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U.S. Freight Transportation Market (2007)

U.S. Freight Transportation Market (2007). Truckload Market $573 Billion. Total Freight Market $848 Billion. Other $78. Air $41. Rail $58. Private Fleets $355. Truckload $573. For Hire $218. LTL/Parcel $98. Source : American Trucking Associations.

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U.S. Freight Transportation Market (2007)

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  1. U.S. Freight Transportation Market (2007) Truckload Market $573 Billion Total Freight Market $848 Billion Other $78 Air $41 Rail $58 Private Fleets $355 Truckload $573 For Hire $218 LTL/Parcel $98 Source: American Trucking Associations

  2. Number of Trucking Companies (2006) Total Number –all Types 794,795 For Hire 290,629 37% Private Fleets 504,166 63% Less than 1,000 of the for-hire carriers are LTL

  3. Number of For-Hire Motor Carriers • 1980 = 20,000 for-hire motor carriers • Today > 200,000 for-hire motor carriers • 56%: one truck • 34%: [2-9] trucks • 10%: > 10 trucks

  4. LTL is More Labor Intensive LTL LTL LTL TL TL TL

  5. For-hire & Private Motor Carriage • Service for the parent company (i.e., Tyson, Walmart) • For-hire trucking: Offer motor carriage transportation service to the general public • Can have both private carriage registrationsand for-hire (often as a backhaul business)

  6. Private Fleets • Over 500,000 private fleets, half with only one truck • Nearly two-thirds of all motor carriers • Over half of private fleets have for-hire authority • Average haul 71 miles • Implications for turnover • 16% • Most common justification: better service to key customers

  7. Basic For-Hire Competition Express (Parcel): up to 150 pounds Usually less than 50 pounds Local pickup & delivery Between terminals LTL: Defined by the ICC as shipments up to 10,000 lbs Average is about 1,000 pounds Local pickup & delivery Between terminals TL: Max 80,000 pounds GVW About 40,000 to 48,000 pounds of freight Average 20,000 to 35,000 pounds Point-to-point service

  8. Express vs LTL 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.

  9. $ Express LTL ? Express Market LTL Market ~ 150 lbs 500 lbs 6k 10k Volume

  10. Small Shipment Specialists (SSS)? Opportunities for new carriers with specialized equipment? Focus on shipments form 150 to 500 lbs? Focus on service?

  11. $ Express LTL SSS* ? Express Market LTL Market ~ 150 lbs 500 lbs 6k 10k Volume

  12. 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.

  13. $ LTL TL V* Volume Weight Breaks A point of indifference between a given rate and a rate charged for a larger volume

  14. 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 = $1,500.00 LTL rate for 5,000 to 10,000 lbs = $25.00/cwt $1,500 = 25.00 * V 1,500/25.00 = V V = 6,000 lbs If shipment is less than 6,000 lbs, ship LTL If shipment is over 6,000 lbs, ship TL (pay for the entire truck) [1] TL Volume at 40,000 lbs

  15. $ LTL TL ? LTL Market TL Market ~ 150 lbs 500 lbs 6k 10k Volume

  16. 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?

  17. $ LTL LSS* TL ? LTL Market TL Market ~ 150 lbs 500 lbs 6k 10k Volume *LSS = Large Shipment Specialists

  18. $ Express LTL LSS SSS TL Express LTL TL SSS LSS ~ 150 lbs 500 lbs 6k 15k Volume

  19. What will the industry look like in the future? New forms of competition? or Mega Carriers Providing Service to all Segments?

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