Tightening Capacity in the Market Calls for a More Strategic Approach to Freight Management

The recent load to truck ratio hit a two-year high indicating further that TL capacity is tightening up.  As we've mentioned before, the DAT Solutions metric is a good indicator of the state of the market.  If you explore the trendlines in more detail you can find certain markets that are tougher than others - like outbound Texas.

http://www.dat.com/resources/trendlines/van/demand-and-capacity

We are also noticing a very strong change in direction from the LTL carriers.  You may recall in our last post we mentioned increases are being requested at higher %'s, which is a clear indication pricing power has shifted.  In addition - they are getting far smarter in what they are handling and making it clear that there is certain freight they will not handle at a cheap price.

I met with a large, national LTL carrier at their headquarters just last week.  They told me they are handling around 50,000 shipments a day and are not looking to increase that number.  They simply cannot find more drivers, are finding it incredibly difficult to invest in new facilities, and, of course, are being hammered with all the regulations that have come down over the years.  So they want the right 50,000 shipments and are more than willing to walk away from the bad shipments.  They also made it clear they want to deal with shippers who are not simply price-shopping.  They want customers who will embrace a carrier partnership and work together with the carrier to optimize operations on both sides of the equation.

We believe this is healthy IF our customers look to embrace a long-term solution vs. short-term price-shopping.

Bottom line is that the market is getting smarter.  Technology, live connections, and the power of more data is changing the landscape of freight management.  For years now you've heard Recon telling shippers they need to be more accurate on describing their freight characteristics and customer delivery requirements.  This is only going to become even more important going forward so having the data necessary to manage freight correctly is no longer a convenience - it's mission critical!  

Fortunately, Recon's TMS is well ahead of the game and provides all the functionality needed to get the job done and provide deep-dive analytics!

- Hank Newman, President