5 Day <1000 Miles >1000 Miles $6.4 billion $8.1 billion Down -26% from LTL revenue peak of 2006
  • 3. The Major LTL Competitors YRC National Transportation ABF Freight Systems National Carriers FedEx National LTL Con-way Freight FedEx Freight Super Estes Express Lines UPS Freight Regional Carriers Old Dominion Freight Line YRC Regional Transportation AAA Cooper Transportation Southeastern Freight Lines Saia Motor Freight Regional Carriers Averitt Express R+L Carriers Vitran Express
  • 4. Industry Consolidations R 1979 2009 A COMPANY Revenue Revenue NOTES N $MM $MM K 1 Roadway Express $1,098 $1,674 Acquired by Yellow Corp., 12/2003 2 Consolidated Freightways $849 Closed 09/02 3 Yellow Freight Systems $805 $1,814 4 PIE Nationwide $561 Closed 5 McLean Trucking $540 Closed 6 Pacific Intermountain Express $403 Merged with Ryder 7 Spector Industries $316 Closed 8 Smiths Transfer $253 Closed 9 Transcon Lines $238 Closed 10 East Texas Motor Freight Lines $235 Merged with ABF Freight 11 Interstate System $233 Closed 12 Overnite $229 $1,807 Acquired by UPS, Inc. 5/2005 13 ABF Freight Systems $229 $1,384 14 American Freight System $223 Closed 15 Carolina Freight System $216 Merged with ABF Freight Systems 16 Halls Motor Transit $199 Closed 17 Mason & Dixon Lines $184 LTL business merged with Central Transport 18 Lee Way Motor Freight $172 Closed 19 T-I-M-E DC $170 Closed 20 Wilson Freight $165 Closed 21 Preston Trucking $160 Closed 22 IML Freight $159 Closed 23 Associated Truck Lines $156 Combines with Garrett and Grave to form ANR 24 Central Freight Lines $154 $224 Went private ownership status in 2006 25 Jones Motor $148 LTL business closed. Now TL carrier
  • 5. Decline in Unionized Trucking - Past  The decline of the unionized carrier has occurred due in part to the recent number of bankruptcies of these carriers whose workers belonged to IBT. The primary reason for the bankruptcies of these carriers is the higher union wages, benefits and lack of work rules flexibility.  At the time of deregulation, 55 out of the top 60 carriers in the LTL industry were unionized. Now only two are left. Tonnage Market Share of Unionized LTL Carriers has Declined 1990 2009Non Union – 49% Non Union – 73% Union – 27% Union – 51%
  • 6. Market Share – Present & Future Q4 2009 Market Share Q3 2009 Market Share LTL CarriersABF Freight Systems 3.82% 3.78%Con-way Freight 12.43% 12.08%FedEx Freight 14.98% 12.67%Old Dominion Freight Line 6.28% 6.17%UPS Freight 6.20% 6.52%Saia Motor Freight 5.07% 5.29%Vitran Express 3.64% 3.52%YRC National Transportation 8.96% 9.88%YRC Regional Transportation 7.33% 7.96%All Other Carriers 31.29% 32.13% CNW was 9.2%, FDX was 12.5%, YRC was 22.2% in Q4 2008
  • 7. Market Share – Present & Future Q4 2009 Market Q1 2011 Market LTL Carriers Share ShareABF Freight Systems 3.82% 4.3%Con-way Freight 12.43% 13.5%FedEx Freight 14.98% 16.3%Old Dominion Freight Line 6.28% 7.2%UPS Freight 6.20% 7.1%Saia Motor Freight 5.07% 5.8%Vitran Express 3.64% 4.2%YRC National Transportation 8.96% 6.1%YRC Regional Transportation 7.33% 5.4%All Other Carriers 31.29% 30.3%
  • 8. Shipper Trends in the LTL Sector • DC Bypass • Pool Distribution • Growth in Outsourcing • One-Stop Shopping • Blurring the Lines of Freight Transportation
  • 9. Shipping Patterns – DC Bypass  Two of the best places to affect the efficiency of the Asia to US supply chain for DC Bypass: 1. Before the container 2. After the container doors are closed doors are opened Asia
  • 10. Shipping Patterns – Pool Distribution  Shippers have changed their distribution patterns to have added more regional DCs vs. one national DC. This results from the need to be closer to their customers and have shorter lead times (product needs to be there tomorrow, not in three days).
