LTL general rate increases no longer an annual event

ArcBest announced Monday a 5. 9% increase to general rates and charges for less-than-truckload services in both of its business units. The increase takes effect on June 22. This year’s general rate increase is a little ahead of the 11-month cadence the company has followed over the past few years.

ArcBest’s (NASDAQ: ARCB) LTL unit, ABF Freight, last implemented a GRI on Aug. 4. That increase was also expected to average 5. 9% across general tariff codes and lanes. The company’s GRIs have been moving up approximately one month on the calendar over the past four years. This year’s update is approximately six weeks ahead of the one-year anniversary date.

Most public LTL carriers implemented GRIs about one month early last year. A sign the LTL market has turned? Last week, ArcBest raised its second-quarter guidance for both its asset-based and asset-light units. The asset-based unit, which includes ABF Freight, is now forecast to see 600 to 700 basis points of sequential margin improvement.

(The unit normally sees just 350 bps of margin improvement from the first to the second quarter.) The company touted pricing initiatives and cost takeouts as drivers of the improved outlook. Its tonnage growth also accelerated in May on a two-year-stacked comparison, as it is seeing more truckload-rated shipments in the network.

On its first-quarter call in April, it flagged the expectation for double-digit TL rate increases during the second and third quarters. It also said that contractual LTL rates were 6. 3% higher in the first quarter. (Less-than-truckload fuel surcharge mechanisms include a step function as diesel prices rise, typically resulting in margin accretion.)

Industrial activity improved for a fifth consecutive month in May, according to manufacturing data released from the Institute for Supply Management. The ISM’s Manufacturing PMI registered a 54 reading for the month, which was 130 bps higher than April, and the highest reading in four years.

(A reading above 50 signals expansion, while one below 50 indicates contraction.) The subindex for new orders—an indicator of future activity—registered a 56. 8 reading, which was 270 bps higher sequentially. Inflections in ISM data usually lead LTL volumes by a few months.

ArcBest also increased its operating income outlook for the asset-light unit, which includes brokerage and managed transportation services, last week. It now expects adjusted operating income of $3 million to $5 million in the second quarter, which is $2 million higher than the prior forecast. Shares of ARCB were 7.

2% higher on Monday compared to the S&P 500, which was 0. 3% higher on the day.

More FreightWaves articles by Todd Maiden: ArcBest raises Q2 outlook for LTL, asset-light units Knight-Swift founder, executive chairman Kevin Knight retires XPO’s Q2 tonnage trending ahead of guidance The post LTL general rate increases no longer an annual event appeared first on FreightWaves.