Saia’s 7.5% GRI sooner, larger than prior increase

Saia is using favorable less-than-truckload fundamentals to implement a 7.5% general rate increase (GRI), which will take effect Dec. 4.

Most LTL carriers announce annual GRIs on general tariff codes at the end or beginning of a year. The increases are used to adjust base rates and vary by lane and weight class. The percentage indicated for a GRI is the expected average change the GRIs will produce. The increases are used to counter cost inflation and make capital investments.

A news release said some accessorial and minimum charges will be impacted as well.

Saia’s (NASDAQ: SAIA) increase is nearly two months earlier this year and 100 basis points higher than the increase implemented at the end of January.

“By continuously investing in our network, employees, equipment, technology, and sustainability, we are able to provide customers with the industry-leading service they require,” said Matthew Batteh, Saia’s VP of finance. “A GRI allows us to partially offset the rising costs of these expenditures as well as other investments that are essential to providing service to our customers.”

The company has opened eight new service centers this year in addition to relocating existing terminals to larger locations.

FedEx Freight (NYSE: FDX) said in late August that its 2024 GRI would average between 5.9% and 6.9%, 100 bps lower on both ends of the range than the 2023 increase. The new increase takes effect Jan. 1.

Since the exit of Yellow, most carriers have seen an influx of freight into their networks, which has pushed analysts to raise estimates heading into the third-quarter reporting period. Saia has been one of the biggest beneficiaries of the capacity shake-up. Its shipments increased 14% year over year (y/y) in August following a 6% increase in July.

The recent and immediate change in LTL fundamentals was preceded by a period of stagnant freight demand. The group saw volumes begin to roll over at the end of summer 2022, with the y/y declines accelerating to close the year. Volumes were flat sequentially for most of the first half of 2023 until it became evident that Yellow would close.

Some carriers used dynamic pricing strategies, which match available capacity to available transactional shipments, to offset the volume declines. However, that approach was largely unwound as Yellow’s freight was redistributed across the industry, immediately absorbing slack capacity.  

“We believe SAIA is pursuing the best strategy in the current LTL market,” Deutsche Bank (NYSE: DB) analyst Amit Mehrotra said in a Tuesday note to clients. “While this comes with extra costs upfront, they are taking the most market share and providing good service, which allows the most growth in earnings capacity in the mid to long term (i.e. total profit growth well in excess of profit per shipment growth, which reflects market share gains). The key will be the company’s ability to maintain good service while taking on additional volume.”

Saia was named Sunday as one of three national carriers that exceeded the industry benchmark for value and loyalty in an annual shipper survey conducted by Mastio & Co.

“It is always our goal to provide the overall best on-time and claims-free service in the industry,” said Batteh. “We are constantly exploring ways to improve our service while working to balance customer demand with the costs of doing business.”

Saia will report third-quarter results before the market opens on Friday.

More FreightWaves articles by Todd Maiden

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• September Cass data shows freight cycle ‘starting to flatten out’

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