Paul Berger of The Wall Street Journal tells his readers how tighter capacity has been lifting freight rates in the less-than-truckload market. He writes:
The collapse of one of the largest U.S. trucking companies is propping up competitors in a lean freight market. XPO, ABF Freight and Saia are among the carriers reporting strong growth in pricing power, shipment volumes and other key measures during the most recent quarter in trucking’s less-than-truckload sector, a high-stakes corner of the market in which carriers combine freight from multiple customers in a single trailer.
The results suggest the roughly 50,000 daily shipments once carried by Yellow, the nation’s third largest LTL carrier, have been largely absorbed by other operators and that retailers and manufacturers are paying higher rates to keep their freight moving.
LTL truckers are loading up on some of Yellow’s big volumes largely by adding shipments to existing networks, keeping capacity relatively tight so they can charge higher prices than Yellow.
“It shows that the LTL industry, among all the transportation segments, is healthier and in a better position for the next three years from a shareholder point of view,” said Satish Jindel, president of transportation industry consultancy SJ Consulting Group.ArcBest said average daily shipments at its LTL carrier ABF Freight jumped 20% in the third quarter from the second quarter while a key measure of pricing grew 16%. That helped ArcBest offset a decline in demand in its broader freight operations, although its overall third-quarter net profit was still down by more than half compared with the same period last year, at $34.9 million. […]
Luciani said his company’s shipping volumes swung from a 4% decline earlier in the year to 11.5% growth in the quarter ending in September, the period when Yellow ceased operations. “We got the freight at our rate,” he said, rather than the lower prices Yellow was known for.
XPO, which supplanted Yellow as the third largest LTL carrier in North America, increased its daily shipment count 7.8% in the third quarter. Chief Executive Mario Harik said Yellow’s closure bumped XPO’s contract rates up from what would have been mid single-digit increases to increases of about 9%.
Saia felt confident enough about expanding volume that it added 1,000 workers in the third quarter, bolstering its workforce by 8.9%. The Johns Creek, Ga., trucker also said it would raise rates an average of 7.5% in early December to offset higher costs.
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