FedEx Freight to Raise LTL Rates 6.9 Percent

FedEx Freight is raising the ante in what's quickly becoming a reverse less-than-truckload rate war, increasing its general tariff rates 6.9 percent Nov. 1.

That's a full percentage point above the general rate increases posted by rival nationwide LTL carriers YRC and ABF Freight System Sept. 20 and Sept. 27.

FedEx Freight President and CEO Bill Logue last week told The Journal of Commerce YRC's 5.9 percent rate increase was "right on" and "could have been more."

After reviewing its own options and evaluating market conditions, FedEx Freight decided to go for more than 5.9 percent as it attempts to raise its rate floor.

The pricing "adjustment" will help FedEx Freight make key investments in its LTL network and services, said T. Michael Glenn, FedEx executive vice president.

FedEx is merging second- and next-day FedEx Freight with long-haul FedEx National LTL, cutting 100 terminals and 1,700 employees by Jan. 31, 2011.

The merger and rate action follow four quarters of losses totaling $171 million at FedEx Freight, which fought a price war with Con-way Freight last year.

Both FedEx Freight and Con-way gained market share at the expense of YRC, but in doing so filled their terminals with low-priced freight, cutting into earnings.

In trucking, general rate increases don't always mean higher revenue. They only cover non-contract freight, now a minor share of most LTL business. But GRIs do help set the tone and raise the bar in contract negotiations with shippers.

FedEx also said it will raise domestic and international rates at FedEx Express by what amounts to 3.9 percent, effective Jan. 3, 2011. The rates will actually be raised 5.9 percent, but that increase will be offset by lower fuel surcharges.

FedEx Freight's LTL fuel surcharge will remain unchanged, the company said.

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