The truckload market is riddled diversify and not be a one-niche play-with idled capacity, carriers er,” said Eric Starks, president of Freight struggling under soaring oper- Transportation Research Associates. ating costs and customers look- “There’s been a blurring of lines ing for more service options. It’s between traditional LTL, truckload and hardly a business for the faint- parcel. The large guys like to be every-hearted right now, but UPS Freight thinks thing to everyone. They’re trying to it’s just the place for expansion. make themselves
“This economy affords us the ability to a one-stop shop say where want to be,” said UPS Freight so customers can Vice President Mark Ellis. “We’re in a align with you and good position where we don’t have mul- they don’t have to tiple assets like other carriers that now be passed on to have them parked on the curb. We’re another player. So in place we can grow, we’re not pulling from that stand-back, and figure out where we want to point, I’m not sur-grow. We want to optimize what we have prised. That trend that will allow for economies of scale.” has been happen-
That means getting heavier, says Ellis, ing for some time.” in one transportation area where the company has only a small presence — truckload. Just how hard UPS Freight wants to play in that very fragmented sector of the trucking industry Ellis wouldn’t say. But he ruled out nothing, from as little as buying a small fleet of dry vans to as grand as buying a truckload company.
“We want to make sure we understand the market and connect the dots, and the obvious businesses (to expand into) are truckload and intermodal.
“Truckload would complete our suite of offerings that go into our ground network. That would allow us to excel, because of the ability to go small package, LTL, truckload, and a combined LTL-truckload service,” he said. “It would also allow us to move truckload internally at high speed, which we already have the ability to do.”
It has been widely assumed UPS would eventually move more aggressively into truckload since the parcel giant purchased Richmond, Va.-based LTL carrier Overnite Transportation in 2005 and rebranded it as UPS Freight.
“Trucking companies are trying to
companies have been relying more on brokered freight to makeup the shortfall. “Companies have been either buying brokerage businesses are expanding what they do. Almost all (larger) trucking companies have a logistics business, and within that they broker freight.”
UPS’ biggest competitor, FedEx, began testing the truckload waters last year with a truckload brokerage service it created under its FedEx Custom Critical subsidiary.
Truckload transportation isn’t new for UPS either. While the former Overnite
10%
8%
6%
4%
2%
0%
–2%
–4%
1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07 9/07 10/0711/0712/07 1/08 2/08 3/08 4/08 5/08
Source: American Trucking Associations, Stephens
Whatever the trends, jumping into truckload with both feet would mark a dramatic step for the parcel carrier.
UPS and FedEx moved into the more industrial
LTL business over the past decade and many believe they have had an enormous impact with their focus on technology and focus on stringent operating standards. The truckload industry is far more fractured, however, and it’s far from certain that carriers intent on expedited freight would have a big impact in that arena.
But other LTL carriers have bulked up their truckload components. Most notably, Con-way got into the market in big way when it purchased Contract Freighters in 2007.
Starks noted over the last two years as the freight economy has slowed, trucking
was largely an LTL carrier, it also had a time-definite truckload division that UPS Freight uses to help manage its own linehaul network and which it has sought to grow internally. The division provides dedicated contract truckload services for retailers such as Papa John’s Pizza and Honda, where UPS Freight takes control of shipments from dock to dock and “basically manages a good portion of their business for them,” Ellis said.
It uses its own fleet of dry-van and flatbed equipment or contracts with a network of carriers for extra capacity required to provide the service.
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