Aljex Software on Thursday, May 17, announced that its sale of logistics and less-than-truckload software compared to traditional truckload software reached record levels in 2011 and continues to surge. The company said that while the percentage of its overall revenue increased in double digits year over year, logistics and LTL software sales soared by a factor of eight, and that some brokers are collaborating with larger 3PLs that have negotiated rates with LTL carriers.
According to CEO Tom Heine, Aljex’s experience is indicative of wider industry trends. “Due to pricing and capacity issues, shippers are consigning more and more LTL freight to brokers and third-party logistics providers,” Heine said.
“And where LTL is concerned, we even see collaboration between some brokers and 3PLs — otherwise rare in such a highly competitive industry.”
Aljex offers hosted enterprise software for brokers, 3PLs and other transportation companies. The majority of Aljex customers are truckload brokers or carriers, Heine said.
But during 2011, Heine said, sales of software for LTL shipping and a range or other options, including rail intermodal, were eight times higher than 2010, and the trend continues.
“Beyond our own development and sales efforts, that kind of an increase points to a shift in the services 3PLs and brokers are being asked to provide,” Heine said.
Industrywide breakdowns of 3PL and broker services by trucking sector mode are hard to come by, he said. Nevertheless, certain trends seem to have emerged.
“LTL is becoming increasingly important for brokers and 3PLs because customers – shippers – are demanding it,” Heine said. “Carriers on the LTL side of the business are really getting cost-conscious and increasing prices. As a result, smaller shippers are looking to 3PLs, saying ‘Hey, can you get pricing for me?’ Meanwhile, 3PLs that have established LTL pricing are capitalizing on it.”
Heine also said that some brokers are working with larger 3PLs to take advantage of LTL rates the larger company has negotiated.
Heine said the increased demand for LTL service results from a longstanding trend away from long-haul truckload and decreased enthusiasm for JIT (Just-In-Time) delivery. Shippers are adopting more regional views that favor local warehousing and shorter distribution hauls.
