LTL rates increasing in 2018
Be on the lookout for increasing LTL (Less Than Truckload) shipping rates this year. 2018 could see increases up to 5% for shipping less than truckload shipments. This is due to pent-up demand, shortage of qualified drivers, rising e-commerce deliveries, and increased government regulations. If you ship LTL, be ready for some of the highest rates in a decade.
Last year, core pricing rose about 4% on average. Those core charges, (net of fuel surcharges), are adversely effecting shipping rates. According to the DAT Trendlines, spot rates hit an all-time record the final week of December. Load to turk ratios also went up, and seem to be increasing into this year as well. Load-to-truck ratios are reaching record highs, including an all-time record-high of 14.7 loads per truck for vans.
Why are LTL shipping rates increasing?
- Shortage of qualified drivers.
- Increased government regulations
- Pent-up demand
- Surging e-commerce deliveries
There’s already a current shortage of qualified drivers in the industry. The industry needs to hire around 90,000 new truckers every year to keep up with current demand. What’s making matters worse is stricter enforcement of drivers’ hours of service. It’s good for drivers’ safety, but it’s going to hurt your bottom line. The stricter enforcement is supposed to cut down carrier productivity around 4-6%. That’s less shipments, less time on the road, and less deliveries for your products.
Cutting carbon emissions has also forced carriers to pay a steeper price. Trucks that may have cost under $100,00 a decade ago, are now over $125,000 because of electronics installed to reduce carbon emissions. Everything has a price and a cost. The price of those improvements to carriers will change how much it costs to ship LTL.
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