Chew on This is a blog series featuring insights and commentary from our Director of Less Than Truckload (LTL), Tom Chew. In each post, Tom shares his thoughts on a variety of topics related to the LTL industry, including trends, best practices, and industry news. Chew on This is a must-read for anyone interested in staying up to date on all things LTL.
General Rate Increases (GRIs) are regularly occurring for all LTL carriers. They cover anticipated expenses for the following year, such as cost of living increases for employees, purchasing and maintaining equipment, and investments in real estate and technology.
GRIs are typically announced once a year, and they can vary depending on the market conditions. In softer markets with large capacity, the GRI is lower (4%-5% range). The GRI is higher in busier years with tight capacity (6-7% range). Each carrier is different, but they tend to have similar increases.
Most LTL customers are affected by GRIs unless they have a special pricing agreement with the carrier. If a customer has a tariff reviewed annually, their rates are not immediately changed. However, since a majority of shippers/3PLs work off an LTL carrier’s base rates, they will see an increase once the GRIs are put into effect.
With the recent closure of Yellow Corp. (YRC), the third largest LTL carrier, capacity has tightened in the LTL market. This will likely lead to higher GRIs (6-7%) in 2024.
What can you do to prepare for GRIs?
There are a few things you can do to prepare for GRIs:
- Review your current LTL pricing agreements. This will help you understand how your rates will be affected by GRIs and negotiate better terms with your LTL carrier(s) if possible.
- Budget for the increased costs. Once you know how much your rates will increase, you can budget for the additional costs.
- Look for ways to reduce your shipping costs. This could involve consolidating shipments, using smaller packaging, or shipping during off-peak hours.
By taking these steps, you can minimize the impact of GRIs on your business. Click here to learn more about how our team of dedicated logistics experts can help move your freight from point A to point B on time, every time.