Less-than-truckload shipping has come a long way.  When I began working in the trucking business, it was not referred to as “the LTL business. It was simply the trucking business.

The ICC or Interstate Commerce Commission rode herd on tightly regulated trucking companies.  They were simply, Trucklines.  In the pre-deregulation days, trucklines  ran over tightly-regulated territories, with tightly-regulated pricing and tightly-regulated profit margins.  They hauled it all, from one box to truckloads.  There was no UPS and they handled most of the truckloads.  Fortunes were made and lost with a Certificate of Operation issued by the ICC; it was commonly referred to as “Operating-Authority.” 

They all made money and competition was locked out.  You simply couldn’t start a trucking company without buying someone’s operating authority.  For most companies it was the most valuable asset they had.

The operating authority explained where the company could go, what they could haul and how much money they could charge.  If you changed a regulated price, you had to publish it in a tariff and everyone could know what your price was going to be.  They could even match it whenever they pleased and you couldn’t stop them!

When the Carter Administration, along with Congress, de-regulated trucking companies, not only could anyone start a trucking company with almost no capital expenditure, but the existing net worth of every motor carrier in the United States was reduced dramatically because of it.  A new trucking company was a truck, trailer, and phone.  And, they could charge whatever they wanted.

This had the immediate effect to prevent any existing truck line from using their operating authority for collateral.  Literally hundreds of regulated trucking companies ground quickly to a halt and were out of business.

Not all of this was bad.  It was expected that prices would come down, service would improve and that competition would make life better for the entire shipping public.

After several years of all this sorting out, we have a trucking system that does not resemble the pre-deregulation days.  In most ways, it is much better for the consumer.

United Parcel Service and Federal Express, along with DHL and some others, have taken the small shipments away from the truck lines.

Aside from the package carriers, the giant truckload carriers now haul the majority of the full truckload market.  The immediate effect of de-regulation then was reduced net worth, and their most profitable business was gleaned off with the profitable minimum shipments and the easy to pick up and deliver truckloads.

LTL carriers were born or rather they staggered out from the carnage.  New carriers were born, and the marginally profitable ones were cast aside.  The old truck lines that are left are now competing with the newer post-regulation carriers for a market that bears scant resemblance to the old market.

Motor Carriers now handle what is left over.  Shipments larger than packages, but less than a truckload, now comprise the majority of their market.  With the pricing structures in place now, their market has been reduced to shipments weighing between 1,000 lbs and 7,000 lbs.

That is quite a difference from an industry that once hauled it all…from one pound to 44,000 lbs.

This reduced market and increased competition now makes it almost impossible for these companies to make a sustainable profit.  They are in a catch-22.  If they raise their minimum charges, then the package guys pick off the next larger shipments.  If they raise their overall price, the truckload guys can match prices on the next smaller range of shipments.  The squeeze continues.

What has become apparent to me at least is that even though the new competition has improved transit time for customers, the overall product is not universally improved.

For instance, in 1967 truck-lines had three major problems.  They couldn’t pick-up and deliver their shipments on time, they couldn’t carry it without losing some of it or tearing it up, and finally, they couldn’t get their bills right.

It is my contention that LTL motor carriers still have not solved these problems.  Have any of you experienced an ‘up charge’ lately?

They now charge by the pound, but they actually sell ‘cubic feet. A large portion of their margins are to be found only in their ‘up’ charges, and the public is running from them to the new kid on the block….the third party logistics provider.

These guys are the new experts.  How novel an approach.  These providers are brokering the services of LTL carriers, but they are actually working FOR the shipper.  They are working as problem solvers for shippers; they are matching carrier’s needs with shipper’s offerings.  They are furnishing badly needed expertise to shippers who have increasingly difficult times dealing with an industry that has become a moving target hoping to improvetheir margins, without notifying the competition of how they raise their revenue.

My, how things are changing!