Old Dominion announces 4.9-percent general rate increase

For the second consecutive year, less-than-truckload carrier Old Dominion Freight Line Inc. has announced an increase on noncontract rates that undercuts its rivals.

Thomasville, N.C.-based Old Dominion today announced a 4.9-percent general rate increase on shipments moving within the U.S. and Canada. The increase takes effect Aug. 6.

About the same time last year, Old Dominion imposed the same increase on shipments moving under its main tariffs.

Because the 2012 increases will be based on a shipment's length of haul, some shipments may be subject to higher increases than others, the company said. However, the increases are expected to average out at 4.9 percent, the company said.

As it did last year, Old Dominion waited late in the 2012 pricing cycle to make its move. Most of its rivals have already imposed general rate increases of 6.9 percent, though UPS Freight, the LTL unit of UPS Inc., recently announced a 5.9 percent hike.

Old Dominion, considered by many to be the strongest LTL carrier in the industry, did not dramatically lower its rates during the 2006–2010 freight recession as a number of its competitors did. Although the company acknowledged that it had to reduce its prices to defend its market share, Old Dominion chose not to become deeply enmeshed in the fierce rate wars that the other LTL carriers engaged in. These rate wars were designed to gain business and to drive YRC Worldwide Inc., then the market leader, out of business through underpricing.

As a result, Old Dominion emerged from the recession in much better shape than its rivals and could afford to take smaller increases to make up lost ground when the upturn commenced.

In the past two years, LTL carriers in general have rationalized their pricing strategies, and have either shed or turned away unprofitable freight. As a result, rate increases are, by and large, sticking, and yields are picking up to levels not seen for years. Truckers also have abandoned the idea that they could drive YRC out of business through predatory pricing. If anything, the rate wars only served to damage the carriers' bottom lines, and they did not push YRC out of the game.