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

When it comes to the chances of the December 31, 2015 Positive Train Control (PTC) deadline being extended, something which railroads say is badly needed, it appears they need to be prepared to be disappointed. That was the chief takeaway of a statement from Sarah Feinberg, acting administrator of the United States Department of Transportation’s Federal Railroad Administration (FRA).

It’s said that innovation will lead the economy out of its current funk. But how does an organization become a perpetually innovative company? That’s one of the questions Kai Engel and his co-authors at A.T. Kearney set out to answer in their new book Masters Of Innovation.

At $2.843, the average price per gallon was down 1.6 cents, following last week’s 1.1 cent drop and a cumulative 7.1 cent cumulative drop over the last five weeks.

LM Group News Editor Jeff Berman caught up with UPS Freight President Jack Holmes at the National Shippers Strategic Transportation Council’s (NASSTRAC) Annual Conference and Exhibition. Berman and Holmes spoke about various aspects of the less-than-truckload sector (LTL), as well as related freight transportation news and trends.

In the third-party logistics (3PL) sector, the ongoing trend of merger and acquisition (M&A) activity never seems to take a break. That is apparent in recent weeks alone, with XPO Logistics recent acquisition of Norbert Dentressangle for $3.53 billion, Echo Global Logistics scooping up Command Transportation for $420 million, and Kuehne+Nagel buying ReTrans for an undisclosed sum.

Article Topics

News · LTL · ABF Freight · Rates · ODFL · 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