Surface Transportation
That ’ s surprising in an LTL market where shipments overall are down and excess capacity at large carriers is heading toward 30 %. LTL carriers also continue to invest in terminals , opening facilities bought from Yellow as they plan for long-term expansion .
LTL ’ s pricing surge still stems from the July 2023 collapse of Yellow , at the time the third-largest US LTL provider , which cut into overall capacity in the sector .
LTL carriers also have kept pricing discipline , eschewing discounts . Those carriers that have tried lower pricing face tough margin pressure from rising operating costs .
An LTL shipper who asked not to be identified said carriers are still very selective when it comes to the freight they haul , despite overall soft demand . LTL providers are more strictly monitoring shipment dimensions and refusing lower margin freight , the source said .
Long-haul carriers Saia and XPO both reported contract rates rising in the high single-digit range year over year in the third quarter , with Saia fixing its average gain at 7.9 %. That ’ s also the amount of the 2025 general rate increase Saia announced in the last week of October .
Old Dominion Freight Line ( ODFL ), the second-largest US LTL provider , said it expects LTL yield excluding surcharges , a measure that often substitutes for rates , to rise by approximately 4 % in the fourth quarter .
“ When freight starts coming back , we ’ ll have the cycle for all cycles in LTL .”
Excluding fuel , ODFL ’ s yield , or revenue per hundredweight , rose 4.6 % in the third quarter from a year ago .
“ We expect to continue to get increases ,” ODFL CFO Adam Satterfield told Wall Street analysts in an Oct . 23 earnings call .
Overall , LTL tonnage is down about 15 % from a peak in the second quarter of 2021 , according to ODFL .
However , the US LTL producer price index ( PPI ), a
“ The largest LTL carriers command a sizable chunk of the market ,” he said . “ I tell my customers that when the big carriers are the last ones left standing , you will pay whatever they want .” And large carriers are pressing for rate hikes in 2025 .
The 40 largest LTL carriers account for 91.8 % of total LTL sector revenue of $ 56.6 billion , according to the Journal of Commerce / SJ Consulting Group rankings .
Already , pressure is growing on the smallest LTL carriers to “ join or die ,” according to Jindel .
“ Shippers are reducing the number of carriers they work with , and if you have only three or four states in your service area , it ’ s going to be harder to compete ,” he said .
Still , that doesn ’ t mean smaller carriers are the cheaper alternative .
“ We target customers who demand high-quality service in our market , but we won ’ t haul for free ,” Moran said . “ There ’ s definitely a market for commoditized carriers , but that ’ s not our world .”
With about $ 50 million in annual revenue this year , Moran Transportation is too
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small to be ranked among the Journal of Commerce / SJ Consulting Group list of Top 40 LTL carriers , but the company may get there .
Moran said he had looked at six to eight potential acquisitions before deciding on RMX .
“ We ’ re in acquisition mode ,” Moran said . “ We ’ re looking and talking and trying to find the next acquisition to build density in our network and to grow where we want to grow .”
email : bill . cassidy @ spglobal . com www . joc . com November 18 , 2024 | Journal of Commerce 39