Market Overview

FTL Service At LTL Rates: Pooling Protects Loads And Bottom Lines

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FTL Service At LTL Rates: Pooling Protects Loads And Bottom Lines

When shippers talk about operating at maximum efficiency, they are really talking about striking the perfect balance between price and speed. When companies are moving midsize loads, it can be almost impossible to find that balance within the traditional full truckload (FTL) and less-than-truckload (LTL) models. 

If shippers need to move a midsized load and do not want to compromise on speed, they often end up paying high rates for traditional LTL service or using FTL service to move a partial load, wasting money by leaving empty space on the truck.

If companies prioritize price over speed, they may end up holding their freight until they have enough to fill an entire truck, causing delivery delays and storage headaches. 

"There's this awkward 12 linear feet rule in LTL. One to five pallets move really well through the traditional LTL network, but anything around six pallets starts to see higher prices," Flock Freight Senior Vice President of Sales Justin Turner said. "The other side of that is the amount of FTL spend that isn't full. There are a ton of loads that are 16 or 20 pallets. These shippers are paying for empty space."

Flock Freight has designed a pooling service that merges traditional freight models to provide FTL service at standard LTL prices. The model allows shippers to utilize part of a full-sized trailer at a reduced rate. The rest of the trailer is filled by other shippers moving freight between similar origin and destination cities. 

Pooling can help solve the wasted space problem for shippers that need to move loads suited for something between LTL and FTL. It can also knock out some of the risks and inefficiencies associated with traditional LTL because terminals are eliminated and freight is loaded and unloaded one time. 

"It involves less handling. A typical cross-country LTL move would touch five terminals. By pooling, the load is touched by the forklift at the origin and the destination," Turner said. "We have a 0.001% damage rate."

The damage rate seen with algorithmic pooling is over 100 times lower than the rate reported using typical LTL services, according to internal Flock Freight data. 

Demand has weakened since peaking in mid-2018, and companies may find themselves needing to ship more midsize loads today than they were a couple of years ago.

"As demand and volumes decline, it becomes harder to fill full trucks with the same amount of speed," FreightWaves Director of Freight Intelligence Zach Strickland said. "This leads to increasing partial shipments in order to make acceptable service, which can lead to increased costs and higher damage rates."

Currently, the Cass Freight Index inside FreightWaves SONAR is indicating shipments are sitting at 1.022. The index has been trending downward since its peak at 1.307 in mid-2018. The Cass indices are based on the entirety of the Cass client base invoice payments. They are primarily volume-driven indices that have baseline years as reference points.

The Cass indices provide a good view of what is happening in the overall freight market as well as the general economy. Decreased shipments indicate decreased freight movements and generally less trucking activity and revenue flow.

Chart: FreightWaves SONAR

Pooling does not just lower rates, increase speed and decrease risk; it is also more sustainable and environmentally friendly than typical LTL models and moving partial truckloads. 

"Outside of the energy costs from freight terminals themselves, emissions generated from freight traveling through the terminals are also greatly reduced. Pickup and delivery routes to and from an LTL terminal account for 59% of fuel used by an LTL carrier," according to a recent Flock Freight white paper. "When you utilize hubless pooling, you completely eliminate that mileage. And though out-of-route anomalies still occur on FTL shipments – on average, around 20% of pooled shipments find themselves carried out of route – even factoring this percentage back in, a pooled shipment still results in up to 40% less fuel than standard LTL service."

Pooling is a popular solution in passenger transportation, with everything from ridesharing apps to HOV lanes designed to promote sustainability and efficiency through pooling. Flock Freight's service allows the logistics industry to take advantage of those same benefits.

Image Sourced from Pixabay

 

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