UPS Freight announces mid-year rate increase

The mid-year less-than-truckload (LTL) rate hike is nearly complete, with UPS Freight, the LTL subsidiary of UPS announcing a general rate increase (GRI) of 5.9 percent, effective July 16.

UPS Freight officials said this GRI applies to minimum charge, LTL rates, and accessorial charges.

UPS Freight follows other LTL players, whom recently announced rate hikes, including: YRC Freight (6.9 percent GRI, effective July 9); FedEx Freight (6.9 percent, effective July 9); Con-way Freight (6.9 percent, effective July 9); and ABF (6.9 percent, date not made available).

As LM has reported, the LTL sector has made up significant ground from the depths of the Great Recession. This is due, in part, to tighter capacity and steady rate gains since 2010.

What’s more, there are many drivers contributing to the turnaround occurring in the LTL sector, including a sharp focus on yield management and contractual relationships, coupled with an ongoing commitment to service reliability. But even with this positive momentum, it is clear challenges still remain as volumes and the general economy remain below pre-recession levels seen in 2007 and earlier.

“In LTL, a much smaller percentage number of customers experience these rate increases,” said Satish Jindel, president of SJ Consulting. . “LTL’s have to cover the higher costs of supporting all their customers from a smaller group of customers [with the 6.9 percent GRI]. And the LTL industry as a whole struggles with getting a return on its operations.”

When asked about the many factors that come into play when making pricing decisions, UPS Freight President Jack Holmes said a few different things are on the list.

“We have a long-term look at this industry to make the investments we need to make, and there is not going to be a lot out there to influence us not to make a decision that we know is going to be beneficial three or five years out,” he explained. “As far as the industry and pricing goes, from our perspective we have taken a prudent approach to take the volatility out of it and it will be interesting to see how that is perceived in the industry going forward.”