Friday, December 10, 2010

Back in Black:

Increased demand and profitability allow LTL carriers to make higher prices stick.

Since the economic downturn, less-than-truckload has been less than profitable. As reported in Transport Topics, the LTL industry has seen “a turbulent two years of rate cutting, market-share swings and some astronomical losses.” But the black ink has returned.

As a group, publicly-traded LTL carriers turned a profit in the third quarter, with operating income of over $42 million. A year ago, the same companies lost over $200 million. Analysts pointed to an increase in demand to explain the carriers’ increased profitability, allowing the truckers to – you guessed it – raise prices.

“Pricing in the industry remains competitive, but we are seeing it tighten,” said retiring YRC CEO William Zollars, adding that some of his competitors were “getting religion” on keeping rates firm. Operating margins for LTL carriers have improved, but still lag truckload and package operators.

So the good news is the LTL carriers aren’t going out of business, and the not as good news is they’re feeling strong enough to demand more for their services in the year ahead.

Kirk Shearer
800-989-0054 x103

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