Truckload capacity is a very important metric that helps clients, shipping companies, and drivers understand the most profitable way to move freight around the country. Truckload capacity refers to the total available shipping space available on the market (whether that is national or local) at any one time. The truckload capacity can have a significant bearing on market conditions and very often is a key factor in determining truckload rates for both carriers and shippers.
A truckload is the number of goods that can be transported in one vehicle. Truckload capacity is the overall total number of drivers and vehicle equipment that is available to move freight at any one time. The US Department of Transport reports that there are over 700,000 registered motor carriers in the US. Some of these registered carriers are single trucks and drivers, others are truck companies with multiple vehicles (although the DOT reports that 91% of the overall number of registered carriers have fewer than 6 trucks).
It is estimated that there are about 37.9 million trucks registered for business, with around 3.97 million class 8 trucks. Between them, they carry 72.5% of the country’s freight. The potential truckload capacity of the US market would therefore include all of these vehicles. But in reality, that’s not how it works. The actual truckload capacity refers to the number of trucks available to carry loads on the road at any one time.
Truckload capacity can also be broken down to reflect the freight capability of individual spot markets and local areas. As you can imagine, there is a complex web of factors that determine the real truckload capacity of any market, taking into account both seasonal capacity and regional capacity amongst many others.
The capacity refers to the amount of space available on trucks and vehicles that can carry loads. It is generally referred to as trucking capacity and is an important metric used in the trucking industry and one of the most useful ways of understanding supply chains and how potential supply issues may affect the market. However, the term capacity can also be broken down into more specific areas, as you can see below.
One of the major determining factors for truckload capacity is the season. In the trucking industry, there are two major seasons that affect capacity. The first is the produce season, which is when the vast majority of crops are harvested and need to be transported to market. This falls between April and July. Large numbers of vehicles are needed to move crops to market in short time frames. This has an impact across the shipping industry, even for vehicles and shippers that don’t move produce.
The other major season to be aware of is peak season. This runs from August to October and corresponds to the busiest period of the year for manufacturers and retailers. It is the time of year when most people are stocking up on goods for their holidays, followed by the back to school period when new goods and materials are required. Shipping volumes are high at this time of year.
During both of these seasons, the capacity for transporting goods gets tighter and, as a general rule, costs of shipping go up. This follows the basic economic principle of supply and demand. This means it’s a good time of year for truck drivers and truck companies as rates are higher, but not so good for businesses looking to move goods.
However, the seasonal effects of the trucking industry are not felt equally across the country. Certain parts of the US are much busier in terms of available truckloads than others. These tend to be more popular with drivers as they are more likely to find loads more easily, as well as finding outbound loads to get home, known as backloads. This increases the profitability of any journey.
However, there are other parts of the country where it is far more difficult to find a backload, meaning fewer trucker drivers are willing to deliver there. These spots are known as ‘black holes’. These areas tend to be parts of the country where consumption levels are high (meaning there is a high need for goods delivery) but manufacturing and distribution centers are low (meaning fewer available backloads). This includes areas such as Dallas, Seattle and Denver.
Both seasonal and regional factors can therefore have a big effect on trucking capacity and shipping rates, at both a local and national level. This means both shippers and carriers need to be aware of how markets may change at any given point of the year or when shipping loads from A to B.
Truckloads are calculated using several of the above factors plus a couple of other key metrics. So, as well as the seasonality of the product being shipped, the main factors in calculating the cost of a truckload include the mileage, which is the distance the load will be traveling. In addition, the cost of fuel is also a consideration, especially with rising costs. The lead time, which is the amount of time a shipper takes to organize a load, can also have an impact – with better prices generally being more available to shippers with longer lead times.
However, shipping costs are calculated in different ways depending on whether a shipment is a full truckload or less than a truckload.
Freight transports that use up the whole container or shipping space of a truck are called a full truckload, or TL. Transports that don’t require the entire capacity or shipping space of a truck are known as less than truckload, or LTL. Depending on the specific freight requirements of a shipment or route, one option may be better suited to drivers and shippers than the other.
In general, retailers prefer full truckloads when:
· They have enough goods to fill a truck
· Shipments are time sensitive
· Weight makes it more cost effective
· They prefer a dedicated truck for their shipments
The main reason to utilize LTL shipments is to spread the cost of shipping with other customers.
Given the logistical issues around trucking rates and the current truck driver shortage in the US, being able to find truckload capacity is essential to the optimization of shipping practice and freight cost management. Shipping companies can find truck loads in three main ways:
· Using real time trucking data from both national and spot markets
· Increased use of automation and the streamlining of tendering and freight tracking
· Improved communication, collaboration and use of third-party logistics
Improving access to capacity can help to keep truckload freight pricing down at a time when this is perhaps more critical than ever before. For more information on how FleetOps can help your businesses access unique freight solutions, contact us today and explore the FleetOps blog to discover more industry insights.
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