US LTL: A Non-Asset-Based Network Structure
Former President and CEO of Clear Lane Freight Systems
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Former President and CEO of Clear Lane Freight Systems
Interview Transcript
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How do you determine the profit margin on this container?
We usually aim for a profit margin of about 18% to 20%, which is quite good in the LTL industry. However, this can vary based on the availability of containers. During peak seasons like Christmas, container availability can be limited, causing rates to increase.
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That makes sense. My question is about the pricing. If your software suggests charging the client $100 for a shipment, what would typically be your margin, considering the cost charged by the agent?
We would always aim for a 10% profit margin, with all expenses included. In the LTL industry, a 90% operating ratio is considered very good. Old Dominion, for instance, is one of the best in the industry with an operating ratio of around 87%. In LTL, margins are typically thin, often around 96 or 97. This means you're spending 96% of your cost to deliver a shipment, leaving a return of only 3%. We always aimed for a 10% return.
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