Threat of Substitute There is no threat of substitution in LTL industry. The existence of substitute products increases the propensity of clients to use alternative products and services in response to increasing prices. Taking into account that less-than-truckload carriage is self-inclusive, the threat of alternative service does not exist. From this perspective, the LTL industry is invulnerable to price increases. The threat of substitute exists when there is buyer propensity to substitute, high level of product differentiation, low switching costs, and relative price performance of substitute. LTL services cannot be substituted because there are no other related services. Truck-load carriage and premium freight are not taken into account because they are not substitutes. The threat of the entry of new competitors Prior to the Motor Carrier Act of 1980, the threat of the entry of new competitors was not significant for the LTL industry because the entry and prices were strictly regulated. However, since the 1980s, the restrictions on new carriers were eased raising the threat of the entry. The elimination of entry barriers gave small private trucking firms an opportunity to occupy market segments not served by large national carriers. A number of certified carriers (nonunion firms) who focused on specific local routes increased. However, the LTL carriers operating on national and international level do not feel the threat of the entry of new competitors for several reasons. First, the market leaders have years of experience, customers’ loyalty, and reputation. Second, the national carriers are able to make investments into trucks and facilities, while new competitors are not able to afford the same level of investment. The intensity of competitive rivalry The LTL industry is characterized by very high intensity of competitive rivalry. Customers tend to use services of carriers who offer lower price. Thus, the major aspect of competitive rivalry is related to low price. Such factors as transit time, reliability, and on-time delivery are taken for granted by customers and, therefore, are not considered among the factors shaping competitive rivalry. Customers tend to be price sensitive and switch from one carrier to another for a small price saving of less than one percent. Nevertheless, the availability of additional services and ability of the company to response to customers’ needs quickly determine the success in competitive rivalry. In particular, customers want to locate shipments on demand and verify that senders were shipping the required good. The bargaining power of customers The bargaining power of customers is significant for the LTL industry because customers are price sensitive. The switching costs are rather insignificant; however, even small savings might determine the choice of the carrier. From the other side, no customer accounted for more than 2 percent of total revenues and top largest customers account for less than 10 percent. It indicates that the bargaining power of buyers is significant because customers tend to use services that are cheaper paying less attention to the quality of service. The bargaining power of suppliers The bargaining power of su