Less-than-truckload carrier Old Dominion Freight Line (NASDAQ: ODFL) announced a 4.9% general rate increase Monday for freight carried under various general tariff codes. The increase will be effective March 1.
The rate bump follows similar announcements from LTL carriers in recent weeks. The majority of the increases are in the 5% to 6% range, likely indicative of tightening LTL capacity and a rate-disciplined environment.
Most carriers implement annual GRIs for noncontractual freight to absorb cost inflation, including driver and dockworker pay increases and ongoing investments in tech and real estate. In 2021, driver recruitment and retention expenses represent one of the biggest cost headwinds for carriers. Fuel expenses have moved higher as well, but separate surcharge mechanisms are in place to capture fluctuations.
During soft freight markets carriers opt out of annual GRIs or issue them realizing only varying degrees of success.
Privately held carrier Estes Express Lines’ 4.6% GRI went into effect Feb. 1. The carrier also announced an $11-per-shipment surcharge for freight in California at the beginning of the year “due to the rising administrative cost of operating in the state.”
FedEx Freight’s (NYSE: FDX) recent GRI ranges between 4.9% and 5.9%. UPS Freight (NYSE: UPS), which was recently acquired in an $800 million transaction by TFI International (NYSE: TFII), announced a 5.4% GRI effective Feb. 22.
“At Old Dominion, we are committed to delivering our premium value proposition of on-time, claims-free service at a fair price. To satisfy our customers’ expectations and deliver on the promises we have made, we must continue to enhance our high-quality service network and systems,” stated Todd Polen, Old Dominion’s VP of pricing services, in the press release.