• ITVI.USA
    14,115.390
    -122.040
    -0.9%
  • OTRI.USA
    21.440
    -0.370
    -1.7%
  • OTVI.USA
    14,084.970
    -127.210
    -0.9%
  • TLT.USA
    2.750
    -0.050
    -1.8%
  • TSTOPVRPM.ATLPHL
    2.290
    -0.190
    -7.7%
  • TSTOPVRPM.CHIATL
    2.760
    -0.310
    -10.1%
  • TSTOPVRPM.DALLAX
    1.320
    -0.050
    -3.6%
  • TSTOPVRPM.LAXDAL
    2.040
    -0.240
    -10.5%
  • TSTOPVRPM.PHLCHI
    1.870
    -0.030
    -1.6%
  • TSTOPVRPM.LAXSEA
    2.630
    -0.090
    -3.3%
  • WAIT.USA
    127.000
    0.000
    0%
  • ITVI.USA
    14,115.390
    -122.040
    -0.9%
  • OTRI.USA
    21.440
    -0.370
    -1.7%
  • OTVI.USA
    14,084.970
    -127.210
    -0.9%
  • TLT.USA
    2.750
    -0.050
    -1.8%
  • TSTOPVRPM.ATLPHL
    2.290
    -0.190
    -7.7%
  • TSTOPVRPM.CHIATL
    2.760
    -0.310
    -10.1%
  • TSTOPVRPM.DALLAX
    1.320
    -0.050
    -3.6%
  • TSTOPVRPM.LAXDAL
    2.040
    -0.240
    -10.5%
  • TSTOPVRPM.PHLCHI
    1.870
    -0.030
    -1.6%
  • TSTOPVRPM.LAXSEA
    2.630
    -0.090
    -3.3%
  • WAIT.USA
    127.000
    0.000
    0%
American Shipper

Stifel sees pricing momentum for LTL carriers

   The investment bank Stifel said Monday it expects to see “pricing momentum” in the second quarter for less-than-truckload carriers as the industry enters the “seasonally strong” second quarter.
   In a note on the LTL market, Stifel’s transportation and logistics group said pricing rose in the range of 3 to 4 percent in the first quarter, relative to the final quarter of 2013.
   “At our February conference, there was talk of a reaccelerating pricing environment but still in the 3-4 percent range (hearing closer to 4 percent recently on contract renewals),” the note said. “Also, volumes were good when networks were running, but the winter weather caused significant disruptions. Our view is that carriers were hauling essentially five days’ worth of freight over four days in (the first quarter of 2014) due to the network delays, so that it felt good when open for business as capacity was tight.”
   But, Stifel cautioned that underlying this momentum is a “low growth rate for the U.S. economy (~2%-2.5%), even as some are getting more bullish.”
   The bank also noted that truckload, as well as LTL carriers, are reporting the driver situation as “really bad.”
   LTL tonnage in the fourth quarter of 2013 grew 4.4 percent year-over-year, an acceleration from the third quarter growth rate. On the pricing side, Stifel said yields grew only 0.2 percent in the fourth quarter, down from the 1.8 percent growth reported in the third quarter.
   “From our recent conversations with carriers, average LTL rates continue to increase, even if yields are not as positive,” Stifel said. “And most carriers believe the competitive landscape is rational (though some would prefer stronger price discipline). We have been most concerned with UPS using its LTL division as a loss-leader to generate freight for its small package network, but we have not seen that yet, as UPS Freight has improved yields.
   “One of the reasons for the yield/price mismatch, in our view, continues to be increased 3PL penetration. Even if the same freight is still hauled by the same carrier, the shift of the primary shipper relationship erodes the margin of the carrier. On the other side, large national accounts are not giving much in the way of rate increases and are typically much less profitable customers for the carriers. We believe larger shippers will need to accept larger-than-average increases once capacity tightens significantly, as the cross-subsidizing done by the small shipper is decreasing and industry consolidation has increased.”