Carriers Benefit From Surcharges and Rate Hikes

At least in the short term, less-than-truckload (LTL) carriers tend to benefit from rapid fuel price increases. Fuel surcharge collection precedes actual cost inflation, explains Morgan Stanley’s Chad Bruso. Couple surcharges with early implementation of annual general rate increases, and analysts may have underestimated LTL carriers’ second-quarter earnings.

Bruso’s comments followed YRC Worldwide’s upward guidance on second-quarter earnings. YRC Worldwide announced guidance in a range of $1.53 to $1.58 for the second quarter, excluding $0.04 for reorganization expenses and gains on property disposals. Previously it had announced $1.45 to $1.50.



Industry sources indicate that most large LTL contracts are rolling over with little or no underlying price increases, according to Bruso. This supports his view that the LTL industry continues to have excess capacity.

TAGS: Archive
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish