Trucking giant YRC Worldwide raised its tariff rates at national carrier YRC by 5.9 percent Sept. 20, the company’s second general rate increase this year and a strong sign that truckers are anxious to raise pricing amid improving demand.
The rate action by the largest U.S. trucking operator is expected to help other LTL trucking companies hauling low-priced freight bump up their own rates.
FedEx Freight and Con-way Freight, two carriers that were at the forefront of price cuts in a bid last year to lure YRC customers away, still are struggling to recover from heavy discounting in 2009 that depressed earnings in recent quarters.
YRC, along with many other carriers, raised base tariff rates in January.
YRC Worldwide didn’t issue a statement announcing the latest general rate increase, but it braced customers for the price hike and a change in its fuel surcharge in a Sept. 2 letter.
The GRI only applies to YRC’s non-contract freight, typically a small portion of an LTL carrier’s business. Most LTL freight is shipped under contract rates negotiated with the shipper.
The fuel surcharge increase amounts to 1.24 percent when diesel hits $3 a gallon, according to Jim Bramlett, chief operating officer of SmartFreightWare, an LTL shipping software firm.
Domestic Canadian rates and fuel surcharges remain unchanged at this time, YRC said in its letter.
Typically, LTL GRIs are announced around the New Year, but rising operating costs and tighter capacity heading into the fall may help accelerate trucking rate increases.
YRC may be the first out of the gate with a GRI, but other carriers are likely to follow, as many LTL truckers have been struggling to raise rates in a market still amply supplied with capacity.
“I would think they would not be the only player that goes (for a GRI) this fall,” Richard E. Gaetz, president and CEO of Vitran, said of YRC earlier this month.
Gaetz was one of several executives at the Dahlman Rose Global Transportation Conference in New York this month who said a GRI by YRC would be “a positive.”
The price hike may signal that LTL capacity is tightening to the point where carriers think they can make rate increases stick, which also could affect upcoming contract negotiations for 2011.
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