A closer look at the latest "average" LTL rate increases

By Ray Bohman -- Logistics Management, 5/1/1998

From October 1997 through Jan. 1, 1998, most of the nation's major LTL carriers implemented general rate increases, as they have done annually for many years. The carriers announced that the "average" or "approximate" increases were in the range of 5.0 percent to 5.5 percent, varying by carrier. But as we have pointed out in the past, actual increases vary for individual origins and traffic lanes from those "average" percentages.

In looking at a year-to-year analysis prepared by ABM Transportation Services of Delray Beach, Fla. (Web site: abmrate.com), which markets a rate-comparison software package called the RATE SHOPPER, we found once again that increases on most major lanes didn't stray too far from the "average." However, for one of the carriers, an analysis of Class 70 rates from Philadelphia, Pa., to all points averaged (arithmetically) 7.2 percent. And to some 42 sets of ZIP-code destinations in some 27 states, increases ran in the 30-percent range for minimum charges and all weight groups. Representative destinations to which these tremendous increases took effect were Eastham, Mass.; Avalon, N.J.; Claremont, Va.; Crescent, Ga.; Campbell Hill, Ill.; Animas, N.M.; Pine Valley, Calif.; and Haines, Ore.

These higher increases had the effect of driving up what was essentially an "average" 5.0 percent or so general increase to the following overall increases nationwide from Philadelphia (using 5,754 data records):

MINIMUM CHARGE 6.6%

0-499 lbs. 7.2%

500-999 lbs. 7.2%

1,000-1,999 lbs. 7.2%

2,000-4,999 lbs. 7.2%

5,000-9,999 lbs. 7.2%

Over 10,000 lbs. 7.0%

A look at these rate increases reaffirms how important it is to check out how they affect key lanes over which you move freight--particularly if you've built freight costs into your delivered price list. Bear in mind that when an LTL carrier announces the percentage of its general increase, this figure indicates the amount its revenue is expected to increase and not the exact amount your freight bill may increase.

Ray Bohman is a well-known consultant and author. Mr. Bohman is editor of several highly successful newsletters on transportation and is a consultant to a number of national trade associations. He is president of The Bohman Group, consultants and publishers in the freight-transportation field. His offices are located at 27 Bay Lane, Chatham, MA 02633. Phone: (508) 945-2272.