  • 11. Growth in Outsourcing – 3PLs  Many shippers realize that transportation is outside their core competency. The shift to outsourcing will benefit the LTL industry at the expense of the private fleet sector. Shippers see the value of leveraging the expertise of a LTL firm as a way to lower costs and compress the logistics cycle time.  3PLs grow much faster than asset truckers Percentage of Fortune 500 Companies Using 3PLs by Ranking
  • 12. Service/Price Bundling - “One-Stop Shopping”  Large integrated package carriers such as UPS, FedEx, and DHL will continue to offer shippers a “One-Stop Shopping” solution for all modes. These integrators bundle services and price to customers, as they via for the entire transportation share of wallet of a customer.  UPS and FedEx’s sales and marketing power to bundling its LTL service with its small package offerings should enable them to exceed market growth. DHL will also offer LTL service in the future.
  • 13. Blurring the Lines of Freight Transportation
  • 14. LTL Demand Trends  Monthly volumes likely bottomed in Q3 2009. Signs of sequential improvement this year, but still below historical norms.  Inventory restocking - home improvement retailers indicate better trends  Federal stimulus programs pulled weak demand forward  Freight diversion from struggling carrier  TL volumes stronger, TL capacity tighter, LTL weight per shipment increasing  Industry capacity should continue to exit in 2011. However, trying to predict capacity reduction, like with YRC, has proven difficult with banks and debt holders willing to restructure deals rather than force closure and sell off assets in a weak environment. Shippers are NOT going back to YRC  What else can we expect to see in 2011?
  • 15. LTL Pricing Pressure  Rates growth typically follows volume growth by a few quarters. Rates should be better in Q3, while rates in Q1 and Q2 will have a modest uptick in 2011. (Increased fuel surcharges, minimum charge floors, capacity, TL and intermodal usage and average shipment weight)  Rates will not get significantly better until meaningful capacity exits or an economic tailwind takes hold.  Regional pricing much more aggressive than longer haul rates. LTL bid activity was at all time high levels in 2009. GP3PL programs will continue to be popular in 2011.  Fuel surcharge rates were less of an issue in 2009 versus 2008. But 2010 saw fuel expense rise and this will continue in 2011.  The longer the freight recession lasts, the better the rebound. Rate recovery from the economy or a major trucking closure will push pricing power back to the carriers. (greater than ’06 and’99 levels).
  • 16. Can YRC Carriers Survive in the Long-Term?  140,953 shipments a day in Q2 2008  138,286 shipments a day in Q3 2008  123,148 shipments a day in Q4 2008  103,082 shipments a day in Q1 2009  96,330 shipments a day in Q2 2009  91,560 shipments a day in Q3 2009  82,745 shipments a day in Q4 2009  75,250 shipments a day in Q1 2010
  • 17. Freight Overflow To Other Modes  In the near term, the LTL industry would have trouble absorbing an abrupt closure of YRC, as labor capacity would be the bottle neck. Initially, overflow of YRC freight would also benefit other modes such as (purchased transportation) TL, Intermodal, Forwarders and Small Pack carriers.  LTL industry terminal (dock doors) capacity = 25 to 30%  LTL industry equipment (truck/trailer) capacity = 20 to 25%  LTL industry labor (driver/dockworker) capacity = <5%Who Will Survive in the Long-term?  Integrated package carriers with LTL offerings like UPS and FDX  Large super regional LTLs having partnerships with other modes  Regional LTL carriers that serve niche markets will gain national footprints
  • 18. Future LTL Trends  YRC market share erosion continues (41.4% 1990 to 11.5% 2011)  Modal indifference: ”Blurring the lines of freight transportation”  Price bundling: "One Stop Shipping" for all modes of transportation  Pricing pressure will continue until meaningful capacity is removed or an economic tailwind takes hold.  Further industry consolidation: another LTL acquisition by large integrator and super regional get national footprint (after 2011).  Growth of 3PLs will continue  Class 8 equipment demand grows with better freight levels, EGR- SCR technology evolves along with EPA and DOT mandates  Driver shortages (CSA, hours of service, insurance costs)
  • 19. Future LTL Trends  Profitable Growth Segments of LTL Trucking • Regional Deliveries (JIT inventory) • Expedited (air, ground hot shot) • International (Canada, Mexico, Puerto Rico, HI, AK) • Specialized Shipments (Government, Tradeshow, White Glove)  Long term, shippers are redesigning supply chain to remove more costs (costly modes, packaging/weight, fuel)  Long slow road to recovery—The “new normal” in LTL demand (3%+ GDP)  The longer the freight recession lasts, the better the rebound will be, as someone has to physically haul the freight. The future will be bright for those that survive, “Darwinism at its best”.

×