Freight Slows, But LTL Prices Keep Climbing

U.S. less-than-truckload (LTL) carriers have managed to raise rates despite a prolonged freight
downturn, but signs of weakening demand are starting to show.

National LTL carrier Saia told Journal of Commerce that shipment growth slowed at the end of
the first quarter and into April. CEO Frederick J. Holzgrefe said total shipments from March to
April showed only modest improvement, blaming the slowdown on economic uncertainty.
“Shippers are cautious and moving less freight,” Holzgrefe said. He estimated the impact of
weaker seasonal demand to be between $25 million and $40 million in lost revenue, adding that
demand started to soften in March, and failed to recover in April.

The drop in activity is linked to rising U.S. tariffs and trade tensions, which prompted businesses
to rush imports early this year. That initial surge is now fading, with companies canceling orders,
skipping sailings, and reducing factory output.

Despite falling freight volumes, LTL carriers are securing higher contract renewal rates. Rates
increased by an average of 4% to 6% year-over-year in the first quarter, even as volumes have
dropped by double digits since 2022, according to carriers and analysts.

The U.S. Bureau of Labor Statistics’ Producer Price Index (PPI) for LTL trucking shows that
shipper-paid rates now exceed their June 2022 peak. The long-distance LTL PPI, which
includes both contract and transactional rates, rose 6% on average in the first quarter,
confirming mid-single-digit pricing gains reported by carriers.

“We are not seeing any loss of pricing discipline in the less-than-truckload sector,” XPO CEO
Mario Harik told the Journal of Commerce. XPO is the third-largest LTL carrier in the U.S.
LTL carriers may be better positioned than truckload or drayage providers to weather economic
slowdowns, thanks in part to rising U.S. inventories. Harik said that while fewer inbound ocean
containers hurt forwarders and drayage firms directly, LTL providers feel a more indirect and
delayed impact.

“When products enter the U.S., they go into inventory first, and that’s a buffer for us,” Harik said.
The real impact on LTL volumes comes when those inventories are drawn down and
replenishment is needed. Even then, lower inventory levels may not be enough to generate full
truckload demand, creating more opportunities for LTL shipments.

Some shippers are also sourcing more freight domestically, further complicating forecasts. “It’s
very tough to estimate in the near term what the direct impact is going to be on LTL volumes,”
Harik said, noting that a freight rebound could follow the current slowdown. “There could be an
uptick following the downdraft.”