US less-than-truckload (LTL) carriers are positioning themselves for higher pricing in 2025, with general rate increases (GRIs) already announced for non-contract business. These rate adjustments, ranging from the mid- to upper single digits, set a benchmark for contract pricing negotiations next year and reflect a shift toward more disciplined, cost-focused strategies in the LTL sector.
Recent GRIs announced by major carriers include rate increases of 4.9% to 7.9%, effective late 2024 and early 2025. These adjustments underscore the industry’s broader goals of supporting network expansion, addressing rising operating costs, and maintaining profitability. For example, significant investments in terminals, technology, and equipment highlight the need for rate adjustments to sustain operations and growth.
Shippers Anticipate Higher Costs
Shippers expect LTL rates to rise in 2025, but perhaps not to the extent carriers project. Historically, GRIs were often reduced during contract negotiations, especially in softer markets. However, this is less likely today as LTL carriers focus on profitability over market share, applying advanced costing models to ensure lane-by-lane profitability.
Carrier pricing teams now utilize sophisticated tools to evaluate customer profiles, considering factors like shipment delays, expedited orders, and freight dimensions. This data-driven approach allows carriers to differentiate between high- and low-value shippers, ensuring that pricing reflects actual costs and desired margins.
Beyond Base Rates: Accessorial Charges and Technology
In addition to base rate increases, carriers are leveraging accessorial charges, restructured fuel surcharges, and premium services to enhance revenue. Dimensioning equipment, for instance, is increasingly used to ensure freight classifications and rates are accurate.
Accessorial fees have become more strategic, aimed at changing shipper behavior. During the COVID-19 pandemic, surcharges for shipments exceeding specific length limits were introduced, and they remain in place today. These charges not only generate revenue but also help carriers manage terminal congestion and improve operational efficiency.
Remote delivery fees, premium-priced services, and stricter freight requirements, such as preferring palletized, stackable loads, are also becoming standard practices. Carriers are willing to decline freight that doesn’t align with their requirements or apply higher rates to handle it.
Aligning Rates with Costs
The cumulative effect of these strategies is a shift toward pricing that aligns more closely with the actual cost of moving freight. While accessorial charges play a role, carriers are focused on increasing base rates, which offer the most significant opportunity for revenue growth.
LTL carriers are taking inspiration from parcel shipping models, which emphasize profitability over volume. This evolution marks a significant departure from past practices, where some carriers prioritized lower rates to attract business—an approach that ultimately led to the downfall of several players in the industry.
Looking Ahead
As LTL carriers prepare for 2025, shippers should expect higher overall costs, driven by both rate increases and accessorial charges. However, these adjustments come with improved efficiency, reliability, and service quality, reflecting a more sustainable approach to pricing and operations.
The emphasis on disciplined pricing and operational innovation positions the LTL sector to meet future challenges, ensuring carriers remain competitive in an increasingly complex logistics landscape.
