Old Dominion Freight Line will raise its base rates about 4.9 percent Nov. 15, joining several less-than-truckload carriers pursuing early general rate increases.
Unlike its competitors, however, ODFL says won't hike non-contract rates across the board. Instead, the company will base price increases on length of haul.
"Each customer will have a different financial impact based on the lanes and distance their shipments move," Todd Polen, vice president of pricing at ODFL said. The overall impact will be a price hike of about 4.9 percent, he said.
ODFL is the most consistently profitable public LTL carrier. It increased its net income 13.5 percent from the second quarter to $24.4 million in the third quarter.
But the company needs to raise rates to cover higher equipment, technology, labor and insurance costs and to expand the capacity of its network, Polen said.
Several LTL carriers announced out-of-cycle general rate increases this fall, led by YRC Worldwide followed by ABF Freight System, UPS Freight and FedEx Freight.
YRC, ABF and UPS Freight sought a 5.9 percent increase in base rates, while FedEx Freight asked shippers for a 6.9 percent rate hike.
The GRIs only apply to non-contract business, which typically represents a small portion of the LTL business -- though the percentage varies by carrier.
For many shippers, GRIs signal how strongly carriers intend to pursue rate increases in contract negotiations. They also raise the floor in discount negotiations.
Industry analysts question whether LTL carriers will be able to hold onto non-contract rate hikes, or push contract rates up much, until capacity tightens.
-- Contact William B. Cassidy at firstname.lastname@example.org.