Another day, another story about soft retail numbers. When you subtract inflation and prices at the gas pump from the March data, you end up with flat or downward sloping lines for most categories. But for companies who can utilize Less Than Truckload (LTL) transport, there’s a potential upside to these dour retail numbers. Why?

In a recent post, we looked at the effect the housing decline has had on flatbed trucking. The drop has left a great deal of capacity and a buyers’ market for savvy procurement organizations. In an effort to utilize their fleets (and stay afloat), carriers have been far more willing to work with buyers on price and terms than we’ve seen in several years.

Think of the retail/LTL relationship the same way. Fewer flatscreens moving off store shelves means there’s more room on the trucks that typically carry those plasmas. Some analysts are hoping for a bump in consumer spending as tax refunds and stimulus checks make it into people’s mailboxes. But realistically, I doubt there are many economists who truly believe that a) consumers will spend all of their money on retail rather than rent, and b) that it will be the magic bullet that pulls us out of a recession. It seems more likely these anemic conditions will continue for quite some time, leaving a significant amount of empty space to fill on LTL trucks.

So if you’re an organization that can take advantage of this excess LTL capacity (retail, consumer goods, food services and industrial products for example), now is probably a good time to look at your contracts and consider your sourcing options. And I know it’s easy to focus on short term price. But the bigger opportunity is to look at your contracts more holistically, because there are savings opportunities in several areas, including:

• Rates - An obvious focus, but often limited to short term savings.
• Fuel surcharges - A necessary “evil” brought on by triple figure oil prices. But you might be surprised how many carriers are using surcharge tables that are well above true market rates. Standardizing tables across carriers can lead to major savings for years to come.
• Accessorial charges - The move towards a-la-carte fees for anything above and beyond simple dock pick-up and delivery has become a major driver in the true cost of LTL transport. Including these charges in your assessment of current costs and negotiations of future contracts is a financially prudent move.

Of course it’s important to recognize that LTL carriers are usually more regionally focused than other trucking companies. So potential savings vary by region. For example, the Northeastern corridor has more competitive rates than the Southwest.

FYI: I’ll be diving further into the LTL opportunity in the Transport Category Snapshot of the next issue of SupplyWatch.

Rachel Rutkoski is a Category Manager for Transportation and Logistics in Ariba’s Global Services Organization. Rachel is recognized by the Institute for Supply Management as a Certified Purchasing Manager (C.P.M.) and has several years experience as a supply chain and transportation analyst in Fortune 500 companies.