William B. Cassidy | Mar 29, 2011 4:35PM GMT
The Journal of Commerce Online – News Story
Tight truckload capacity pushes freight to LTL, puts pressure on pricing
Less-than-truckload carriers say they increasingly are handling heavier freight typically moved by truckload carriers as capacity in that sector tightens. Heavier freight is showing up in increased tonnage and average shipment weights from YRC Worldwide’s Holland to Saia and Old Dominion Freight Line. That additional freight is chipping away excess LTL capacity and encouraging carriers to hire or rehire drivers, according to trucking executives. Some LTL carriers say they are limiting the amount of heavy freight they receive or raising rates on spot shipments and heavier freight to improve yield.
“We’ve seen a huge increase in shipments over 8,000 pounds since November,” said Fred Rogers, president of Holland, YRC Worldwide’s Midwestern LTL subsidiary.
Holland is seeking 1,000 drivers to handle the rising regional LTL freight volume fueling a turnaround at YRC Worldwide’s regional carrier group.
“We’ve had to limit those (heavier) shipments and turn off the ability (for shippers) to get spot quotes, because I just don’t have the capacity,” said Rogers.
ODFL already raised rates for spot freight, said David Congdon, president and CEO, blunting a 6.9 percent third quarter increase in weight per shipment. That leaves more room in its 28-foot trailers for more profitable LTL freight, he said. At Saia, LTL tonnage shot up 6.1 percent in the fourth quarter, far outpacing a more tepid 1.8 percent increase in LTL shipments and eating into capacity.
“There’s more tonnage coming back,” said Rick O’Dell, president and CEO. Some of that tonnage is shifting from truckload trailers to his LTL network, he said.
“In a soft market, a truckload carrier is willing to take three 10,000 pound shipments (on one trailer), but in a tight market, he won’t do that,” said O’Dell.
As truckload carriers “reserve” capacity for more profitable, higher priced freight, LTL capacity will tighten, pushing up LTL rates, O’Dell said. Tighter truckload capacity “makes it easier for us to pass on increases, even though I anticipate a slow recovery,” O’Dell told The Journal of Commerce.