Dive Brief:
- Some LTL customers are shifting freight to truckload carriers to capitalize on low rates amid one of the worst freight markets in decades, carrier executives said during Q1 earnings calls.
- Old Dominion Freight Line CEO Kevin “Marty” Freeman described a spillover of volumes to truckload, “given the overall weakness there and players that are willing to move freight, take some maybe large, heavy-weighted LTL shipments for cost or less than their cost to operate, just to kind of keep the trucks rolling.”
- Douglas Col, Saia’s retiring EVP and CFO, said sophisticated, national customers are increasingly taking advantage of a “lower-for-longer environment, and figuring out ways to consolidate and move more things to truckload before they break it down to an individual pallet.”
Dive Insight:
The truckload market’s dire straits are no secret to shippers aiming to capture the lowest rates possible before a rebound occurs.
As LTL carriers note recent network investments during rate increase negotiations with customers, some traditionally TL carriers are accepting low rates and offering extra flexibility to capture business.
“Maybe there's some of that other stuff going on, where a smaller truckload carrier decides to make multi-stops,” Col said.
Smaller firms in the fragmented truckload market have more leeway to accept unsustainable rates than large, publicly traded ones, which must reject such rates, Knight-Swift CEO Adam Miller said in an earnings call.
“You have smaller, private companies who right now are just trying to keep the doors open in hopes that they can survive to when there's a market inflection, and they can make up some of the losses that they've taken on,” Miller said.
TFI International Chairman, President and CEO Alain Bédard called the truckload market one of the worst in the past 30 years during a Q1 earnings call.
“If you would have asked me six months ago, ‘What you think about early ’24?’ I would never have said that it would be that bad,” Bédard said.
