Trucking Industry Segmentation

The regional LTL segment is comprised of carriers such as AAA Cooper Transportation, Averitt Express, Con-Way, FedEx Freight, Estes Express, Old Dominion, Southeastern, and Saia Motor Freight Line. Examples of national LTL carriers are ABF Freight System, Yellow/Roadway, and, to a lesser extent, UPS Freight and FedEx National.

Full truckload or "TL" motor carriers specialize almost exclusively in transport of predominantly full trailer loads of freight. These loads move directly from a shipper's dock to the receiver's, or consignee's, dock on irregular schedules. The average shipment size of a full TL shipment is 20,000+ lbs and can range up to around 40,000 lbs depending upon weight limits as imposed by regulatory agencies. Size of the U.S. TL marketplace is approximately $152 billion. Examples of TL motor carriers are Covenant Transport, CRST, Heartland Express, Landstar, Schneider National, Swift, and USXpress.

There are a few key differentiators:

• Labor costs as a percentage of revenue ranges from 60% for regional LTL carriers, 65% for national, and 40% for TL trucking firms.
• Labor characteristics of regional LTL carriers find a predominantly non-union, low-turnover labor base. National LTL carriers feature unionized workers with a low turnover. TL carriers are predominantly non-union with extremely high labor turnover, often in excess of 100% annually.
• The long-term growth rate forecasts vary, but generally are approximately 5-10% and 0-5% for regional and national LTL carriers, respectively; while the projected growth rate for TL motor carriers is10-15%.. The current escalation of diesel fuel costs is having a direct impact on mode selection by shippers. The volume of TL freight is shifting to rail, where shipping prices are lower and delivery times longer.
• Operationally, LTL carriers move individual shipments through "sorting hubs" or "break-bulk" terminals, where individual shipments are sorted and loaded to final destinations. Of course, TL carriers move directly from shipper's dock pick-up to receiver's delivery docks. These hub-and-spoke systems add costs to the LTL process. Hence, LTL versus TL rates per hundredweight (cwt) are generally higher that TL rates per cwt.

• Commodities transported by LTL and TL differ somewhat in that LTL carriers by their nature move smaller quantities of most of the products shipped. For example, while it is conceivable that an entire truckload of textbooks may be shipped to a distribution center, it is generally more common to find shipments of 150 to 1,000 pounds being shipped via the LTL truck line to a book store. Commodities like paper products; bagged materials like cement, fertilizer, seed and feeds, are generally shipped in full truckloads.

The impact of changes in transportation industry drivers will affect each segment in a different manner; any well-structured tactical or strategic plan will carefully evaluate these impacts separately.