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How Shippers Are Circumventing LTL Freight Contract Rates in Today’s Soft Market

Well, it seemed like a good idea at the time. A year or two ago, when many shippers locked into freight contracts in advance of the Mother of All Capacity Crunches, they probably felt pretty good  about their situation.

Now, with conditions far less “crunched” than expected–some may say Charmin soft–shippers are looking for an alternative to their above-market contract rate, which has them leaving money on the table.

Based on news this week, uShip data shows shoppers are finding better, non-contract rates online. In fact, its LTL instant-rate marketplace is up 228 percent in Q1 2016 compared to the same period last year as shippers circumvented standing rates in favor of carrier-direct pricing.

uShip also announced that UPS Freight® has been added to its roster of 30+ national and regional LTL carriers, including the nation’s top fiveFedEx Freight®, XPO Logistics, YRC Freight, Old Dominion Freight Line and UPS Freight — offering direct, instantly-bookable quotes. uShip’s LTL marketplace now features rates from a vast majority of capacity in the $35.1 billion LTL market, according to SJ Consulting Group, Inc.

Carrier-Direct Rates on uShip LTL Marketplace
Shippers can get direct, instant rates from as many as 30 top LTL carriers, including the countries top 5–FedEx Freight, XPO Logistics, YRC Freight, Old Dominion Freight Line and UPS Freight.

“While the truckload industry is struggling to hold rates due to overcapacity, the LTL carriers are getting rate increases resulting from better capacity management and shift in pricing from honor system to actual shipment characteristics. In addition, the LTL carriers have gotten better at managing broker relationships and tapping into electronic marketplaces like uShip that directly connect carriers and shippers at a lower cost generating higher profit margins and expanding the LTL industry by attracting a new customer base,” says Satish Jindel, President, SJ Consulting Group, Inc.

“Right now shippers hold the pricing power — and they shouldn’t be afraid to flex it,” says Jim Bramlett, senior vice president, SMB at uShip. “The uShip LTL marketplace gives shippers, especially small-to-medium-sized businesses, direct access to market rates and shipping technology they may not otherwise have, especially as LTL carriers claim contract rates are actually increasing by 3 to 5 percent. Shippers can now simply go online to directly book with top carriers like UPS Freight and many others.”

“This is totally different from using a broker, where they’ve got a blanket rate or customer specific pricing,” uShip Chief Marketing Officer Dick Metzler told the Journal of Commerce. “This is testing the market everyday. It’s a different way of managing LTL freight. It just hadn’t been done so much before.”

Shippers Saving 15 to 30 Percent

uShip has a total of 3.5 million registered shipping customers, including over 350,000 self-identified business shippers. One example is a maker of high-performance 3D printers that saved 20 percent on its LTL shipping costs after discovering uShip. Other shippers — from auto parts dealers to LED light producers to pet food distributors — are saving anywhere from 15 to 30 percent by switching to uShip, and commonly report substantial time savings by shifting shipping operations from phone calls to online.