Rates falling in LTL; truckload “flattish” analyst says

NEW YORK — After some gains in the first part of the decade, carriers haven’t been able to pass along rate increases as easily over the last couple years and that looks to remain the case in the near future, says a leading New York-based transportation market research firm.

A large U.S. retailer, putting out its first formal TL and LTL freight bids in the last five years this coming first quarter, told Bear Stearns that he expects a 3 to percent year-to-year reduction in his LTL rates and flattish TL rates in 2008.

Some shippers choose not to squeeze carriers too aggressively
for rate reductions in exchange for longer term agreements.

For many TL carriers, the contact has not awarded rate increases for two years now. He expects lower rates across the board from his LTL carriers and he’ll spend much of the next couple months benchmarking his rates to the market on each TL and LTL lane in its network.

Currently 75 percent of carriers accept this shipper’s loads as soon as first offered, which is a record high for this shipper. Last year at this time 67 percent of its loads were accepted on first tender, compared to 50 percent during the capacity-tight 2004-05 years, says Bear Stearns.

The only real pressure on the shipper’s transport budget, the firm continues, has come from higher fuel surcharges.

The shipper does not plan to squeeze its core TL carriers too aggressively for rate reductions in the near term, but instead plans to pay “flattish” rates in 2008 — and likely beyond — in exchange for longer-term agreements.

Because of his lower overall freight volumes, the contact says he has used less spot market and brokerage carriers and consolidated loads with his core carriers in order to increase his volumes with them. He has also increased his utilization of intermodal carriers and consolidated drop & hook shipments.