Today's focus is on what we're seeing in longer-term pricing trends for LTL and TL.
For LTL pricing, we look to the Feds LTL PPI for long-term guidance and the signal here (shouldn't be a surprise) is that LTL pricing is starting a new leg up. Carriers have had pricing power for some time now, but TL is always faster to respond vs. LTL. Currently, we are hearing that many LTL carriers are looking for double-digit increases, cutting unprofitable business, and not even considering new RFP's (unless you're a preferred partner like Recon is ).
Below are two LTL PPI charts - one is a 12-month average YOY comparison (really long-term) and the other is a rolling quarterly month over month measure. The month over month set a new record and
indicates strong pricing increases right now while the long-term chart suggests that trend will stick around for a while.
TL pricing - we can look at the TL PPI as well as spot vs. contract rates. We all know spot rates have run hard for months now, but contract rates are rising quickly to resume their normal position as higher vs. spot. Spot rates should cool down some, but we are at "new normal" levels of elevated pricing. The TL PPI also set a new record.
Clearly higher pricing is coming and will stick around so what's the solution? Look hard at internal processes - optimize order volumes, reduce sequential shipments, and build in more lead-time.