What are LTL managed transportation services?

A white tractor pulling two white LTL trailers

The net has widened in the less-than-truckload industry.

The mode became a bit of a catchall during the pandemic as more freight — e-commerce, in-store retail, in-home delivery and heavier truckload shipments — showed up when truck capacity tightened. Shippers of all sizes became familiar with the service and its intricacies. 

However, LTL is a much different beast than truckload, which primarily involves a shipper procuring a truck and a driver to move goods from point A to point B. In LTL, one shipment can move on several trucks and get cross-docked at multiple terminals before arriving at the final destination. The freight is also occupying space on a trailer with other shipments from other shippers. Wrapped pallets from one shipper need to be compatible with those from another so carriers can manage their primary costs — space, time and risk — and maintain fluidity throughout the network.

The complexities of setting up an LTL shipment, especially for shippers not familiar with the offering, brought about the need for third-party intermediaries to help manage the process. Managed LTL service providers handle pricing negotiations, reporting, daily execution, track and trace, invoice audit, payments and more. The service has emerged throughout the industry even as TMS platforms and technology tools have become more abundant and less expensive.

But managed transportation intermediaries aren’t there to completely supplant a supply chain manager.

“Managed LTL services don’t replace a quality transportation practitioner at the manufacturer, distributor or retailer — rather they enhance and equip the in-house logistics group,” Curtis Garrett, senior vice president at managed transportation provider FreightPlus and founder and chief creative at Understand LTL, told FreightWaves.

Image credit: Understand LTL

Garrett said the biggest benefit is that managed LTL services aggregate “all of the strategy, data, technology and momentum with one entity — rather than many different spokes that are connected to multiple providers. By default, managed transportation providers have something that a single capacity provider, or LTL carrier, doesn’t have: perspective from the shipper’s point of view and insight into the best carrier fit.”

A big difference is that shippers and carriers are more focused on shipment-level details, the carrier’s day-to-day availability and generating the lowest rate on the transactional side, Garrett said. Managed LTL refines and accelerates the inputs into carriers seeking the “best shipment-carrier fit, rather than seeking the lowest rate,” since reducing carrier pricing is not the only incentive in this model.

“True, high-quality managed LTL providers are more of a bolt-on to the shipper, versus being another carrier option,” Garrett continued. “They are the ‘organize all the information and push’ in the equation, not the ‘pull’ as would be with a carrier trying to fill their trailers.”

However, many carriers provide similar services to their best accounts, tailoring an account-specific LTL solution centered on finding the best transportation option at a margin that will keep the account from walking.

The acceleration of tech implementation throughout the industry is creating a divergence, according to Garrett, with transactional LTL being more focused on predictive analytics, dynamic pricing and linehaul and capacity needs. The managed side has also become more data driven. However, it relies on carrier partnerships and trust, which includes data sharing and interfacing with their systems.

The goal of managed LTL providers is to reduce costing assumptions from the carrier pricing team by giving them quality, accurate data early in the shipment process, ultimately producing the best fit for the shipper.

“All parties are realizing that LTL carriers, 3PLs and technology companies are not commoditized in any way. It’s not like choosing an ATM, which may look different but produces the exact same output,” Garrett concluded.

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