You’ll Never Guess Who Assembled Your Peloton

You’ll Never Guess Who Assembled Your Peloton

Drew Dobbs never knew his job would be so dynamic. He started working for XPO as the Site Manager of a trucking terminal in Des Moines, IA. But instead of sitting around in an admin role, Dobbs was assembling Peloton bikes with his coworkers. “Sometimes we’d work 14 hour days just to make sure packages were delivered on time,” says Dobbs. 

At first glance, you might not realize that Dobbs works for an LTL company (Less Than Truckload), one of the largest in the US. In Des Moines alone, XPO has over 20 terminal locations for trucks to park, bring parcels, divide the packages, then ship directly to consumers. 

LTL drivers carry parcels for hundreds of Fortune 1000 companies across the US and many other small ecommerce shops (Peleton, Whirlpool, and Ashley Furniture are just a few major players). Items from multiple businesses are consolidated onto one truck to save space and increase efficiency. Instead of paying for an entire trailer, LTL allows you to rent a “pallet,” or section of the truck. With the steady growth of ecommerce, this is the perfect way to ship from business to consumer more affordably, according to Stan Johnson Co. 

In order to shift cargo from one truck to another, LTL companies need terminals – these are fairly simple buildings, 70-80 feet deep, with anywhere from 10 to over 100 dock doors for the trailers to pull up to. 

The LTL market is a 48 Billion dollar per year industry, according to Ed Garner, Director of National Accounts at Old Dominion Freight Line. What’s fascinating about the market is how consolidated it is: “The top 20 companies make up 90% of the revenue,” says Garner. “Whenever a terminal isn’t used by one operator, another snatches it up, sometimes before it ever goes for sale.” 

The terminals are long, skinny buildings where cargo shifts from one truck to another (usually 70-80 feet deep, with anywhere from 10 to over 100 dock doors for trailers to pull up to). Some companies own their own sites, while others rent on a door-to-door basis.

“Sites are selected based on the labor pool,” says Geoff Mussig, the CMO of Pitt Ohio. “The last thing a driver wants to do is commute an hour just to drive eight hours more.” The labor shortage is just one hurdle LTL companies like SAIA, Old Dominion, and Forward Air must face in order to scale quickly enough to keep up with shipping demands. But the scarcest resource is the terminals. 

You’re probably wondering, why can’t LTL companies just build more sites? Regulations for zoning and an extensive process of county approvals are just a couple reasons. There are only so many tertiary cities in the US where the labor pool provides an excellent number of truck drivers. Proximity to a higher populated city also matters to help with two-day shipping, but not too close or trucks will be stuck in traffic. 

In May, the Journal of Commerce reported that LTL tonnage (shipments by weight) is rising by 3%. Capacity, on the other hand, (supplies, truck drivers, site operators) can only rise by 1-2%. 

Think of a large web stretched across the United States. In order for packages to go from point ‘A’ to point ‘B,’ there needs to be a network of stopping points along the way. “Every carrier out there, public or private, is looking to expand their footprint,” says Todd Maiden, Editor of FreightWaves. “It’s mostly a power-play of acquiring existing facilities – whatever it takes to build the network.” As many more companies continue to use LTL to ship their products, the question isn’t whether the sector will grow, it’s how quickly. 

Chyelle Dvorak