Less-than-truckload shipping, also known as LTL shipping, is nothing new within the transportation and shipping industry, but it has become more of a game-changer in recent years with freight rate prediction. Many LTL industry trends, including capacity limitations, increasing accessorials, surcharge rates, changes in market trends and buying patterns, are almost certain to continue through 2021 and for some time to come. According to statistics, cited by GlobalTranz, for 2021, it is anticipated that the LTL freight market will remain volatile and will take some time still to return to some semblance of normalcy.
Major shippers and transporters have only so much space available to work within LTL shipping capacity. Every inch of space available in delivery vans, trucks, semis and cargo crates is valuable. As the amount of cargo that needs to be transported increases, the room becomes more valuable. In the past, calculating freight class depended on the physical weight of an item, as well as what else could be shipped within the same truck to set a cost per hundredweight (CPW). Those were the roots of LTL shipping rates. However, they have taken a backseat in modernity as carriers realized shippers were wasting space in packaging. That gave rise to a new time pricing strategy, dimension (DIM) pricing.
DIM pricing considers cubic volume in addition to physical height, width and depth of packages as a factor for price calculations. Each freight management team within carriers utilizes its own LTL shipping rates and DIM pricing factor to calculate the rates for LTL. Density and package weight are critical in defining DIM pricing rates within LTL shipping services. UPS, FedEx and USPS each set their own DIM factor that is implemented for dimension pricing within intermodal shipping and normal shipping. Generally, it follows the same basic process:
Maximizing LTL shipping rates and maintaining a competitive advantage depends on staying on top of trends and market demand. Development within the shipping industry is all about securing long-term agreements and contracts, which comes down to a few critical points of consideration:
Shipping rates and negotiation have to stay strategic because of the continuous disruptions still happening within the market and industry. The best way for shippers and logistic managers to ride out the ever-changing market is to embrace less-than-truckload shipping methods and utilize long-term pricing agreement negotiation. Remaining competitive and finding success in today’s strained and stretched shipping market are all about maintaining the best shipping rates and presenting the best RFPs each time. Accurate data and analytics, along with the inclusion of digital dashboard platforms, can make everything more accessible and more streamlined. Request a FreightWaves SONAR SCI demo to get started on your next RFP bidding and lane volatility strategy to keep LTL rates in check.