AMERICAN less-than-truckload (LTL) carriers expect their rates to rise and remain elevated even if the US economy falls into a recession, according to speakers and executives at the SMC3 Connections Conference, reports IHS Media from San Diego.
Demand for LTL freight services remains strong, despite concerns about slowing expansion of US gross domestic product, LTL and third-party logistics (3PL) officials said at the SMC3 event in San Diego. On top of that, LTL capacity remains tight, despite the gradual expansion of terminal networks.
Pricing discipline that has characterised the LTL market since recovery from the 2008-2009 recession remains in place. And the LTL market, largely contract-driven, doesn't feel the type of transactional price pressure applied to truckload agreements by the spot market.
The producer price index for long-distance LTL trucking rose 3.8 per cent in May from April and was up 34.1 per cent year on year, an indication of how much LTL costs have climbed. The [producer price index (PPI)] data reflects carrier revenue from the 'selling price' including base rates and fuel surcharges.
PPI is a measure of inflation from the perspective of producers.
LTL carriers, from FedEx Freight at the top of the market on down, remain focused on 'revenue quality.' That means they're choosing freight based on its profitability and impact on their margins. And there is still enough LTL freight demand to keep pricing elevated as they reject less profitable freight.
Executives at the SMC3 event were concerned about the short-term outlook, but they're focused on the long term. 'I think it's going to be important to keep perspective,' said Forward Air CEO Tom Schmitt at the conference.
'I think we should be thoughtful and careful not to panic over the next week or month or three months, to fear the world's going to go under and the sky is going to fall, because it's not,' Mr Schmitt said.
LTL increasingly seems at the crossroads of parcel, truckload, and international cargo. Congestion at ports and on intermodal rail is pushing more deconsolidated container freight to truck. That's leading LTL carriers to position more terminals closer to US seaports, a trend that is expected to continue.
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Demand for LTL freight services remains strong, despite concerns about slowing expansion of US gross domestic product, LTL and third-party logistics (3PL) officials said at the SMC3 event in San Diego. On top of that, LTL capacity remains tight, despite the gradual expansion of terminal networks.
Pricing discipline that has characterised the LTL market since recovery from the 2008-2009 recession remains in place. And the LTL market, largely contract-driven, doesn't feel the type of transactional price pressure applied to truckload agreements by the spot market.
The producer price index for long-distance LTL trucking rose 3.8 per cent in May from April and was up 34.1 per cent year on year, an indication of how much LTL costs have climbed. The [producer price index (PPI)] data reflects carrier revenue from the 'selling price' including base rates and fuel surcharges.
PPI is a measure of inflation from the perspective of producers.
LTL carriers, from FedEx Freight at the top of the market on down, remain focused on 'revenue quality.' That means they're choosing freight based on its profitability and impact on their margins. And there is still enough LTL freight demand to keep pricing elevated as they reject less profitable freight.
Executives at the SMC3 event were concerned about the short-term outlook, but they're focused on the long term. 'I think it's going to be important to keep perspective,' said Forward Air CEO Tom Schmitt at the conference.
'I think we should be thoughtful and careful not to panic over the next week or month or three months, to fear the world's going to go under and the sky is going to fall, because it's not,' Mr Schmitt said.
LTL increasingly seems at the crossroads of parcel, truckload, and international cargo. Congestion at ports and on intermodal rail is pushing more deconsolidated container freight to truck. That's leading LTL carriers to position more terminals closer to US seaports, a trend that is expected to continue.
SeaNews Turkey
