http://www.ltl.upsfreight.com. " /> http://www.ltl.upsfreight.com. " />

LTL news: UPS Freight to raise rates 6.9 percent in August

The General Rate Increase 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.

By ·

UPS Freight, the less-than-truckload (LTL) subsidiary of UPS and the fourth-largest LTL carrier in the country, said today 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.

This GRI follows one which took effect on October 18 for 5.9 percent which also covers non-contractual shipments in the U.S., Canada, and Mexico.

In the first quarter of 2011, UPS Freight’s revenue was up 22.8 percent at $604 million, with strong increases in LTL revenue per hundredweight up more than 8 percent. UPS’s second quarter earnings release is scheduled for July 26.

“We don’t envision any further increases for this year,” said Ira Rosenfeld, UPS Freight spokesman, in an interview. “UPS does not sell on price but on the breadth and the depth of our portfolio offering and the quality of our service. It takes a huge investment to offer the best product in the industry.”

He also noted that the price per gallon is roughly a dollar higher now than it was a year ago, explaining that diesel prices are a contributing factor in this increase but not the only factor in what continues to be a soft economy. UPS Freight, he added, has made and continues to make huge investments into technology and rolling stock as evidenced by an investment totaling more than $100 million in new trucks and trailers, new stacking equipment in trailers, and network improvements for better transit times over the last two years. UPS Freight has made transit time improvements in more than 2,000 lanes during that same span.

Satish Jindel, president of Pittsburgh-based SJ Consulting, told LM that this increase is 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, 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. Contact Jeff Berman

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!

Article Topics

LTL · Trucking · UPS · All Topics
Latest Whitepaper
Refining TMS Integration Outside the Four Walls of the Warehouse
How shippers can use a modern transportation management system (TMS) to successfully integrate across the supply chain ecosystem and create a truly digital network.
Download Today!
From the October 2017 Logistics Management Magazine Issue
A leading distributor of professional salon products in the U.S. forms unique partnerships with its key LTLs to lower transport costs, reduce its carbon footprint and improve service to its 565 store locations.
Q4 2017 Rail/Intermodal Roundtable: Improvements apparent; work remains
LM Viewpoint: Collaboration, Now more than ever
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
EDITORS' PICKS
SalonCentric: One Beautiful Network
A leading distributor of professional salon products in the U.S. forms unique partnerships with its...
26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...

34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...
2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...