Subscribe to our free, weekly email newsletter!


LTL news: ABF to raise rates, effective July 25

By Jeff Berman, Group News Editor
July 06, 2011

Following the lead of UPS Freight, ABF Freight System announced today it will raise its rates by roughly 6.9 percent, effective July 25.

ABF said that this increase applies to its general rates and charges for its less-than-truckload (LTL) freight division, with the effect on specific lanes and shipments varying.

ABF officials were not available for further comment at press time, but a company statement noted that shippers will be able to view and download the new rates on or before July 25 at http://www.abf.com.

On July 1, UPS Freight, the less-than-truckload (LTL) subsidiary of UPS and the fourth-largest LTL carrier in the country, said it is rolling out a rate adjustment in the form of a general rate increase (GRI), effective August 1.

The GRI will be 6.9 percent and covers non-contractual shipments in the U.S., Canada, and Mexico, according to UPS. It also applies to minimum charge, LTL rates, and accessorial charges. UPS added that shippers will be able to view and download the new rates at http://www.ltl.upsfreight.com .

Satish Jindel, president of Pittsburgh-based SJ Consulting, recently told LM that these rate increases are a good thing, because the LTL industry needs to become more profitable.

“The market is getting tighter, and it is a good time for this,” he said. “Capacity is part of this in terms of the two types of capacity the industry deals with: one being fixed capacity and the other being variable capacity.”

Regarding the latter, Jindel said it is very tight at the moment, as it involves driver availability, which is very challenging at the moment.

While raising rates is seen as key for recovering revenues lost during the recession, Jindel said there are other effective ways to address this situation. One way is for LTL carriers to charge for what they actually handle.

“If a carrier is charging for 760 pounds and the Bill of Lading says 740 pounds, charge for the extra 20 pounds,” said Jindel. “About 4 percent of industry margins would improve if carriers did that. This is a bad industry practice from years ago.”

Another thing that can help LTL margins, according to Jindel, is freight classification and using FAK (Freight All Kinds) rates for average pricing. Leveraging both these practices would improve margins without rate hikes, said Jindel.

As LM reported during the fourth quarter of last year, anecdotal evidence suggested that many LTL carriers are seeing rates recover and are turning their attention to rate increases, following a challenging 2009 for the sector in which LTL carriers to a degree were highly focused on driving volume gains with pricing power largely diminished.
LTL carriers are also seeing marked improvements in pricing, volume, and weight per shipment in recent months, according to analyst reports.

An LTL executive told LM that there is no question that LTL rates are starting to firm up on the yield side and it has become a focus for carriers—with all having some sort of yield improvement process to raise rates in place.

Ed Wolfe, analyst at Wolfe Trahan & Co, wrote in a research note that while LTL capacity still is much more available than LTL, LTL pricing is “going in the right direction as the largest carriers remain very focused on improving rates.” He added that LTL tonnage has seen decelerated growth during that second quarter.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The PMI, the ISM’s index to measure growth, fell 1.4 percent to 51.5 (a PMI of 50 or greater represents growth), declining for the fifth straight month since reaching 57.9 in October 2014. And it is 4 percent below the 12-month average of 55.5. The March PMI is at its lowest level since May 2013’s 50.1.

How the food giants integrate supply chain operations is one of the most interesting components of the recently-announced merger between H.J. Heinz Co. and The Kraft Foods Group.

The new online offering is entitled “Vessels at a Glance” and is comprised of a daily update that shows all vessels at berth and anchor within POLB, as well as the Port of Los Angeles (POLA). It also includes information relating to vessel arrival and departure dates and length of stay in Long Beach, too, along with weekly updated charts that show the number of vessels at anchor at POLB and POLA that POLB officials said illustrate trends occurring over the last six months.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in January dropped 1.2 percent to $89.3 billion.

Download our new white paper, "The ABCs of HST: Understanding the Harmonized System of Tariffs," for insights and explanations of the complex cross-border classification codes.

Article Topics

News · Trucking · UPS · LTL · ABF Freight · Less-Than-Truckload · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA