The Road Ahead: How LTL Carriers Are Preparing for Higher Pricing in 2025 - Sobel Network Shipping Co., Inc.

The Road Ahead: How LTL Carriers Are Preparing for Higher Pricing in 2025

The US less-than-truckload (LTL) shipping sector is gearing up for significant pricing shifts in 2025, well in advance of anticipated increases in freight volumes. Recent announcements from leading carriers suggest that higher base rates and strategic adjustments will play a crucial role in the year ahead.

Setting the Stage for Rate Adjustments

Several major LTL carriers have introduced general rate increases (GRIs) for 2025, with percentages ranging from mid- to high single digits. These GRIs primarily target non-contract shipments but are expected to influence contract negotiations as well.

For example, one prominent carrier announced a 4.9% GRI effective early December, while others are implementing rate increases of up to 7.9%. These adjustments align with trends observed in contract renewals, where similar rate hikes are becoming the norm.

Driving the Need for Higher Rates

Carriers emphasize the necessity of these increases to support ongoing investments in infrastructure, workforce, equipment, and technology. One leading company plans to allocate $1 billion this year to expand terminal networks and address operational costs, highlighting the scale of financial commitment required.

The shift in pricing strategy reflects a focus on profitability rather than market share. Unlike pre-recession trends where GRIs were often negotiated down in soft markets, today’s carriers are adopting a disciplined approach to pricing and cost management.

A New Era of Pricing Discipline

Modern LTL carriers have advanced their pricing strategies significantly. Sophisticated costing models now allow carriers to evaluate profitability lane by lane and customer by customer. This granular approach enables them to maintain margin goals while offering tailored pricing based on client behavior and shipment characteristics.

For instance, some customers may pay less than the average GRI while others shoulder higher costs. Factors like shipment delays or expedited requests now play a larger role in determining rates.

Beyond Base Rates: The Rise of Accessorial Charges

LTL carriers are not relying solely on base rate increases. They’re incorporating accessorial charges, refining fuel surcharges, and expanding premium service offerings. These changes align with practices long used by parcel carriers, such as remote delivery fees and length-based surcharges.

Notably, extreme length surcharges — ranging from hundreds to over a thousand dollars per shipment — are becoming standard. These charges incentivize shippers to adhere to length and dimension requirements, promoting efficiency in freight handling.

Dimensioning technology is also playing a key role, ensuring shipments are accurately classified and priced. This precision benefits carriers and encourages shippers to provide stackable, palletized freight that optimizes trailer space.

Preparing for 2025: What Shippers Should Expect

The cumulative effect of these strategies will result in higher costs for shippers, but also more transparent pricing tied to the actual cost of moving freight. Carriers are increasingly selective about the freight they accept, favoring shipments that align with their operational priorities.

While accessorial charges will continue to rise, the primary driver of cost increases remains the base rates. Carriers focused on long-term growth are targeting these rates to ensure profitability while balancing operational efficiency.

As the industry prepares for 2025, shippers should anticipate a more sophisticated pricing landscape. Understanding and adapting to these changes will be essential for navigating the evolving LTL market effectively.