Truckload Market Changes May Lift LTL Market

YRC Worldwide, which collectively represents the second-largest group of carriers in the $43 billion less-than-truckload (LTL) sector, will benefit from closings and reduced capacity in the $340 billion full truckload (TL) market, according to analysts and top YRC officials.

“The year 2019 probably ended with close to 800 closings in the truckload industry,” YRC Worldwide President and CEO Darren Hawkins said. “That lessens capacity. Plus, the driver shortage, increased alcohol and drug screenings, the insurance market, all those things will impact capacity. The truckload market is (nearly) 10 times the size of the LTL market. But a ripple in truckload can create a tidal wave in LTL,” Hawkins added.

At least one analyst agrees. Satish Jindel with SJ Consulting said he believed LTL contract rates for shippers would rise at a higher rate than TL rates in 2020.

“One reason LTL will perform better is retailers are converting TL shipments to LTL because of e-commerce demand,” Jindel said. “LTL carriers are handling more retail shipments than ever before. That will continue. The caveat is the LTL industry must learn how to handle those shipments.”

As far as shippers are concerned, Hawkins said rates will continue to track internal operational costs—led by soaring insurance rates and equipment prices—that continue to rise in the “mid-single digits.”

Going forward, Hawkins said, YRC will have fewer physical locations but the same geographic service areas.

“We expect this will increase density, reduce mileage, facilities and equipment and better serve our customers,” he said.

YRC, which is an Association partner, consolidated 25 terminals last year. YRC Worldwide, parent of the fourth- and seventh-largest groups of LTL carriers, lost $104 million last year, compared with $20.2 million net profit in 2018.

YRC’s total revenue for last year fell 3.4 percent.

Hawkins said YRC’s full-year results from 2019 are hurt by comparisons with 2018, which was a boom year for trucking. Last year’s results, he said, were hurt by a slump in U.S. manufacturing.

Source: Logistics Management