Underutilized Trucks and Rising LTL Rates: What You Need to Know

The latest data on truckload inefficiencies and rising LTL rates might make you rethink your logistics strategy. Let’s dive into what’s happening and why it matters for you.

Underutilized Trucks

A recent study by FreightWaves and FlockFreight revealed that 43% of truckloads in 2023 moved partially empty, leaving an average of 29 feet of unused deck space. This is like having one out of every four trucks running completely empty. Why is this happening?

• LTL Dilemma: Shippers face a tough choice: opt for the unpredictability of less-than-truckload (LTL) services or ship partially filled truckloads to meet tight delivery timelines.
• Cost Impact: Shipping partially empty trucks means higher costs per unit shipped, hitting your bottom line hard.

Rising LTL Rates

LTL rates have been on the rise, making the situation even more complicated. According to the Bureau of Labor Statistics, the Producer Price Index for LTL long-distance trucking jumped 8.2% year-over-year in April. In contrast, the index for long-distance truckload (TL) trucking dropped 4.4% over the same period.

• Why the Shift? With truckload rates stalling, many shippers are consolidating shipments into truckload services, leaving more room for price hikes in the LTL sector.
• Year-over-Year Gains: LTL rates have accelerated, especially from February to April, with the PPI increasing 3.4% in February and 5.2% in March.

What This Means for You

Here’s why you should care:

• Maximize Space: Reducing the amount of unused space in your trucks can significantly cut costs and improve profitability.
• Adjust Pricing: With LTL rates rising, you might need to adjust your pricing strategies to stay competitive and cover increased operational costs.

Looking Ahead

The current market dynamics are pushing everyone to be more strategic about load planning and cost management.

Sources: FreightWaves | Trucking Dive