Transportation/Logistic Strategy Express Carriers: Traditionally restricted to shipments under 150...
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Transcript of Transportation/Logistic Strategy Express Carriers: Traditionally restricted to shipments under 150...
Transportation/Logistic Strategy
Express Carriers: Traditionally restricted to shipments under 150 lbs
LTL: Defined by the ICC as shipments up to 10,000 lbs
TL: Full truckloads of 40,000 lbs
Actually a lot of competition between segments
Basic Competition
Motor Carrier Competition
Transportation/Logistic Strategy
Small shipments are a problem of long standing.
Express Carriers do well with shipments under 150 lbs.
LTL does well with shipments over 500 lbs.
Shipments between 150 lbs and 500 lbs are a problem.
FedEx and UPS moving into LTL, but not set up for it.
Express vs LTL
Motor Carrier Competition
Transportation/Logistic Strategy
Express LTL
$
150 lbs
LTL MarketExpress Market
500 lbs
?
6k 10k Volume
~
Express vs LTL
Motor Carrier Competition
Transportation/Logistic Strategy
Express vs LTL
Motor Carrier Competition
Small Shipment Specialists (SSS)?
Opportunities for new carriers with specialized equipment?
Focus on shipments form 150 to 500 lbs?
Focus on service?
Transportation/Logistic Strategy
Express LTL$
150 lbs
LTL MarketExpress Market
500 lbs
?
6k 10k Volume
SSS*
~
Express vs LTL
Motor Carrier Competition
Transportation/Logistic Strategy
LTL vs TL
Weight Breaks Between Modes
Many traffic managers use TL for shipments of 6K to 10K
Some competition between LTL and TL, but also a gap in service:
LTL prefers 1,000-5,000 lbs;
TL will try to re-sell the capacity remaining.
LTL vs TL
Motor Carrier Competition
Transportation/Logistic Strategy
LTL vs TL
Motor Carrier Competition
Weight BreaksA point of indifference between a given rate
and a rate charged for a larger volume
TL
LTL
Volume
$
V*
Transportation/Logistic Strategy
Weight Break Example
TL Cost[1] = LTL rate * Volume (V)
Ship 6,000 lbs from Fayetteville, AR to Phoenix, AZ (1,200 Miles)Actual Rate via ABF = 60.58; with 60% Discount = $24.23/cwt
TL Cost = $1.25/Mile * 1,200 Miles = $1,500.00LTL rate for 5,000 to 10,000 lbs = $25.00/cwt
$1,500 = 25.00 * V1,500/25.00 = VV = 6,000 lbs
If shipment is less than 6,000 lbs, ship LTLIf shipment is over 6,000 lbs, ship TL (pay for the entire truck)
[1] TL Volume at 40,000 lbs
LTL vs TL
Motor Carrier Competition
Transportation/Logistic Strategy
TL
LTL$
150 lbs
LTL Market TL Market
500 lbs
?
6k 10k Volume
~
LTL vs TL
Motor Carrier Competition
Transportation/Logistic Strategy
LSS = Large Shipment Specialists
Opportunities for new carriers with sophisticated information systems?
Jevic, Holland – Others?
Carriers that handle large LTL shipments (i.e., 6k to 20k) like TL carriers (i.e., door-to-door, without terminals).
Role of Density?
Role of Intermodal?
Role of Information?
Motor Carrier CompetitionLTL vs TL
Transportation/Logistic Strategy
TL
LSS*
6k 10k Volume
$
150 lbs
TL Market
500 lbs
LTL
?LTL Market
*LSS = Large Shipment Specialists
~
LTL vs TL
Motor Carrier Competition
Transportation/Logistic Strategy
Express
TL
150 lbs
Express TL
500 lbs
SSS~
SSS
6k 15k Volume
LTL
LSSLTL
$???
LSS
Motor Carrier Competition
Transportation/Logistic Strategy
What will the industry look like in the future?
New forms of competition? or
Mega Carriers Providing Service to all Segments?
Motor Carrier Competition
Transportation/Logistic Strategy
Carrier Selection
Available ModesSelection CriteriaCarrier CompetitionTotal Cost