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LTL Pricing to 'Firm' Later in 2010, Report Says
Thursday, 07 January 2010 00:00
Research firm sees LTL rates going up with or without YRC.

Less-than-truckload pricing, which took a sharp turn downward toward the end of the 2009, will begin to firm by the second half of 2010 regardless of whether YRC Worldwide is still in business, investment firm Wolfe Research says.

Shippers are expected to hold firm on pricing in the first quarter, when many annual trucking contracts come up for bid, and those surveyed by Wolfe Research expect LTL rates to remain flat as long as YRC Worldwide stays in the game.

If the carrier shuts down sometime in mid-2010, shippers expect LTL prices would increase 5.7 percent year-over-year this year, Wolfe Research said. However, if the company continued to operate under Chapter 11 bankruptcy protection, those shippers believe rates would go up 2.7 percent on average, the research company said.

Rates for LTL freight dropped 10 percent or more on average last year as trucking companies fought desperately for business in the worst recession in decades. As the year drew to a close, some carriers offered discounts of 80 percent or more off base rates.

As early as October, one leading LTL executive, Old Dominion Freight Line's Earl Congdon, called the rates offered by many competing companies "unsustainable," as carriers tried to knock ailing YRC out of business or whittle down its market share.

Competing carriers succeeded in taking market share from YRC—although it remains the largest single player in the LTL freight market. One analyst recently pegged its market share around 15 percent—down from more than 20 percent a year ago.

But the company averted bankruptcy, narrowing its third quarter losses, winning new long-term lending and labor agreements and completing a debt-for-equity swap with bondholders Dec. 31 that eliminates $470 million out of about $1.6 billion in debt.

The Journal of Commerce Online, 1/7/2010