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State Of The LTL Freight Industry
- 1. State of the LTL Industry
- 3. $26.5 Billion LTL Market in North America in 2009 Defined in terms of service: Next Day (0 - 500 miles) $12.1 billion 2 - 5 Day $14.5 billion 2 Day 3 –5 Day (500 - 1000 miles) (over 1000) $6.4 billion $8.1 billion Source: Tom Jackson Estimates Down -26% from LTL revenue peak of 2006
Editor's Notes
- Union carriers are bolded, typically long haul, deregulation—1200 plus LOH Super regionals grew from regionals with M&A to complete national footprint. Sit in sweet spot of next day, 2 nd and 3day freight, 650 to 950 LOH Next day regionals are fixed in a region, usually non union family owned private carriers that serve a niche—auto, retail, carpet, usually under (under $1 bb in revenue)
- Imports are down due to drop in dollar Imports are typically high value retail freight Exports are typically heavy low value industrial freight Shipping Patterns - Assembly and Distribution The long-haul LTL networks of 300+ terminals were set up originally to serve the US manufacturing economy (with many intermediate moves in production before the finished goods move), but now with manufacturing having moved offshore, when the finished goods arrive in the US, they usually come back for one move (often TL or regional LTL). In these cases, the domestic LTL segment misses all the intermediate shipments that go into its production, as they are happening overseas. Moreover, many long-haul LTL movements have changed to become two regional LTL moves connected by TL for the linehaul, called “assembly and distribution.” Assembly essentially means that a regional LTL carrier will pick up a large number of LTL shipments in one area, like the L.A. basin, and consolidate them into numerous TL quantities to be delivered to a retailer’s DC on the West Coast. From the DC, the retailer would then hire a TL carrier to haul a truckload or container load (if going intermodal via rail) of freight from L.A. to the Northeast, where the full trailer is dropped off at a Northeastern regional LTL carrier’s facility to deconsolidate and distribute the contents throughout the region using its LTL network.
- Target was a leader in this area---Goal: “Reduce LTL spend”
- Armstrong & Associates, Inc. projects that U.S. 3PL revenues will exceed $150 billion in 2010 after a modest year (5.5% increase) in 2008 and an improving year (7.5% increase) in 2009.
- Numerous examples where package carriers go after the account base of LTLs. Most vulnerable are the carriers with high % of national accounts (YRCW)—not ODFL or ABFS
- One Stop Shopping Credit Crisis Will Diminish Housing and Automobile Industries Will Gradually Rebound Cost of Fuel May Decline, Speculative Premium May Diminish
- One Stop Shopping Credit Crisis Will Diminish Housing and Automobile Industries Will Gradually Rebound Cost of Fuel May Decline, Speculative Premium May Diminish