Thursday, January 14, 2010

LTL carriers seeing some signs of demand increase

Two carriers announce LTL rate increases

Less-than-truckload carriers are a bit more optimistic about demand today than they were even a month ago. But, pricing remains something of a mixed bag. Some carriers are focusing on competitive rates to gain market share while others are increasing rates in the hope of improving profitability.

A fourth quarter review from Wolfe Research says truck demand has been improving and "we expect LTL tonnage to improve significantly in the fourth quarter relative to recent quarters, but pricing remains very weak for, likely worse in 4Q than 3Q for LTL."

A note this morning from Longbow Research says LTL carriers are "continuing to become increasingly hopeful for further demand stabilization as a result of increased volumes from existing customers. Pricing forecasts among our contacts, however, remain very mixed due to aggressive pricing tactics by some carriers."

Longbow says their contacts cite FedEx Freight as the most aggressive LTL carrier on pricing right now, while Con-way Freight "appears to have eased its foot from its aggressive pricing strategy as it looks to focus on profitability." Con-way last year implemented an LTL pricing cap.

Some LTL carriers are taking the other approach, however, and beginning to raise rates on the expectation that demand in 2010 will be strong enough to support increases. Old Dominion Freight Lines last week announced a general rate increase of 4.4% on average. And ABF Freight System said it would increase rates 5.7% on average beginning this month.

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