LTL pricing, demand will stay down in 2008
Carriers report very competitive pricing in third-quarter results
By Dave Hannon -- Purchasing, 11/1/2007 3:43:00 PM
Less-than-truckload carriers and market analysts alike are predicting a continued slump in LTL demand in 2008, resulting in lower LTL pricing and rates. Market analysts Bear Stearns said in a recent research note on the trucking industry that “there is another shoe to drop in pricing during [the first half of 2008] leading to pricing weakness likely until 2009, particularly for the LTL providers.”
The analysts continue to say that if economic conditions continue to be “uncertain”, LTL pricing could remain low even longer.
But buyers viewing this as a time to gouge their carriers may be in for a surprise, as carriers look to focus on their most profitable contracts in these lean times. In a recent earnings call, Bill Zollars, president of YRC, said the carrier is looking to reprice contracts for some ''unprofitable customers'' at its USF Holland and Reddaway divisions in the Midwest.
Doug Stotlar, president and CEO of LTL trucker Con-way, said the LTL market continues to be “very price sensitive.” He told Reuters that “We are assuming 2008 should remain relatively flat for freight.”
Old Dominion Freight’s CEO Earl Congdon said "The pricing environment...was increasingly competitive during the third quarter, as indicated by the decline in our revenue per hundredweight of 0.7%. We expect that soft demand within our industry will continue to drive a highly competitive environment, particularly with respect to pricing."
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