ABF Freight System Inc. will increase its general shipping rates by about 5.4 percent for the year, the company said Wednesday.
New rates will go into effect for general-rate customers - those without specific contracts - on March 24. Rates are set by ABF, a subsidiary of Fort Smith’s Arkansas Best, on an account-by account basis, so the effect on specific shipments will vary.
ABF last increased its general rates in May. That increase was about 5.9 percent.
Other less-than-truckload carriers also have announced recent price changes. UPS Freight announced a rate increase of 4.9 percent for its customers, and FedEx Freight rates increased 3.9 percent.
ABF spokesman Russ Aikman said the company’s new rates remain competitive within the industry. Annual increases are typical for carriers, and Aikman said ABF’s bump in pricing is a way to counter the rise in equipment and other costs.
“We believe the freight market and operating environment will support the timing and level of the increase we are announcing,” Aikman said. “In addition, we have rising costs thatwe must absorb, such as the purchase of new equipment, to meet new environmental standards that are far more expensive than it used to be.”
Stephens Inc. analyst Brad Delco said the announcement by ABF was unusual only because of its timing. Companies have traditionally announced pricing changes closer to the middle of the year.
Arkansas Best CEO Judy McReynolds spoke Tuesday at the Raymond James investment conference, and while she did not address the effect that rate increases would have on ABF, she did say she is confident in ABF’s performance going forward. ABF was responsible for $1.8 billion in company revenue for 2013, with parent company Arkansas Best reporting $2.3 billion in total revenue.
McReynolds said 2013 was “a pivotal year for our company, particularly at ABF Freight.”
Rate increases will play a part in helping ABF return to what McReynolds called “historic profitability.” Also playing a role in the trucking segment’s performance is a five-year contract between ABF and the Teamsters that was ratified in November and is expected to save the company between $55 million and $65 million annually.
ABF also is to announce additional details of a network redesign when its first-quarter results are released in April. The company is consolidating 30 terminals as part of the redesign and expects additional savings there.
“We have weathered the challenges of the last few years,” McReynolds said. “We can move forward with growth and investments that benefit our shareholders, our employees, and our customers.”
Business, Pages 25 on 03/06/2014