Subscribe to our free, weekly email newsletter!

LTL pricing continues to show improvement

By Jeff Berman, Group News Editor
October 28, 2011

During the third quarter earnings season to date, it appears that less-than-truckload carriers (LTL) are in a good groove, when it comes to pricing.

The early returns so far are evident, with LTL players Saia, Old Dominion, and ABF Freight System reporting year-over-year per hundredweight price gains of 11.6 percent, 13.7 percent, and 15.9 percent, respectively.

In part, these pricing gains stem from General Rate Increase (GRI) announcements for non-contract freight made by LTL carriers during the second half of this year, with increases coming in around 6.9 percent on average.

These rate increases came at a time when the LTL market is getting tighter in terms of both fixed capacity and variable capacity, which make up the sector.

And since the fourth quarter of last year, anecdotal evidence has 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.

Since that time, LTL carriers have also seen 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.

“The LTL industry is finally getting its arms around pricing and profitability, which is being seen in improved results, and the operating ratios for those that have reported earnings are better than those being reports by truckload carriers,” said Satish Jindel, president of Pittsburgh-based SJ Consulting.

Jindel said LTL carriers are focused on finding customers that have had bad pricing, adding that customers should fully carriers to only carry freight that helps them turn a profit, which has not happened in the past, as some carriers were cutting rates to attract business while suffering financially.

But this does not mean that LTL carriers are strictly trying to make up for previous losses and getting control over pricing, as much as it is the industry recognizing carriers cannot remain in business without moving profitable freight, according to Jindel.

“What LTL carriers want is to provide quality equipment, quality service and to take better care of customers,” he said.

Dahlman Rose analyst Jason Seidl wrote in a research note that LTL fundamentals remain strong industry-wide, with those trends expected to continue in the fourth 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

Earlier today, leaders of key House and Senate committees related to transportation said an agreement has been reached for new long-term surface transportation in the form of a bicameral, bipartisan agreement Conference Report for the Fixing America’s Surface Transportation (FAST) Act.

While staving off contraction in the previous four months, manufacturing in November did not grow, according to the most recent edition of the Institute for Supply Management’s (ISM) Manufacturing Report on Business.

Rising Cyber Monday sales numbers continue to demonstrate the ongoing and emerging influence of e-commerce on consumer shopping habits and patterns and subsequently supply chain and logistics operations, too.

Diesel prices fell for the third consecutive week, with the average price per gallon down 2.4 cents to $2.421, according to the Department of Energy’s Energy Information Administration.

The 2015 Pain in the (Supply) Chain survey recently conducted by UPS coincided this year with qualitative interviews of healthcare executives in North America to gain further insights into trends, challenges and opportunities having an impact on healthcare logistics.

Article Topics

News · LTL · ABF Freight · Rates · ODFL · Less-Than-Truckload · All topics


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