ABF hikes non-contract rates by 6.9 percent

Less-than-truckload (LTL) carrier ABF Freight System, Inc. said today it will hike rates by 6.9 percent on its non-contractual shipments effective July 25. ABF's move comes just days after rival UPS Freight, the LTL unit of UPS Inc., a similar rate increase on its non-contract freight.

In a statement, Fort Smith, Ark.-based ABF said the impact of the increase will vary depending on specific lanes and shipments.

The rate increase comes amid an improving climate for pricing and yields for the LTL industry as carriers benefit from generally firmer traffic trends and actions to cull unprofitable freight from their systems. Through mid-June, ABF's second-quarter yields were up between 9 percent and 10 percent from year-earlier levels, compared with 2 percent to 3 percent gains in the first quarter versus the same period in 2010.

ABF's volumes grew by 10.8 percent in the second quarter over 2010 levels, though they moderated significantly through mid-June in line with a general economic slowdown.

Few expect UPS Freight and ABF to be the last LTL carriers to implement these general rate increases. Though the hikes are scheduled to take effect during the traditionally slow summer shipping cycle, they stand a better chance of sticking as auto production resumes in Japan following last March's tsunami and earthquake that disrupted trans-Pacific automotive supply chains, analysts at Robert W. Baird & Co. said in a research note published today.

In another, perhaps unconventional, metric of a brightening LTL outlook, Con-way Inc., which runs LTL, truckload, and logistics businesses, announced yesterday it would restore two 401(k) contributions to employees that are largely based on an employee's time of service with the company. Con-way said in a filing with the Securities and Exchange Commission that an improvement in "general economic conditions" prompted the move, which takes effect Oct. 1 and will cost the company about $5 million per quarter.