This month, I will begin a series of articles on the LTL industry discussing the carriers’ various operational areas. Why is it important to learn how carriers operate? By better understanding carriers’ operations in areas such as Pickup and Delivery, Linehaul, Dock, and their service center network, you can develop a better working relationship with your carriers. Knowing the finer details of how a carrier operates will enable you to assist carriers in being more efficient in moving your shipment to destination in a timely manner. In this series of articles, you will learn reasons why carriers operate the way they do, how key operations are handled and how your actions can affect a carrier’s operational cost, both positively and negatively.
This first article will focus on a carrier’s service center network, why they operate the number of service centers they do, and where those service centers are located. Carriers are generally classified in three ways: National, Regional, and Inter-Regional. National carriers cover the 48 contiguous states. Regional carriers’ service areas encompass a group of states in a region, such as the Southeast, Midwest, or Northeast. And Inter-Regional carrier serves several regions such as the Southeast and Midwest. Examples of National carriers are UPS Freight, Estes Express and Old Dominion Freight Lines. Regional carriers include Dayton Freight, Oak Harbor Freight, and Southeastern Freight Lines. USF Holland and SAIA Motor Freight are classified as Inter-Regional carriers. Each classification of carrier has its own unique operation characteristics in their P&D, Dock and Linehaul operations. These various operations will be discussed throughout this series.
National carriers tend to have more (and smaller) service centers serving a smaller service area because their shipment length-of-haul is longer and linehaul cost is a critical component of their total shipment cost. National carriers will also utilize a hub and spoke breakbulk linehaul operation with more breakbulks to minimize the number of linehaul miles and maximize trailer load average. In large geographical cities such as Atlanta, GA, a national carrier may have three to four service centers.
In addition, national carriers want to minimize the number of miles on P&D (Pickup & Delivery) routes. When new customers are secured in service areas farthest from the service center, they require more P&D miles. Carriers analyze and determine the shipment and revenue level that will reduce P&D miles for the new service center. The savings in variable operational costs must outweigh the fixed cost of operating an additional service center.
Regional carriers will have higher volume service centers covering a larger geographical area in order to increase the number of shipments handled by a single service center. Next day service on lanes less than 500 miles is a key service offering of all regional carriers. They must provide this on-time service if they are to survive in the regional market. The higher shipment volumes enable their service centers to load more direct linehaul trailers to other service centers in their network. In many cases, every service center will load direct to every other service center in the network. Thus, regional carriers eliminate the need for breakbulk dock activity on next day service lanes. As a result of the direct linehaul loading, they are able to maximize the geographical scope of their next day lanes. Regional carriers put less emphasis on trailer cube utilization, as the linehaul cost is smaller percent of the total operational costs.
Inter-Regional carriers serve both long haul and short haul markets; therefore, their operations tend to be a combination of both national and regional.
In remaining articles, I will cover in depth the carriers’ P&D, dock and linehaul operations as well as how carriers develop their pricing.
This first article will focus on a carrier’s service center network, why they operate the number of service centers they do, and where those service centers are located. Carriers are generally classified in three ways: National, Regional, and Inter-Regional. National carriers cover the 48 contiguous states. Regional carriers’ service areas encompass a group of states in a region, such as the Southeast, Midwest, or Northeast. And Inter-Regional carrier serves several regions such as the Southeast and Midwest. Examples of National carriers are UPS Freight, Estes Express and Old Dominion Freight Lines. Regional carriers include Dayton Freight, Oak Harbor Freight, and Southeastern Freight Lines. USF Holland and SAIA Motor Freight are classified as Inter-Regional carriers. Each classification of carrier has its own unique operation characteristics in their P&D, Dock and Linehaul operations. These various operations will be discussed throughout this series.
National carriers tend to have more (and smaller) service centers serving a smaller service area because their shipment length-of-haul is longer and linehaul cost is a critical component of their total shipment cost. National carriers will also utilize a hub and spoke breakbulk linehaul operation with more breakbulks to minimize the number of linehaul miles and maximize trailer load average. In large geographical cities such as Atlanta, GA, a national carrier may have three to four service centers.
In addition, national carriers want to minimize the number of miles on P&D (Pickup & Delivery) routes. When new customers are secured in service areas farthest from the service center, they require more P&D miles. Carriers analyze and determine the shipment and revenue level that will reduce P&D miles for the new service center. The savings in variable operational costs must outweigh the fixed cost of operating an additional service center.
Regional carriers will have higher volume service centers covering a larger geographical area in order to increase the number of shipments handled by a single service center. Next day service on lanes less than 500 miles is a key service offering of all regional carriers. They must provide this on-time service if they are to survive in the regional market. The higher shipment volumes enable their service centers to load more direct linehaul trailers to other service centers in their network. In many cases, every service center will load direct to every other service center in the network. Thus, regional carriers eliminate the need for breakbulk dock activity on next day service lanes. As a result of the direct linehaul loading, they are able to maximize the geographical scope of their next day lanes. Regional carriers put less emphasis on trailer cube utilization, as the linehaul cost is smaller percent of the total operational costs.
Inter-Regional carriers serve both long haul and short haul markets; therefore, their operations tend to be a combination of both national and regional.
In remaining articles, I will cover in depth the carriers’ P&D, dock and linehaul operations as well as how carriers develop their pricing.
