Less-than-truckload pricing is now experiencing its most intense upward momentum since the third-largest national carrier in that sector ceased operations during mid-2023, following a relatively weak beginning to the year. The monthly cost per hundredweight gauge for LTL, which captures pricing shifts using transaction-level data, indicates that new bids and general tariff increases are being set at levels roughly 12.5% above those from a year earlier and 29% above May 2021 figures. This does not mean every contract rose at once, but rather that as fresh proposals and rate adjustments propagate through the industry, they reflect these higher benchmarks.

Read also: Retail Sector Drives Fundamental Shift in Truckload Freight Markets

The dry van truckload contract rate metric VCRPM1 signaled mounting upward force on truckload pricing last November, likely stemming from failures in routing guides and the cascading of tenders rather than lasting rate hikes. The persistent climb of this indicator suggests truckload rates are rising on a more durable basis. LTL markets generally trail truckload conditions by about three to six months and rely heavily on contracts or blanket pricing deals that span at least a year. A key deviation occurred in 2023 when the third-largest national LTL provider left the market.

LTL operations differ from truckload in several respects, most notably that LTL carriers do not reject shipments because of capacity shortages; instead, overall service quality declines when linehaul networks—the truckload movements connecting hubs—become strained. This linkage explains why LTL rates eventually follow truckload pricing trends, albeit at a slower tempo. The current reaction is unfolding roughly on schedule but is more pronounced than anticipated. A subtle point is that the truckload market shift started during the holiday peak season, a period that typically has little impact on LTL because it is less connected to retail shipping and restocking.

December and January are usually the quietest months for LTL, as factories shut down and dock hours for shipping and receiving are cut back. Winter weather also plays a major role, slowing networks, though unlike in truckload, weather does not automatically drive rate increases. There is no significant spot market for LTL, so urgency never appears in real-time data; shippers lack a central platform to compete for capacity. In many instances, shippers turn to LTL as a release valve for truckload tightness, splitting full truckloads and routing them through LTL networks for assured capacity, albeit with reduced service and higher costs. The average shipment weight has risen roughly 11% since the year began, indicating this is probably happening.

This context makes the current LTL pricing surge especially striking, as substantial market shifts are required to generate sharp movements in this sector. Part of this sharpness may reflect a rebound from weakness in the first two months of the year: rates fell 1.7% year-over-year in January and 1.2% in February. The March reading more than offset those drops, recording a 7% year-over-year increase. The LTL market is generally less volatile than truckload because there are fewer providers and rates are almost entirely negotiated over extended periods. This also means that increases are more persistent and take longer to reverse.

SONAR compiles information from hundreds of sources, displaying it in charts and maps along with analysis on what freight market professionals need to understand about the industry as events unfold.

Source: IndexBox Market Intelligence Platform