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Why Less Than Truckload Rates are Changing

Published on
2/14/2024
A semi on an overpass

Freight prices can be broken down by dimensions, size, and ease of delivery. When freight is small, lightweight, and hard to break, it’s easier to ship and therefore cheaper. Heavy, large, or hard-to-maneuver freight will cost more to ship.

However, there is more to shipping costs than these dimensions. Many other external factors can change less than truckload rates (LTL). World events like labor shortages, fluctuating manufacturing, technological advances, gas prices, and bottlenecks can affect the cost you pay for less than truckload shipping rates.

what affects LTL Shipping costs? Gas prices, world events, and high demands for faster shipping

World Events

LTL freight is just a portion of a large worldwide supply chain. Other forms of shipping may be more affected by worldwide tensions, but LTL shipping still experiences price changes during these events.

As of January 2024, attacks in the Red Sea are changing how freight is moved overseas. Maritime shipping costs are skyrocketing, and now air freight is becoming congested as companies are trying to move their cargo.

The events happening at the Red Sea are increasing shipping costs across the board. You can expect LTL shipping costs to increase when world events cause strain on the supply chain.

High Demand for Short Shipping Time

E-commerce has changed the game. Customers now expect packages to come to them quickly and conveniently.

The focus is now on the last mile of delivery, speedy service, and specialized delivery needs. There’s an increase in demand, and with that comes an increase in cost.

Related Article: Last Mile Logistics Explained

Changes in Manufacturing Productivity

Manufacturing took a sharp nosedive during the COVID-19 pandemic. However, the manufacturing PMI has been increasing in the last few months. When manufacturing increases, so does the amount of goods being shipped.

This has a positive effect on several industries. However, it can increase the cost of LTL shipments.

Better Technology and Pricing Methods

Technology is always getting better and shippers are beginning to implement new and exciting tech that makes logistics better for everyone.

New technology lets shippers create better plans for filling trailers. Dimensionalizers use lasers to accurately and instantly measure freight. This gives extremely accurate measurements that help pack trailers efficiently. More accurate packing means more accurate prices.

Better technology also means more accurate route planning. Meaning drivers can avoid bottleneck traffic and take optimal routes.

While better technology can decrease shipping costs, the larger shipping companies that use this technology need more capital to fund these endeavors. That means it's not likely for you to see a quick decrease in shipping costs because of new technology.

Better technology lowers shipping costs, but it's expensive to develop and use

Driver Shortage

America is currently experiencing a labor shortage. This shortage includes every industry in the United States—including drivers. With fewer workers, it’s harder to find drivers to fulfill jobs.

This not only delays LTL shipping, but increases the cost as well. The talent pool is smaller than is needed and their specialization is in high demand.

Traditional LTL is struggling to meet the demand of the industry. However, Hotshot drivers are creating a helpful alternative that’s faster than traditional freight. These drivers specialize in picking up jobs at the last minute. 

Hotshots carry less-than-truckload freight directly to its final destination without unnecessary stops. You can access this pool of skilled drivers by signing up for Open Road.

Gas Prices

Gas prices change frequently. Not every change in gas price will affect shipping costs. However, when prices get really high, you can expect to see an increase in LTL shipping rates

Port Congestion and Bottlenecks

Maritime shipping has been experiencing slower-than-average berth times due to congestion at ports around the world. This slows down the shipping time for goods and increases prices due to fees and extended shipping times.

When ports are congested your supply chain slows to a halt. This is frustrating for large corporations and small businesses alike. Not having what you need when you need it can greatly affect your ability to run your business.

How to Deal With Rising Shipping Costs

Businesses that require LTL shipments have to walk the line between spending too much money or waiting too long. It’s a difficult task and more often than not, it doesn’t work according to plan.

Mitigate the frustrations of traditional LTL shipping by choosing Open Road for your specialized shipping needs. Open Road taps into the existing network of Hotshot truckers to find you a driver who can complete your job within a short timeframe. Hotshots don’t have to stop at various warehouses instead head straight to your package’s final destination.

If you’re interested in changing how your business ships, sign up for the Open Road app, start posting jobs, and finally get your shipments delivered on time.

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