LTL transportation has distinct and important uses in the electronics sector. The business-to-consumer or business to specialty shops segments rely heavily on this mode of transportation. For instance, while electronics companies selling to big box stores are typically getting truckloads, they may use LTL for small shipments, such as ear pieces, after market components, and software.

Electronics manufacturers, retailers, and distributors like Amazon.com, CraigsList.com, Overstock.com and specialty retailers from Game Stop to Radio Shack are sending goods to multiple locations and/or taking pallets of multiple products at one time. They depend on a robust LTL network—major international small package express carriers, ground delivery companies, or small regional transportation companies and inside delivery services.

There are two primary LTL business models: national and regional. National LTL carriers run a hub and spoke model with interline carriers to a break-bulk location where shipments are cross-docked for final delivery. Many of these carriers have unionized workforces. On the other hand, the regional LTL group may be more cost competitive, but only focuses on a shipping radius less than 600 miles.

In the regional LTL market, there are synergies due to ongoing consolidation and a move in 2008 by shippers to get closer to their customer markets. These strategy shifts are driven by the sudden increase in fuel costs and retail customers carrying less inventory. These customers need to be able to replenish stock in a very short time frame.

Challenges

The biggest challenges in LTL transportation today are theft, damage, and customer delivery. Large electronics companies do their best to avoid LTL shipments because it is too easy for product to arrive with shortages or hidden damage (a national LTL network requires hand-offs along the route). The original carrier may drop material off and an intermediary who is responsible for either final delivery or delivery to another region, therefore increasing the chances for things to go wrong. On occasion, product even gets left on the dock because someone forgot to load all of them. 

Furthermore, damage prevention is also an issue for electronics companies shipping LTL. How are your electronics packaged? If a forklift tears the outer pack, the inner pack must be designed so they will not be damaged. The most successful manufacturers of electronics items have very strict inner packaging standards to maximize the arrival of high quality intact packaged merchandise when it arrives at their retail customer locations or with their end use customer.

The unloading setup for final delivery is another major issue that continues to pose challenges for LTL shippers and providers. What does the building look like? Can one driver do the job or do you have to have more to unload and handle assembly? Does the delivery point have direct access to dock or lift? If the requirement calls for an inside delivery, you need to know if there is an elevator, and whether there is a pallet jack or dolly to move product around. LTL providers have to be able to deal with the variables. 

Trends

A big trend in 2011 is that LTL shippers are seeking more value-added services and many transportation companies are gearing up to provide them. For example, if a project manager is buying 20 pallets and sending them LTL, they may want them unpacked, set up, and the debris taken away. Red Arrow Logistics has provided similar services for the Federal Telecommunication Infrastructure (FTI). The contract required the development of a site plan gauging dock, lift options, security, and pathway to delivery, etc. The FTI also requested that during each phase of delivery, that Red Arrow Logistics unload and unpack, then set up the racks, servers, and install monitors and desktops. 

Meanwhile, the greatest area of improvement for LTL carriers centers around inaccurate billing and the need to provide an audit function for shippers. Many shippers have no ability to audit their freight bills. Compounding the problem is that LTL carriers are notorious for their accessorial charges and reclassification of freight rates. Shippers are encouraged to standardize their fuel surcharge and accessorial fees so that the freight payment group can easily assess or dispute additional charges.

LTL freight is rated by a number of factors including product description weight and size. It is helpful to work with your core LTL carriers to ensure your product is classified correctly and that you verify the piece count, weight, and cubic dimensions on your bill of lading. This will help reduce instances of LTL carrier overcharges.

Also in 2011, we will likely see additional product offerings in the LTL market, especially the bundling of services, such as relationships being forged with airlines and ocean freight companies to move product seamlessly from point of origin to destination. Likewise, we are likely to see an improvement in tracking among interline carriers, similar to that for airport baggage handling or with small package shipments. For example, using bar code scans for tracking freight as it passes from one truck to another and to monitor the time that freight sits on a dock.

Lastly, electronics companies will continue to select carriers that have a large network and bypass regional and smaller carriers that rely on multiple cross-dock and interline agreements to transport goods to their final delivery point. However, the smaller LTL carriers that take the time to understand their customers’ needs, train their drivers thoroughly, and ensure efficient shipment tracking and delivery should continue to have opportunities to deliver, especially for regional service, if not national as well. wt

Liz Lasater is founder and CEO of Washington-based Red Arrow Logistics, which was named as one of Women Presidents’ Organization’s Top 50 Fastest-Growing Women-Led companies in the U.S.