LTLs need local carriers to be competitive as e-commerce demands skyrocket

By: Lance Healy

After significant slowdown following the 2008 Recession, the less-than-truckload (LTL) industry continues to bounce back as freight volumes boom. In fact, Logistics Management magazine is hailing the current cycle as “the roaring freight market of 2017-2018.”

 

One of the biggest contributing factors is the ever-growing demand from e-commerce as customers turn more and more to online shopping – demand that’s not expected to slow any time soon. In fact, Forrester predicts that online sales will account for 17 percent of all US retail sales by 2022, up from a projected 12.7 percent in 2017, cites Business Insider.

 

These record-level shipping volumes should be great news for the LTL shipping market… right?

 

Not entirely.

 

Increasing shipping demands have put significant strain on carrier capacity – even as crippling driver shortages continue to balloon. Coupled with the higher-touch demands of e-commerce and largely residential delivery, traditional LTL carriers are not properly oriented with equipment and infrastructure to support this demand.

 

The results are ongoing rate increases as carriers struggle to boost profitability amongst inadequate capacities and delivery delays.

 

This has led LTL giants like UPS and FedEx to get choosier in picking the best-yielding freight for their bottom lines. Yet even as they’re rejecting shorter and more out-of-the-way routes that are less profitable – it creates opportunities for LTL operators to step in and get a bigger slice of the market pie, says Freight Scouts.

 

So how can LTL carriers scale their capacity to take advantage of this – without significant rate increases and fleet investments beyond their reach?

 

The answer isn’t in expanding your own assets, but in complimenting them with a reliable network of local carrier partners.

 

Why use local carriers?

 

Using local carriers expands your capacity to deliver into markets across the nation, without the need to expand your core fleet. What’s more, they’re well-suited to providing the specialty services today’s shippers are looking for in home deliveries, à la Amazon.

 

From expedited and same-day shipping options to assembly and takeaway packing services, these cost-effective, outsourced options help give you a competitive edge to attract shippers.

 

Additionally, having a network of reliable local carriers can improve your ability to respond to risk.

 

For example, if your system detects an exception – such as a missed pickup – you can schedule a local partner to quickly step in and make the delivery on time.

 

The advantages are a clear win-win for you and shippers. So why aren’t more LTLs turning to local carriers to supplement their operations?

 

The primary challenge has been in connecting these local carriers into the operations efficiently to enable the LTL carrier to scale their local delivery operations. To accomplish, this there needs to be a seamless data exchange between partners.

 

How do you herd fruit flies?

 

While local carriers are known for delivering world class service at very affordable pricing because they know their markets well, it can be a challenge for LTLs to connect with them. There are a wide range of technology platforms and configurations that make a true data exchange very difficult, taking significant IT investment into each partner.

 

The common solution requires a local carrier to download an application on their phone that they will update upon shipment delivery. However, most local carriers make deliveries for dozens of different companies – resulting in lack of compliance updating apps.

 

Fortunately, Banyan Technology’s Local Carrier solution makes connecting with and managing local carriers quick, easy, and cost effective.

 

Our unique API connectivity platform enables your TMS system to connect with various local carriers throughout the United States and Canada, through the platforms they use to do business. As local carriers update their own systems, Banyan shares those updates automatically – eliminating compliance issues.

 

How is this an improvement over the traditional Electronic data interchange (EDI) technology?

 

APIs enable live, two-way communication between you and your carrier network, as opposed to EDI’s batch approach. This is both faster and more efficient when rating, tendering and tracking freight.

 

And Banyan has already built a connection with hundreds of local carriers – so you start accessing local carriers right away.

 

Banyan is not a broker nor an agent for any carrier, but a neutral technology platform. We can share names of connected carriers if you are looking to expand or create a network, but you will own the contracts and the negotiations.

 

If you have an existing network, we can review which carriers are connected and identify others to review their platforms and capabilities.

 

Ultimately, Banyan normalizes the data feed across all carriers through a single API, delivering end-to-end visibility of freight movement within your system. This means you can manage consistent, high standards of carrier performance – from first to last mile.

 

Gain a competitive edge with Banyan Technology’s Local Carrier solution

 

Key benefits of our Local Carrier solution include:

  • Live, upfront, account-specific quote retrieval
  • Automated tender requests
  • Status updates, such as pickup and delivery
  • Imaged document retrieval
  • In-depth metrics and reporting

 

For more information on how your LTL operation can take advantage of Banyan Technology’s live connectivity solution to reach local carriers and boost profitability, click here to contact us.

 

 

Subscribe to the Banyan Blog to stay up-to-date with the latest in shipping technology: