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July 9, 2021 by Logistics

Why is my Less Than Truckload (LTL) freight pricing going up and my service level going down?

As it stands right now, the LTL (Less-than-Truckload) market is best described as “STRESSED”. This is probably an understatement. All carriers, regional and nation-wide, are saying the same thing. It’s a tough environment out there. Terminals are over-loaded, service levels have deteriorated, embargoes are in place in select markets and pricing is under extreme pressure.

The first question should be “how did we get here”? In one word = PANDEMIC. Carriers anticipated that volumes would dry up due to the pandemic lockdowns. They furloughed and retired staff and drivers only to be left without enough help when the volumes not only returned but increased from pre-pandemic levels.

Now as we fast-forward to today, we are seeing multiple carriers, especially the nationals, shutting down flows into and out of specific terminals to reduce terminal congestion from excess supply. These “embargoes” are causing further stresses to the system. As one carrier shuts off capacity, another gets overloaded, and on and on and on. It’s a domino type effect that is not dissipating quickly.

So, let’s turn to service levels. They are lower, in some cases much lower. Your freight is sitting in the pipeline longer and delaying delivery to your customer. You identify the problem, push for better delivery, but it back-fires on you by causing more delays. The driver shortage is making it very tough for carriers to get the job done.

Finally, the pricing is going up. If you have contracts in place good for you. If you don’t, we would suggest you either get them in place or deal with a 3PL who has solid contractual commitments that won’t rise with the tide.

It’s not all doom and gloom. Carriers are slowly recovering, and capacities are adjusting to volumes. As supply improves, demand subsides, and capacity levels out, the service, pricing and overall market conditions will improve. How fast? Not fast enough. I would anticipate the network balancing in late 2021 or early 2022. Until then, make sure you align with the right partners who can help steer you successfully through this current environment.

Filed Under: News & Events, Transportation News Tagged With: Carriers, Freight Cost Management Solutions, Less than Truckload (LTL), Richmond, Riverside Logistics, Truck Brokerage Firm, VA, Virginia

August 27, 2020 by Logistics

Are your freight costs going up?

If so,  you are not alone. The recent disruption in supply chain due to Covid-19 has been challenging and well documented.  Being able to ship product on demand is a basic business need. The challenge in today’s environment is lack of predictability.  As Covid-19 cases increased, demand for food to restock grocery stores rose dramatically, while demand for food from restaurants and hotels slowed drastically. This shift is just one example of an extraordinary change in freight demand. As demand goes up, prices go up. As demand goes down, prices go down. When both are happening at the same time…it can be very challenging. 

A third-party logistics company can help relieve some of this stress because of the volume of freight they handle and their close monitoring of truck capacity. This volume means they have strong relationships within the transportation industry and warehouse space at their disposal to help provide solutions that many transportation companies cannot offer. A strong 3PL team is dedicated to finding solutions for their customers often in unexpected ways. A 3PL can help “flatten the curve” of your freight cost and reduce the heartburn that comes with high price volatility. Below are a few specific ways a 3PL can help when your freight costs are going up and your demand for freight is changing rapidly. 

  • Local Delivery – 3PL’s have trucks running every day within a 150-mile radius of their location to serve multiple customers. By putting multiple clients product on one truck the cost is reduced for all. As a matter of fact, when more clients that have different products going to the same locations (Example: hospitals) everyone saves money and reliability increases. 
  • Dedicated Lanes – If a 3PL has a truck shipping freight from point A to point B for one client and finds another client who needs product shipped from point B to point A, then the 3PL can “match” the driver and truck with the loads. Everyone benefits from this relationship. More predictability, lower cost, and a knowledgeable and reliable driver who knows what you need and when you need it.
  • Drayage – International shipments, whether exports or imports, can be difficult to time with respect to labor.  A 3PL can help by not only picking up TEU’s (containers) from the port but they can either transport directly to your warehouse or client, or they can cross-dock the product (usually less than a week) at their warehouse to allow more time to find the lowest freight cost available. The Virginia Ports and the Richmond Marine Terminal are very attractive options because of their locations on the East Coast.
  • Change in Mode – Another example of how freight costs have shifted dramatically is in the airlines. The cost of using passenger airlines to ship freight internationally has increased because the number of passenger flights has dropped substantially .  Before, freight was added  to flights that were frequent and reliable so capacity was available at a reasonable cost. Now, with so few flights, there is a  significant decrease in freight capacity.  Shipping internationally may require dedicated freight flights often with an expedited focus which comes  at a much higher cost. How is  this problem solved? Maybe  with a shift in mode of transportation! Instead of Air freight maybe the shipment travels internationally by ship, or domestically by rail or truck. Obviously, timing can be a factor that needs to be taken into consideration. Low Air Freight may be a long way in the future but a 3PL company  can help.
  • Flexibility – A 3PL has many solutions to choose from to help lower your freight costs and offer cost savings from unexpected places. As you navigate the uncertain future cost of freight, it only makes sense to develop a partnership that focuses on reducing costs to help you navigate the challenges ahead.

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Riverside Logistics is a third-party logistics and supply chain management company providing a full complement of third-party logistics, transportation and warehousing solutions.

Riverside Logistics serves the Medical, Food, Chemical, Paper and other mission critical industry sectors.  Riverside Logistics has owner operator’s and dedicated lanes, with routes throughout Virginia, the Mid-Atlantic and the Southeast. Riverside Logistics offers pooled distribution and consolidated delivery services throughout the 48 states that can save you money. They are headquartered in Richmond, Virginia. To contact Riverside Logistics for a quote call 1-804-474-7700 Option 4 or click here.


Filed Under: Transportation News Tagged With: Change in Mode of Shipping, Drayage, How can a Third-Party Logistics Company Help (3PL), How do lower Freight Cost, How to ship LTL, Less than Truckload LTL, Local Delivery Options, Norfolk Ports, Richmond Marine Terminal, Richmond Virginia, Small Package shipping, Truck Brokerage Firm, Truckload, VA, Virginia Ports

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