Wednesday, March 20, 2013

Multi-Modal Model

UPS looks to expand truckload business, along with parcel and LTL.

UPS Freight, the less-than-truckload (LTL) arm of the parcel mega-carrier, will expand its full truckload business in 2013 as changing shipping patterns and tight capacity at traditional truckload operators spur more intramodal shift, UPS president Jack Holmes said.

“Retailers that over the last couple of years have really challenged themselves on the supply chain have gone from heavy use of parcel and lighter, more frequent shipments to a more consolidated model” and toward truckload shipments, he said in an interview with the Journal of Commerce.

Although he wouldn’t release truckload volume or revenue data, Holmes said the new truckload offerings “in the last couple of months have been very well received.” With this move, UPS continues its quest for world dominance, extending its tentacles into one of the few transportation modes where it has not been a major player.

At the same time, Holmes said he expects tightening truckload capacity to create more opportunity over 2013 to convert full trailerloads into LTL shipments. That consolidation and concurrent deconsolidation is being driven by several factors, with high truck prices and a shortage of available drivers on one side, and e-commerce, lean supply chains and tight delivery windows on the other.

Add a slowly improving economy to the recipe, and more advanced technology to help optimize supply chains, and freight can begin to move in new and different patterns. If the economy continues to improve, the squeeze on truckload capacity could quickly be replicated in the LTL space, causing savvy shippers to once again rethink their shipping patterns.

The takeaway? Past results are no guarantee of future performance. Even though your multi-modal model was optimal last year, you still need to stay on top of the ever-changing conditions to make sure your supply chain is doing the best job for you now. And putting all your eggs into one basket, even if the basket is a Brown-painted truck, is a strategy fraught with risk.

Kirk Shearer
800-989-0054 x103

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