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YRC Freight is latest LTL carrier to roll out mid-year GRI

By Jeff Berman, Group News Editor
June 27, 2012

Earlier this week, YRC Freight, a subsidiary of less-than-truckload (LTL) transportation services provider YRC Worldwide (YRCW), became the most recent carriers to announce a GRI (general rate increase) for non-contractual freight.

Company officials said this GRI, which takes effect on July 9, will cover non-contractual shipments in United States, Canada and Mexico, with rates increasing by an average of 6.9 percent, varying by lane and shipment type. YRC Freight added that this GRI applies to minimum charges, LTL rates and accessorial charges.

Other LTL carriers recently announcing rate hikes include FedEx Freight’s and Con-way Freight’s respective 6.9 percent GRI, which are both effective July 9 and ABF’s 6.9 percent GRI increase announced on June 11. ABF did not specify when the rate increase would take effect.

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,” he said. “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.”

With three of the major LTL players having introduced rate increases in recent weeks, it stands to reason that more are on the way.

Stifel Nicolaus analyst David Ross wrote in a research note that LTL’s should continue to have the upper hand over shippers when it comes to pricing power.

“During 1Q12, LTL yields (excluding fuel surcharges) continued to climb from the late 2009 trough, and we expect them to continue rising through 2014, even as comps get tougher, because they are still a good bit away from where they need to be, in our opinion,” wrote Ross. “Given increased price rationality among competitors and the structural tightening in active capacity (# of trucks and people moving LTL freight), we believe pricing power should remain with the carriers as long as capacity and pricing remain rational.

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).


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Article Topics

News · YRC Worldwide · LTL · YRC · YRC Freight · All topics

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