Striving to minimize warehouse stocks, companies are increasingly outsourcing the transport of their goods to LTL (less-than-truckload) transport operators. This is driving market growth. Operators are introducing new, specialized services addressed to specific industries, such as retail or food, and are launching regular international transport routes. All this makes LTL transport an increasingly attractive alternative to full truckload (FTL) transport.
Demand for LTL transport is systematically growing, both in the domestic and European markets. Looking at the experience of our foreign partners, the growth in LTL cargo volume in the mature European market reaches as much as several dozen percent per year. For example, in the Spanish market, the Pall-Ex network recorded a 32% increase last year. In Poland, the volume of transported goods is growing by a dozen or so percent month-on-month.
The operator will deliver and stock the goods on shelves
The main reason for this state of affairs is a change in the business strategy of enterprises, which, in the face of economic slowdown and demand uncertainty, have started ordering smaller batches of goods more frequently. The drive to minimize stocks has, in turn, led to an increase in the volume of LTL cargo transported and, consequently, influenced market development. LTL transport has thus become a very interesting alternative to full truckload transport. Customers benefit from this – over the last few years, transport prices have fallen, and new specialized services have appeared.
The direction of development is set here by the retail industry. This can be seen, for example, in the ways goods are delivered – producers increasingly expect, for instance, clothing to be delivered on hangers, which means that a much smaller volume of goods can be transported by vehicle. Another example of a specialized service is stocking goods on a shelf in a warehouse or store. In the food industry, there is a need to combine frozen and dry goods. Certainly, large companies will increasingly expect such goods distribution capabilities. IT solutions are also gaining importance. I am referring here, for example, to a shipment tracking system, which is already a market standard, but which is not yet used by all carriers.
E-commerce will accelerate service development
Over the next few years, the LTL transport market will have to face the challenges posed by the e-commerce industry. For now, the development of e-commerce does not have such a significant impact on the dynamics of LTL transport, but the launch of a huge Amazon logistics center near Wrocław is a signal that “something new is coming.”
E-commerce is both an opportunity and a threat for LTL. On one hand, an increase in the number of shipments can be expected in both the domestic and international markets. More and more producers are changing their distribution channels, eliminating intermediaries from the logistics chain. Entrepreneurs strive to minimize warehouse stocks, so LTL transport fits perfectly into the new strategy. However, there is a risk that some LTL shipments may be replaced by parcel shipments. Of course, there will remain industries that will continue to rely on LTL transport, which results, for example, from the dimensions of the transported cargo, but e-commerce is a challenge that LTL transport will have to deal with.
Certainly, the customer will benefit from the competition, as they can expect not only new services tailored to a given industry but also greater attention to service quality. In the face of low rates and the price war taking place in the market, this will be the most important criterion for choosing a logistics operator.
Maciej Winiarski, Logistics Director Pall-Ex Polska