U.S. LTL carrier revenues soared for the second year in a row in 2022, rising 15.8 percent to a record $5.8 billion, according to data released Tuesday by SJ Consulting Group. LTL revenue growth will slow this year, possibly reducing single-digit percentages, but probably won't stop as the U.S. economy has weathered the slowdown and global and domestic freight flows seek a new balance.
In terms of capacity demand, consumption in Europe and North America remained weak in the context of interest rate hikes, and the growth rate of retail sales of consumer goods in the United States fell to a low level. After raising interest rates in 2022, high inflation in the United States is gradually falling, and the United States is facing recession pressure. U.S. shippers want to achieve this balance at a lower cost and want LTL rates to be greatly reduced, while LTL rates have achieved unprecedented leaps in 2021 and 2022.
From September 2020 to June 2022, the producer price index (PPI) of long-distance LTL trucks in the United States soared by 39.5%. The BLS's PPl is a barometer of "selling prices," including fuel surcharges and other costs.
From June 2022 to January 2023, LTL PPI fell by 7.9% due to increasing pressure on basic contract rates due to lower fuel surcharges. However, LTL PPI still increased by 7% year-on-year in January, 21.2% higher than in January 2021. This shows how important the increase in LTL prices over the past two years has been to shippers and how slowly these prices have fallen.
All but three of the 25 largest LTL carriers in the United States grew double-digit percentages in 2022, ranging from 10.8 percent for XPO to 33.8 percent for AAA Cooper Transport, according to SJ Consulting Group. More than 1/3 of the industry's revenue growth of 15.8% can be attributed to fuel surcharges, with the rest coming from higher rates, but also increased the use of volume measuring equipment to capture the exact weight and size of pallet goods, and more use of additional fees for additional services.
LTL carrier said it could not return to pre-pandemic pricing as rising operating costs showed signs of permanence. LTL carriers also deepen their exposure to customer supply chains, not only in the middle-mile freight of e-commerce transportation, but also in U.S. ports.
LTL business requires not only trucks, trailers and drivers, but also docks, cross-transshipment and property, all of which require capital investment. New carriers are often formed through acquisitions and mergers. According to SJ Consulting Group, FedEx Freight is now the largest LTL carrier in the United States, earning $0.2 billion over 10 years.
Most of's LTL revenue growth last year was set in the middle of the year. The decline in demand and prices in the second half of 2022 will continue in the first quarter of 2023, making it unlikely that the top 25 LTL carriers will achieve double-digit revenue growth in the third year. Yet, despite the shrinking U.S. industrial economy, LTL executives don't have much doom and gloom.
Forwardernet.com