UPS Freight announces 2019 general rate increase

Earlier this month, UPS Freight, the less-than-truckload subsidiary of Atlanta-based transportation and logistics bellwether UPS announced general rate increases (GRI) that went into effect on February 18.

The GRI, which applies to non-contractual less-than-truckload (LTL) shipments rated on the current UPS Freight 525, 560, 570 and 571 tariffs, is 5.9%.

UPS Freight officials explained that that the impact of this general rate increase may vary by specific lane or shipment characteristics such as weight or class.  

In an interview, UPS Freight President Rich McArdle said that when looking at the LTL market, as it relates to pricing, there is a general sentiment that shippers with the right freight, or freight that matches up well with an LTL carrier’s network, the shipper is more likely to get a better rate, whereas shippers’ freight that does not match up well may need to be renegotiated rate-wise.

“That interaction will continue this year as well,” he said. “As carriers like UPS Freight look deeper and deeper into how freight is flowing through our network, where the opportunities are, and where the capacity is and is not, we are also thinking about it in terms of how dynamic it is. We are looking at our data a little bit deeper and closer, and that is one of the things all of the [LTL] carriers are doing. This is managed through where the opportunities are.”

Other national LTL carriers have also rolled out 2019 GRI notices in recent months, too.

Last November, FedEx Freight, the company’s less-than-truckload unit, announced 2019 rates were pegged to increase by an average of 5.9%, with FedEx noting that this rate change applies to eligible FedEx Freight shipments within the United States (including Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands), between the contiguous U.S. and Canada, within Canada, between the contiguous U.S. and Mexico, and within Mexico. This GRI went into effect on January 7. 

ArcBest and ABF Freight recently announced general rates and charges for LTL services headed up “by about 5.9% although the effect on specific lanes and shipments may vary, effective February 4.

Industry analysts have frequently stated that LTL GRIs typically impact 20%-40% of LTL business.

That has been made very clear in the past by Satish Jindel, president of Pittsburgh-based SJ Consulting, whom has told LM over the years that regardless of which way the economy goes, LTL GRI’s have seemingly gone the way of a “broken record.”

Even though LTL carriers announce GRI hikes every year, they are clearly becoming meaningless because they cannot seem to show it on the bottom line, he said.

For the larger carriers like FedEx Freight and UPS Freight, he noted they typically have operating ratios in the mid-to-high 90s, with GRIs not aiding them in any meaningful way. But smaller carriers that are efficient and well run, like ODFL, usually have lower, and better ORs more often than not.