2025 LTL Roundtable: Market positioned for an upswing

The less-than-truckload (LTL) market remains a complex landscape, shaped by many factors. While demand has softened—creating a more consolidated market in the wake of Yellow’s August 2023 exit—there are signs of optimism on the horizon.

Despite ongoing sluggishness in the industrial economy, a key volume driver for LTL, broader economic indicators suggest potential improvement. Meanwhile, LTL pricing remains relatively stable, even as technology-driven shifts continue to reshape the sector. Service levels are holding steady, and some carriers are expanding their terminal networks and workforce to enhance capacity.

To help LTL shippers make sense of these dynamics, we’ve gathered insights from three of the segment’s top experts:

• Satish Jindel, president of SJ Consulting;
• Jason Seidl, managing director of industrials-airfreight and surface transportation at TD Cowen
• Scooter Sayers, president of Sayers Logistics LLC.

Logistics Management (LM): How would you define the state of the LTL market?

Jason Seidl: I think one of the major LTL CEOs put it best when he said that demand isn’t where it needs to be today. We’ve been in a freight recession for well over two years now, and it’s really shown in the industrial sector. This was evident in the ISM index which has been in contractionary territory 24 out of the last 26 months (through January).

The LTL carriers have been able to offset this weakness with the closure of Yellow, but once we started to lap those comparisons, tonnage numbers showed the weakness of the economy. While we expect manufacturing to begin to improve based on survey work we’ve done, first quarter tonnage levels appear to be off to a sluggish start due to difficult weather conditions across certain parts of the country.

Scooter Sayers: Soft, but with rational pricing, is how I would describe it. The weak industrial sector has been a drag on the LTL market, shored up partially by the stronger retail sector. Even with YRC Freight shutting down mid-2023, the market remains soft. Long-term, the view is more positive, with nearshoring and e-commerce proving LTL’s value. However, we may not see much in terms of improvement in 2025. A strengthening of full truckload prices will sure help.

Satish Jindel: I’ll add that after generating operating margin of low single digits for decades, and being the worst performer in the broader trucking industry, in the last three to four years LTL as an industry has generated a double-digit margin—which is better than either parcel or truckload.

LM: How should shippers approach this market?

Sayers: Show you’re willing to be a partner and work jointly to remove overall cost, rather than focusing on reducing the freight bill charges. Understand where you can provide your carriers with operational and administrative cost reductions that they might reward you for.

Start with an accurate electronic bill of lading that digitizes all of the initial information carriers need to know about your shipments. Also, you can’t look at all LTL carriers as essentially the same. Rather, understand what each is best at, and be willing to split business among carriers based upon their strengths and weaknesses.

Jindel: Shippers should start paying greater attention to their shipping habits. Those with bad practices in how they tender the products on pallets or without crates have been subsidized by either other shippers or the carriers. That will end with greater emphasis on dimensional pricing and consolidation of carriers, with many smaller carriers out of business.

Seidl: From an LTL standpoint, there’s still enough excess capacity out there, so shippers have the upper hand. However, as the TL market recovers, we expect that to push some freight back to the LTL sector that was taken away via LTL consolidation.

This, along with the expected recovery in the freight markets, should remove a good deal of the excess capacity that we see today. Hence, shippers should start to think about building or strengthening long-term relationships with their key asset providers if they have not already done so.

LM: What can shippers expect in terms of service over the course of the next year? How do you view the current state of LTL service?

Jindel: Given the demand/capacity relationship, shippers should receive on-time service in the high 90s—and with an even lower claims/damage ratio. And with many Yellow terminals purchased by other LTL carriers, the network capacity should expand, as those terminals are renovated and come on line in the coming months. Even if the demand increases with President Trump coming back into office, shippers can expect a continued high level of on-time and low-claims service beyond 2025.

Sayers: Service will continue to improve—across the board. Solid service is table stakes. YRC Freight showed the remaining carriers that cheap pricing with OK service is not sustainable and will not be rewarded.

The key for carriers is providing the same, if not better service, but at a lower cost by eliminating inefficiencies. That’s what will separate the winners from the losers, and is the primary reason why carriers like Saia and XPO are investing so heavily in real estate. While this does add capacity, the bigger benefit is a more efficient linehaul network and being closer to customers.

Seidl: Several LTL carriers have been pushing to improve service for a while now. Several carriers used the demise of Yellow to upgrade or expand their service offerings to customers. This, along with technology investments, should lead to better service standards and increased options for the shipping community.

LM: In your opinion, is pricing where it needs to be for LTL rates?

Sayers: Pricing is stable, with pockets of aggression from some carriers. If a carrier has invested heavily in their network lately, they may be getting nervous about filling it with freight.

We’ve seen a big step up in LTL pricing the last two years, with YRC closing. Some announced contractual increases and general rate increases are quite high and may be pushing customers away. Those carriers bragging about their big increases may need to be mindful of this so that they don’t price themselves out of the market.

Seidl: The current LTL market remains rational and should enable carriers to offset cost inflation. However, we’ve seen a slight deterioration of contractual pricing and are keeping a close eye on it.

If we’re wrong about a macro recovery, then I believe the pricing market could show signs of further weakness. To be clear, however, I don’t think LTL pricing will turn negative.

Jindel: In spite of efforts by FedEx Freight, ABF and others to roll out density-based pricing, the industry is still stuck with the product description based National Motor Freight Classification [NMFC] freight classification system. I expect it to take on more urgency with even the National Motor Freight Traffic Association now embracing the new approach, which will cause some shippers to change their bad shipping practices and reduce number of shipments rated at ‘freight all kinds.’

