2005 LTL general rate increases are already on the way

By Ray Bohman -- Logistics Management, 4/1/2005

The wheels on the 2005 round of LTL motor carriers' general rate increases (GRIs) are already turning. They look like they'll be about the same as last year's increases, only they'll be upon us quite a bit earlier.

At this writing, SMC³ (formerly the Southern Motor Carriers Rate Conference) and the Pacific Inland Tariff Bureau have already approved their increases for publication and have set their effective dates.

SMC³ is going forward with LTL and minimum-charge increases of 5.2 percent, but will not increase truckload rates. The scheduled effective date is May 2—much earlier than in the past. Last year the group's GRI, which went as high as 9.0 percent on LTL shipments weighing less than 500 pounds, took effect on June 7. The year before that, the increases went into effect on August 1.

The Pacific Inland Tariff Bureau, which represents LTL carriers operating in the Pacific Northwest, has approved an across-the-board increase of 5.9 percent. That change will become effective on June 1.

Other regional rate bureaus set to act on GRIs include the Middlewest Motor Freight Bureau (MWMFB) and the Rocky Mountain Motor Tariff Bureau.

The General Rate Committee of the MWMFB was scheduled to meet on March 31 to consider a proposal to increase all rates and charges by an amount that would result in an overall revenue impact "not to exceed 5.9 percent," according to the group's meeting notice. The purpose, the notice continues, is to "offset expense increases and improve operating margins." At press time we did not yet have the results of that meeting, but we expect the GRI will take effect sometime in early June.

Meanwhile, the Rocky Mountain Motor Tariff Bureau's General Rate Committee was scheduled to hold a conference call on April 5 to consider a proposal for a GRI that would have a maximum overall revenue impact of 6 percent.

We expect the remaining motor carrier rate bureaus will be docketing general rate increase proposals very shortly, if they haven't already done so by the time this column reaches you.

Right on their heels should come announcements from practically every major LTL carrier—companies such as Yellow, Roadway, Saia, and Overnite, to mention a few—giving their customers notice of their rate increases. We expect most of those rate hikes will fall in the range of 5.5 percent to 5.95 percent, as they did last year. We also expect the effective dates of their GRIs will be earlier than they were last year.

General rate increases aren't the only cost considerations you'll need to watch out for this spring. Fuel surcharges, which can be adjusted weekly, have been skyrocketing of late and may rise even further. The only consolation is that fuel surcharges are not subject to the general rate increases.

While most LTL carriers will be implementing general rate increases in the weeks and months ahead, one exception will be Pitt Ohio Express. This regional carrier, operating primarily in the Middle Atlantic and Central states, has not taken a GRI in two years. Instead, it has adjusted its discounts downward, rather than raising its general rates and then increasing its discounts. It's a novel approach that many other LTL carriers don't favor. They'd rather adjust their general rates upward and not tinker with their established discounts.