For many manufacturing companies, LTL shipping is the default method of transporting goods to customers in the U.S. Indeed, the country’s industrial sector also happens to be “the bread and butter” for LTL firms, says executive editor Mark Solomon, writing for DC Velocity.
While it’s no secret demand for LTL shipping is down nationwide, shippers haven’t benefitted much from lower prices. In fact, according to LTL YRC Worldwide, its contract rates “rose 3 percent year over year after backing out the impact of diesel-fuel surcharges, which have fallen along with the price of oil and diesel,” according to DC Velocity.
That bargaining strength has come from continued consolidation amongst LTL carriers. “The top 10 LTL carriers control 77 percent of the $37 billion market, while the top 25 control 94 percent, according to data published in late June by BB&T Capital Markets, an investment firm. Given the dominance of a few players, there isn’t much room for cost-conscious shippers to maneuver as long as carriers stay disciplined.”
LTL companies are loathe to undercut one another like the industry did during the 2008–2010 recession, which led to the collapse of some firms and longer-term consequences for others. For the most part, in 2016, pricing seems unfazed by declining demand.
Check out more details in DC Velocity’s article Business down, prices up: For LTL carriers, oligopolies are a good thing.