News / LTL price hikes by US carriers expected to stick, despite softer market

© Mohamed Ahmed Soliman |

Although demand has declined slightly, general rate increases announced by major LTL carriers in the US are likely going to stick – unlike price hikes in the parcel sector, which have been largely neutralised by discounts designed to retain customers. 

Two major carriers – FedEx Freight and ABF Freight – have announced increases of 5.9%. Saia is an outlier at the top end with a 7.9% rate hike, while Old Dominion is raising prices by 4.9% starting 2 December. 

Supposedly, these increases should cover cost increases for the carriers and fund capital investment. 

“The general rate increase is based on the company’s economic forecast and expectations for the operating environment,” said Todd Polen, head of pricing at Old Dominion, adding that the carrier needed to continue enhancing its network and systems. 

Satish Jindel, founder and president of ShipMatrix and SJ Consulting, said an increase of 5.9% was not out of line with carriers’ previous rate movements, and that the two top parcel carriers, FedEx and UPS, were raising their rates by the same margin. 

These two integrators have also pushed up their surcharges, some by considerably higher percentages, but experienced strong pushback from customers in a market that proved less buoyant than forecast, and they ended up offering strong discounts that more or less cancelled out those increases. 

These developments have fuelled questions over whether a rate increase in the LTL segment might face similar headwinds. Moreover, demand for LTL service has softened. 

“Demand for LTL services continues to be slightly lower than last year, with most carriers having excess capacity,” noted Uber Freight’s Q4 market update, adding that the effect of Yellow Freight’s collapse was wearing out, a large number of the defunct carrier’s facilities back into the market in the networks of other carriers. 

ArcBest management claimed, in the earnings call on its recent results, that the rate increase of subsidiary ABF Freight had seen “really good retention” after its rate hike. 

And Uber Freight wrote in its market update: “Despite weak demand, carriers are still seeing favourable financial results in the LTL space by leveraging and investing in technology and internal efficiencies and processes. Carriers are also being more selective in the opportunities they invest in to drive yield, with some opting to exert more price control.”

But it added that large carriers had dialled back their projections for the final quarter by 10% to 15%. 

Mr Jindel believes the LTL operators are in a more favourable position than the parcel carriers. While high entry barriers keep out new entrants into the LTL market, for the parcel firms every new entrant constitutes competition. The LTL scene has been contracting, he added. 

“There were 40-50 large LTL carriers, now there are 15,” he said. Four smaller operators were sold or merged this year, and 2025 would likely witness a similar reduction, he added. 

This makes it easier to keep prices up in the LTL segment, he concluded. He regards the sector as the best performer over the coming three years compared to the truckload and parcel arenas. 

“I imagine that, for LTL as a whole, we’re likely going to see between 3% and 5% net increase in 2025,” he said. 

Shipper resistance to parcel rate increases was partly fuelled by anger over rather aggressive hikes in surcharges, such as the $20 for fuel for address corrections, although most of these changes are made before a package is delivered. 

The LTL sector is no stranger to surprising pricing moves, Mr Jindel noted. He pointed to a surcharge on items that are 24ft or more in length, which is $4,000 – on top of the regular rate and other applicable charges.

“You can ship it for less by truck,” he said.