With dynamics in the less-than-truckload (LTL) market shifting this year through a major reclassification and the pending spinoff of FedEx Freight, shippers need to be aware of the impacts in order to take advantage of the opportunities.
Because of these market forces, especially FedEx Freight expected to use its massive LTL share to offer competitive rates, and the end of the “freight recession” being punted once again, this could be a great time to reallocate more spend from full truckload (TL).
LTL is traditionally seen as a discount to TL, as it is generally a slower service involving multiple stops to discharge customers’ freight. But with the right strategic approach, and an experienced 3PL in your corner, LTL can become a valuable option that works to your advantage.
The Impact of LTL Freight Reclassification
The National Motor Freight Transportation Association (NMFTA) has been planning for more than a decade to simplify its freight classification system (NMFC) that determines pricing. The four main factors have been density, handling, stowability, and liability. But because of the rapid increase in e-commerce and its propensity toward lightweight, often bulky packages, the new classification system will logically focus more on density to better align pricing with actual space and weight.
For this reason, the system will reward shippers that optimize packaging to increase density – think compact, stackable items that are cube friendly – with lower rates, while penalizing those that tend toward bulky, less dense goods.
Generally, shippers will see fairer, more transparent LTL pricing, as well as a reduction in classification discrepancies that lead to carrier disputes. They’ll also be able to better predict freight costs, an advantage when it comes to contract negotiations.
On the other side of the coin, carriers will be able to better optimize trailer space, reducing empty miles and improving network efficiency. This will help improve service reliability due to better load balancing.
FedEx Freight May Put Downward Pressure on Rates
As an independent, sector-leading FedEx Freight is expected to compete heavily on price to gain even more market share, which will have a dampening effect on LTL rates, according to Stifel analyst Bruce Chan.
Lower capacity will also contribute to a slow freight recovery and check rate growth, Chan added. Many analysts see freight volume challenged this year due to economic uncertainty as the Trump transition and tariff impacts play themselves out.
FedEx’s daily LTL volume of 92,000 shipments is double that of its nearest competitor, Old Dominion, and way ahead of Knight-Swift, at 22,000 daily loads. That gives FedEx considerable clout in impacting freight rates.
Smarter Freight Consolidation Strategies
Given market conditions favorable to shippers, investing in LTL freight can definitely work to your advantage in 2025.
Get ahead of the new NMFTA classifications, which go into effect July 19. Shippers should plan now to optimize shipment density in order to get the most favorable LTL rates by reducing cube space aboard trailers.
A logistics partner, such as an experienced 3PL solutions provider, can help you develop a smart freight consolidation plan. This can include increasing LTL shipments and/or doing pool shipments with nearby businesses to share costs. In this way, you can even take advantage of expedited freight on priority shipments without a huge cost increase.
Leveraging Technology for Cost Optimization
A transportation management system (TMS) uses automated routing and cost analysis to determine whether shipments should be sent via LTL or TL and provide rate visibility based on factors like:
- Shipment size and weight (LTL is ideal for smaller loads).
- Freight classification and density, per NMFC codes.
- Transit time requirements (more stops with LTL).
- Cost comparisons based on carrier rates, fuel surcharges, and accessorial fees.
- Consolidation opportunities to maximize savings.
By leveraging automation and real-time data, a TMS optimizes mode selection and provides dynamic routing to reduce costs while meeting SLAs. Many modern TMSs also utilize AI-driven predictive analytics to anticipate shipment delays and adjust services and modes accordingly.
Negotiating and Collaborating with Carriers for Better Rates
When negotiating with carriers, tools like a TMS or rate shopping software can help shippers win the most favorable rates on freight contracts.
A TMS provides historical rate data, carrier performance metrics, and shipment volumes. It can analyze freight spend, lane efficiency, and mode optimization. Scorecards that rank carriers based on such metrics as on-time performance and claims history are also useful.
A rate shopping tool compares rates in real time across multiple carriers. It can be used to identify market trends and spot rate fluctuations. This comes in handy for dynamic pricing negotiations in volatile freight markets, such as the current one.
Take Advantage of LTL in a Favorable Market
Market conditions such as the NMFTA reclassification and the FedEx Freight spinoff make it an opportune time for shippers to consider increasing their LTL spend. Freight consolidation, increasing shipment density, and using technology like a TMS and rate shopping software are all tools that can be brought to bear. Finding the right 3PL provider, especially for organizations without a deep internal logistics bench, is a smart move as well.
In an uncertain market, Wicker Park Logistics, a woman-owned company and WBENC Certified Business, is just such a reliable shipping partner. We provide fast, cost-efficient transportation for leading firms across a range of industries through a broad carrier network.
Leveraging deep industry expertise, a cloud-based platform, and a consultative approach, Wicker Park offers on-demand transportation across TL, LTL, flatbed,hot-shot, and expedited freight, with end-to-end visibility into every shipment. To learn more about the many benefits we bring, contact Wicker Park Logistics today for a quick quote.
