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Stifel sees upwards pricing momentum in LTL industry in US
PRICING in the less-than-truckload carrier industry increased by three to four per cent in the first quarter, compared to the fourth of 2013, according to investment bank Stifel.
It expects to see "pricing momentum" in the second quarter as the industry enters the "seasonally strong" quarter, American Shipper reported.
"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) due to the network delays, so that it felt good when open for business as capacity was tight."
However, Stifel cautioned that underlying this momentum is a "low growth rate for the US economy "even as some are getting more bullish".
LTL tonnage in the fourth quarter was up 4.4 per cent year-on-year, an acceleration from the third quarter growth rate. On the pricing side, yields grew 0.2 per cent, down from the 1.8 per cent growth the previous quarter.
"From our recent conversations with carriers, average LTL rates continue to increase, even if yields are not as positive," Stifel said.
"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.
It expects to see "pricing momentum" in the second quarter as the industry enters the "seasonally strong" quarter, American Shipper reported.
"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) due to the network delays, so that it felt good when open for business as capacity was tight."
However, Stifel cautioned that underlying this momentum is a "low growth rate for the US economy "even as some are getting more bullish".
LTL tonnage in the fourth quarter was up 4.4 per cent year-on-year, an acceleration from the third quarter growth rate. On the pricing side, yields grew 0.2 per cent, down from the 1.8 per cent growth the previous quarter.
"From our recent conversations with carriers, average LTL rates continue to increase, even if yields are not as positive," Stifel said.
"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.
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