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March 27, 2017 1:30 AM, EDT

LTL Fleets Offering Short-Term Storage, Shift to Smaller Trucks for E-Commerce

A. Duie Pyle Inc.

This story appears in the March 27 print edition of Transport Topics.

Less-than-truckload companies hoping to capitalize on e-commerce are offering shippers short-term storage in terminals and shifting more business from Class 8 trucks to Class 5 and Class 6 straight trucks, according to industry executives.

As consumers become more comfortable purchasing larger items online such as flooring, appliances and electronics, LTL carriers and shippers are working together to shorten the duration between the order and final delivery.

In 2016, e-commerce sales increased 15% to $394.9 billion in the United States and accounted for 8.3% of total sales versus 7.3% in 2015, according to the U.S. Department of Commerce.

In addition, investment bank Jefferies identified expedited last-mile logistics as one of the top 10 internet themes of 2017. Wal-Mart Stores Inc. started offering free two-day shipping in January in an effort to take on Amazon.com in the e-commerce market.

“LTLs are starting to take interest in handling e-commerce deliveries of large shipments. For example, delivery of exercise equipment and furniture in a box. LTLs used to ignore it because it often meant residential deliveries, but they’re starting to realize that it’s an area that is growing and if they ignore it, they miss out on a growth opportunity,” said Satish Jindel, founder of SJ Consulting Group.

As a result, demand is rising for expedited services at carriers such as A. Duie Pyle Inc. Last year, the carrier began offering expedited deliveries using Hino medium-duty straight trucks.

A. Duie Pyle ranks No. 73 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

“Over the last three years, shippers trying to find a specific window for delivery have increased 20% to 25% per year. In fact, last year it was 27%,” said Randy Swart, chief operating officer at A. Duie Pyle.

He added, “We measure the amount of shipments under 500 pounds. Over the last two years, it has been the largest growth segment with more than 7% growth in volume. It’s a significant shift.”

To speed up deliveries, Swart said that A. Duie Pyle uses integrated warehouses, where it stores products for the shipper rather than travel to the shipper for each order.

“If our hardwood floor clients stored product in our warehouse and called us up to relay an order at 4 p.m., we can take it from our facility and put it on a truck right away. Think of the speed of that transaction,” he said.

Pitt Ohio was one of the first adopters to offer space in the center or end of the terminals to small or medium-size shippers. The Pittsburgh-based LTL ranks No. 48 on the for-hire TT100.

“Usually, they’re sending nearly a full truckload to us. Then we’ll put it away for a short time so it’s not in the way of the crossdock,” Chief Operating Officer Jim Fields said. “They can send us orders until late at night. We’ve got it, and it’s already that much closer to the customer.”

As Pitt Ohio expands existing terminals or builds new facilities, higher ceilings and wider docks are a priority to provide more short-term storage space, he said.

“Generally, it’s beneficial for a business with a reasonably lower number of SKUs [product codes that allow items to be tracked in inventory] that can be replenished a few times a week,” Fields said.

Pitt Ohio also uses medium-duty straight trucks to deliver these items. The company has more than 400 straight trucks with liftgates to provide home delivery rather than 28-foot or 53-foot trailers.

Averitt Express Inc., No. 31 on the for-hire TT100, also offers short-term warehousing and distribution to cut the steps between the shipper and the consumer.

“We enable the shipper to reduce the time and financial costs of managing and staffing their own distribution center. Our goal is to take the worry out of transportation and logistics,” said Phil Pierce, Averitt Express executive vice president of sales and marketing.

YRC Worldwide, No. 5 on the for-hire TT100, doesn’t offer short-term storage in truck terminals but offers space in three warehouses: Salt Lake City, Dallas and Columbus, Ohio.

And Chief Customer Officer Justin Hall told Transport Topics that YRC is evaluating whether to offer short-term warehousing and distribution at truck terminals.

“We are seeing more inquiries every week in ’16 and ’17 than we’ve ever seen in the past. We have thousands of requests for what I call ‘large parcel or large parcel-white glove items’ that need to move direct to house or storefront. It’s a genuine uptick,” he said.

Hall defines large parcel as shipments between 150 and 2,500 pounds.

Jindel says that the industry is only in the beginning stages of e-commerce freight growth.

“We’re only in the third or fourth inning,” he said. “There is a still a long way to go.”