LM: In what ways is technology making an impact on pricing as it relates to things like dimensional pricing and AI?

Seidl: I think it’s been helping the carriers. Dimensional pricing, however, isn’t new, so I think the level of improvement will be smaller. On the other hand, AI is in its infancy, and we’re likely just scratching the surface of its capabilities for the transport sector.

Jindel: The most relevant and time sensitive role of technology in LTL pricing will come from deployment of dimensioning equipment. And the speed of it will be driven by availability of equipment that doesn’t hinder dock activity or productivity—especially for those shipments with next day overnight delivery standard.

While AI also has potential, it will be held back due to the lack of accurate data on the attributes of the shipments, such as number of boxes; width; length; and height of each handling unit.

Sayers: Carriers are getting more and more granular with their pricing. They have the ability now to target a specific operating ratio by shipment, and prefer that approach as it’s a better profit-maximizing strategy. They prefer to make the margin they want per shipment, rather than an average margin across a basket of shipments.

Dimensioners are driving this, and shipper behavior to provide accurate shipment data will propel this further. We can also expect dynamic and profile-based pricing—that does not rely on the NMFC—to grow. This is being fueled by focusing more on full addresses rather than zip codes to obtain LTL quotes, as well as the use of the digital service Shiplify, which has greatly benefited the carriers and is now benefitting shippers and 3PLs.

LM: What do you think the impact of the Trump administration’s tariff objectives—specifically on Mexico and Canada—could have on domestic and cross-border LTL?

Sayers: Not much, to be honest. Imports don’t have as much of an impact on LTL as one might think. And while tariffs might help prop up the industrial sector, that will take time. In the meantime, the reduced buying power of U.S. consumers due to tariffs may just offset any gains. Longer-term, tariffs plus nearshoring should eventually lead a stronger industrial market.

Jindel: Given that it’s seeking to impose additional 10% tariffs on shipments traveling from those two countries to the U.S., it will slow down the nearshoring movement by corporate America that took on greater importance with the supply chain ‘pains’ experienced during the pandemic.

However, since these tariffs are being suggested to gain the cooperation of these two countries with control over illegal immigrants crossing the border, I expect those governments will work to control those illegal crossings and thereby avoid the imposition of additional tariff.

Seidl: As I sit here today, the U.S. just imposed 25% tariffs on both Canada and Mexico and 10% tariffs on goods from China. These are our top three largest trading partners, so this will undoubtedly have an impact if the tariffs are in place for a long time.

While, ultimately, it could help push more sourcing to the U.S., shippers are likely to have difficulty in changing their supply chain quickly. Hence, they’re more likely to push the increased costs onto the consumers, which could negatively affect near-term consumption and increase inflation.

LM: How will the LTL market look five years from now?

Sayers: We’ll see more national carriers, who will be larger, and fewer regionals. Size matters, scale matters. Many regional carriers will need to be acquired before they’re forced to shut down. The market favors a national network.

Also, expect a disruptor to make a splash, showing how an asset-light model with technology can provide service similar to an asset-heavy national player. Also, I think Intermodal Bridge Transport is a wild card. With the possibility of ABF and TForce merging, and the rumors of Jack Cooper stepping into the LTL market, we may see a resurgence in unionized LTL.

Seidl: I think there will be more options and better service for shippers. Many large carriers are in the process of expanding their coverage maps and improving their service product. This should bode well for the overall supply chain.

Jindel: In the past, just the lack of terminals of the right size in the right location were barriers for new carriers to enter the market. However, those barriers now include three Ts—terminals, technology and talent—and are thus more unsurmountable and will mean no new entrants.

And with more, smaller LTL carriers being sold or merging and the upcoming spin-off of FedEx Freight, the LTL industry is in the best shape compared to parcel and truckload segments for the next five years.

However, the density-based pricing tailwind will have died down, and the carriers will have to explore other ways to generate the higher operating margins.

LM: Given the erratic nature of the economy, can you offer words of advice to shippers?

Seidl: Shippers have the upper hand now because there’s so much excess capacity in the LTL marketplace. However, this will change. Remember, there will be 5% less capacity in the LTL marketplace compared to when Yellow was offering service. Hence, if I was a shipper, I would be concentrating on securing my relationship with my core carriers for my most important lanes and utilizing brokerages/3PLs to cover the remainder of my business.

Jindel: With LTL carriers consolidating and gaining more control over pricing, the shippers need to be viewed as a desirable customer to their preferred carriers.

They can do so by utilizing information technology to better understand the needs of their customers on frequency of deliveries, such that instead of shipping one pallet on three days of the week, they can send three pallets once a week.

In addition, avoid accessorial charges for appointment deliveries or for detention via better communication with the consignee and having more dock doors at their warehouses. As a result, more than 90% of shippers can absorb the higher LTL prices and yet spend fewer total dollars.

Sayers: Pick your partners. If you don’t envision your logistics department being a competitive advantage for you, consider working with a reputable LTL broker, even outsourcing your operation to a managed transportation player. Otherwise, stick with direct relationships and pick a handful of carriers whose values align with yours.

Either way, focus on long-term relationships with partners who have been in business for a long time, and expect to continue doing so. Focus on working with your service partners to share in cost reductions that can then lead to price reductions where everyone wins.