Con-way Freight will raise its non-contract rates 6.9 percent on average July 9, becoming the third less-than-truckload carrier to announce a rate hike.
FedEx Freight, the largest standalone U.S. LTL carrier, and ABF Freight System earlier this month announced general rate increases averaging 6.9 percent.
The industrial freight arm of FedEx will also raise rates and accessorial charges July 9. ABF Freight’s general rate hike, announced June 11, took effect June 25.
The rate increases, which only cover non-contract shipments, signal that LTL carriers are willing to push for higher rates despite an uncertain economy.
The 6.9 percent average rate hike sought by the carriers is among the largest in recent years, matching rate increases most LTL carriers took last summer.
For the most part, those rate increases stuck, carriers say, but they say shippers are still paying less for LTL service than before the recession, when pricing plunged.
Despite slow economic growth, demand for trucking services is increasing, and truckload and LTL capacity is tightening, putting more pressure on pricing.
At shipper conferences in May and June, LTL and truckload carriers also stressed rising operating costs are eating into already thin profit margins.
“We’re now paying 50 percent more for the tractors we’re bringing on line than the tractors we bought six years ago,” Roy Slagle, ABF president, told NASSTRAC.
Rising vehicle and health insurance costs and wages also put pressure on carrier bottom lines, truckers told the National Industrial Transportation League.
Investment research firm Stifel Nicolaus expects LTL rates to climb 2 to 4 percent in 2012, as trucking operators retain pricing power during a choppy recovery.
“We believe most of (FedEx’s) competitors will follow suit with a rate increase in the July-August timeframe,” said David G. Ross, an analyst with Stifel Nicolaus.