FedEx Freight Considers Rate Hike

FedEx Freight is studying a price increase of its own after YRC's general rate increase this week, President and CEO Bill Logue said Thursday.

"I thought it was right on," Logue said of the rival carrier's Sept. 20 general rate increase. He wasn't surprised by the size of the rate hike -- 5.9 percent.

"You could say that the surprise was that it could have been more," he said.

JOC Video: FedEx Freight President Bill Logue on American Infrastructure

YRC's early rate action is "a positive development," Logue said. "It sends a good message that this industry is focused on what is recoverable."

A FedEx spokesman said the company is still studying the pricing in the less-than-truckload business, which has lagged behind other shipping modes that have reported improved demand this year. "FedEx is evaluating market conditions but we have made no final decisions regarding the timing or the magnitude of any price changes," spokesman Maury Lane said.

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General rate hikes in the LTL industry affect non-contract rates offered from the company's tariff and only impact a small share of LTL business directly. However, they do raise the bar in contract negotiations with shippers.

FedEx Freight and YRC are both struggling to return to profitability, with FedEx's less-than-truckload division losing $16 million in its last quarter.

While YRC is recovering from years of losses, FedEx Freight is trying to rebalance its business after gaining market share from YRC through deep price discounts.

FedEx Freight leaped past YRC to become the largest stand-alone U.S. LTL carrier last year, but lost $171 million over its last four fiscal quarters.

Contracts negotiated during last year's rate war contributed to weak pricing and its losses in the quarter that ended Aug. 31 -- its first quarter of fiscal 2011.

Efforts to improve pricing made headway quarter to quarter, but year-over-year comparisons were more difficult because of rampant discounting last fall.

"We're in the process of figuring out our own plans for a GRI," Logue said at a U.S. Chamber of Commerce event in Washington.

Logue would not discuss specifics of LTL volume but said business has been "consistent with what it was in August. September for us has been a strong month."

The company plans to combine its regional FedEx Freight and long-haul FedEx National LTL networks by Jan. 31, eliminating 100 terminals and 1,700 jobs.

"Every LTL carrier is reworking their networks to make them more efficient," Logue said, "but first and foremost we must protect our customer service."

-- Contact William B. Cassidy at wcassidy@joc.com.