Shippers buoyed by strong 3PL, carrier partnerships amid LTL crunch

The Yellow bankruptcy represents one of the biggest industry shakeups of the past two decades. Remaining less-than-truckload carriers and shippers alike continue to feel the impacts of the company’s shutdown.

“What that is creating is a massive void in the LTL markets,” R2 Logistics SVP of LTL Operations Frank Dreischarf said. “YRC, by some estimates, handled up to 15% of the overall market share of LTL transpiring in the United States.”

Yellow operated largely within the retail industry. As such, other retail-heavy LTL carriers are feeling the most acute effects of the bankruptcy. Almost immediately after YRC closed up shop, its peer carriers became overloaded by the sudden influx of shipments. 

“Shippers started making the next best decision that they could possibly make. One of the blessings of technology is it speeds up decision making,” Dreischarf said. “The curse is that now everybody is making the same rational decision at roughly the same time.”

This is creating a cascading effect of carriers becoming overloaded and backing out of shipments, which continue moving down the list of “next best” carriers until all the excess capacity in the market is finally absorbed.

In turn, this causes both practical and financial stress for shippers. The intensity of that stress — and how long it will last — depends largely on a shipper’s reputation in the industry.

“Shippers that have forged very, very good relationships with either carriers or 3PLs are in a much better position than shippers that have historically looked at this business as purely transactional,” Dreischarf said.

Dreischarf predicted that shippers in the “transactional” camp will experience serious price increases between August and December. While more partnership-focused shippers may also experience some price jumps, these are not expected to be nearly as severe.

Regardless of which category shippers fall into, companies should be prepared to continue navigating the fallout of the YRC bankruptcy well into peak season. Partnering with the right 3PL partner — like R2 Logistics — can make all the difference.

“We’re essentially the Expedia of LTL,” Dreischarf said. “You connect with us, type in your shipment details, and we’ll bring back pricing ranked from lowest to highest, while also cataloging carriers by service and anticipated delivery times.”

R2 Logistics makes it simple for shippers to identify the best carrier partners for them based on both pricing and level of service.

The company’s TMS was designed to empower shippers with $10 million or less in total LTL spend to compete with larger players by providing those companies with tools that have historically been financially inaccessible to them.

“If you’re not operating with a technological solution today, you’re really in a bad spot right now,” Dreischarf said.

Shippers should also remember that the team a 3PL provider brings to the table is just as important as the technology. At R2 Logistics, team members are equipped to look out for each shipper’s best interests.

R2 Logistics personnel are trained to pick up on any mistakes that may occur in the tender process, including everything from costly situations like accidentally tendering too many pallets to negotiating billing discrepancies with carriers. In some cases, this alone can make the difference between hemorrhaging money and operating efficiently.

“If you don’t have the tools, you don’t have the technology and you don’t have the people who are trained to manage LTL spend at a shipment level, you are certainly going to be incurring some hidden charges that you not only didn’t know were there but have no idea how to correct,” Dreischarf said.

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Editor: Ashley Coker