newsworthy
“Do you, broker, take this
LTL carrier ...”
JETT MCCANDLESS AND TOMMY SKINNER
believe they have gone where no transportation
folk have gone before. McCandless is founder
and president of a Chicago-based consultancy
called CarrierDirect. Skinner is vice president
of Shift Freight, based in Santa Fe Springs,
Calif. CarrierDirect is the primary sales channel for Shift, which operates a range of less-than-truckload (LTL) services from the West
Coast into the Midwest and the Northeast
through an outsourced network of carriers.
Shift isn’t the lowest-cost provider. Yet in 10 months in
business, it has established itself as a reliable player that
sticks to its hauling commitments even if it means carrying the load at a loss. What is different about CarrierDirect
and Shift is they are believed to have formed the first LTL
model built to work only with brokers and third-party
logistics service providers (3PLs).
So far, Shift’s early life has been mostly free of the usual
growing pains. It has quadrupled its revenue year on year.
It recently announced a 30-percent expansion of its cover-
age area. And it seems to have found a receptive audience.
McCandless, who consults with LTL carriers to help them
penetrate the broker universe and who sits on Shift’s board,
calls the company the “future of LTL carriers.”
Whether Shift fulfills that lofty expectation remains
to be seen. What is evident, though, is that brokers and
3PLs—especially those living in the “transactional” world
that matches loads with trucks—are increasingly interested
in doing business with LTL carriers. And LTL carriers are
returning the eye contact.
BUILDING ON A SOLID FOUNDATION
LTL carriers and intermediaries are not strangers to each
other. In fact, many shippers would rather work through
3PLs than directly with carriers, said Bill Crowe, vice president, corporate sales for LTL carrier YRC Worldwide Inc.
About 40 percent of all LTL shipments today are billed
through a 3PL, according to data from the American
Trucking Associations (ATA) and the Georgia Center of
Innovation for Logistics.
Old Dominion Freight Line Inc., widely considered the
country’s top LTL carrier, gets about one-quarter of its
annual revenue from 3PLs, J. Wes Frye, Old Dominion’s
CFO, said on a recent conference call with analysts.
Virtually all of Old Dominion’s business with interme-
diaries comes from “strategic 3PLs,” big firms that offer
warehousing, distribution, and other services that extend
beyond transactional activities, said C. Thomas Barnes,
president of Con-way Multimodal, a brokerage operating
under the banner of Menlo Worldwide Logistics, a large
3PL that does a lot of work with the carrier.
Today, about three-fourths of all LTL business with
intermediaries is considered “strategic,” with the rest seen
as “transactional,” Barnes said. Yet the transactional side is
growing faster than the strategic side, an ironic twist given
the carriers’ general distaste for working with transactional
partners, Barnes said.
If projections for LTL growth are accurate, there might
be more opportunities for collaboration. LTL revenue will
grow by 8. 1 percent a year through 2018 and will double
to $103 billion a year by 2024 from $51.5 billion in 2012,
according to data from ATA and the Georgia Center. That
is faster than the projected growth rate for either truckload
or private fleet operations. (Several experts interviewed for
this story say that the 2012 numbers are overstated and that
total LTL revenue today is closer to $35 billion a year.)
Crowe, who presented the data at an April conference
of the Transportation Intermediaries Association (TIA),
said demand for LTL services would continue to p. 16
