William B. Cassidy, Senior Editor | Jul 02, 2012 1:55PM EDT
UPS Freight will raise its less-than-truckload tariff pricing 5.9 percent on average July 16, joining other LTL carriers with general rate increases this summer.
The $2.6 billion industrial freight arm of UPS will take a lower general rate increase than the tariff pricing increases most of its competitors announced last month.
In the last few weeks, FedEx Freight, YRC Freight, Con-way Freight and ABF Freight System announced plans to raise base rates 6.9 percent on average.
The rate increases, which only cover non-contract shipments, signal that LTL carriers are willing to push for higher rates despite an uncertain economy.
Despite slow economic growth, demand for trucking services is increasing, and truckload and LTL capacity is tightening, putting more pressure on pricing.
Trucking executives, speaking on condition of anonymity, say they expect this summer’s general rate increases to stick and help push up contract rates.
At shipper conferences in May and June, LTL carriers stressed rising operating costs are eating into already thin trucking profit margins.
Investment research firm Stifel Nicolaus expects overall LTL rates to climb 2 to 4 percent in 2012, as truckers retain pricing power during a choppy recovery.
UPS Freight revenue increased 2.3 percent year-over-year in the first quarter to $614 million. Last year, the LTL carrier’s revenue shot up 16.1 percent.
Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter @wbcassidy_joc.
