Shippers turn to volume LTL spot pricing in tight capacity market
Authored by Brian Thompson on October 30, 2018
A buoyant economy coupled with the omnipresent shortage of domestic truck drivers can only mean one thing for shippers and 3PLs trying to ship goods around the country right now: it’s hard to find space. Capacity is currently extremely tight and, as the holiday season is right around the corner, empty trucks will likely be hard to come by for at least the rest of the year.
Shippers deciding between sending their goods via LTL or truckload, and weighing the constraints and costs of each mode, have another option. Volume LTL deals with shipments that won’t fill an entire truck, but don’t fit into contracted LTL rates. These goods can move on a carrier’s backhaul or chronic empty lanes (a benefit for the carriers) and are priced at spot-market rates, which can save shippers money. With volume LTL, customers only pay the going rate for the space their freight occupies. Volume LTL can be looked at as a mutually beneficial arrangement among shippers and carriers.
Carriers will even offer attractive spot volume rates in lanes where they expect to consistently run trailers empty due to network imbalances. This, of course, comes with a caveat: Not all carriers have the same balance to their networks and balance can shift with the seasons, so it is important to quote several carriers to get the best deal.
The spot market is not a replacement for contracted LTL rates, but it can help shippers and 3PLs save money and supplement capacity needs in specific situations. When quoting out LTL providers, if the shipment isn’t especially time sensitive, savings might be in the equation if the goods can be sent via a volume LTL spot rate.
So how do shippers and 3PLs find these rates? While volume LTL moves account for a small percentage of each carrier’s shipments, companies are beginning to make spot quoting more accessible to shippers and 3PLs in the hope to fill more backhaul lanes. Using API connectivity, customers can now connect individually to carriers like Estes Express Lines and Holland, which released their APIs this summer. The two carriers joined an already-established volume LTL cohort of carriers. Querying each of these companies and weighing the volume LTL rates takes time, of course.
To take full advantage of the growing accessibility of LTL spot pricing, customers should partner with a technology provider that can turn the task of compiling spot pricing from an array of carriers into a fast, automated solution.
With SMC³’s volume LTL API, customers can automate the volume rating process, reducing manual inefficiencies and eliminating errors. Ilango Namasivayam, CIO of SaaS Transportation, is an early user:
“This new volume LTL API from SMC³ is very well built. It literally took a couple of days to integrate into our TMS. It’s so easy to use. We had our first customer consuming volume rates in less than five days.”
Volume LTL data is sent securely and easily through the reliable SMC³ cloud, which handles 50 million transactions each day. To learn more, contact us today at sales@smc3.com.