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- Scooter Sayers To recap the 2Q24 earnings for publicly-traded LTL carriers, I felt it appropriate to come up with one word or phrase to define each carrier. Also, for comparison purposes, I felt it appropriate to look at a 2-year comparison, 2Q22 vs 2Q24. This takes out some of the noise from the Yellow Corp closure. Essentially, this gives us a peak into how each carrier took advantage of the Yellow Corp situation. 🔴 ABF: Transactional. Transactional pricing weighed heavily on results, and still does. Their OR worsened by 4.3 points to 89.8, they experienced a large shift in freight profile (huge drop in shipment size), but maintained their revenue market share. 🔴 FedEx Freight: Right-sizing. Finding a way to prosper while shrinking their network. Their OR held steady at 78.1, they improved their yields noticeably, but they did lose revenue market share. 🔴 Forward Air: Under construction. While the newly-merged operation undergoes its reconstruction, costs are up and business has dropped. Their OR worsened 7.9 points to 92.5, they lost major market share, and yield change was poor as price cuts were used to keep customers. 🔴 Knight Swift: Super-sizing. Explosive network and business growth while building out a national footprint. Their OR worsened by 4.6 points to 89.2, but they added major market share via new longhaul business while maintaining yields. 🔴 Old Dominion: Steady. As I have alluded before: death, taxes, and ODFL. While their OR deteriorated 2.4 points to 71.9, they maintained market share and yields. 🔴 Saia: Concerning. Costs from terminal expansion have begun to impact profits. Their OR worsened by 2.9 points to 83.3 but they have won serious market share gains while maintaining yields. 🔴TForce Freight: Fat. Their CEO feels there is too much fat that still needs to be cut. Their OR slipped 1.9 points to 92.3 and they experienced major market share losses with a big shift in profile (weight/shipment up bigly) and poor yields. 🔴 XPO: Transforming. This carrier is being re-built with the addition of Mr. Dave Bates. Their OR held steady, and good market share gains wave been won while maintaining yields. The industry is clearly down when compared to 2022, which was a banner year for carriers. When including Yellow Corp, tonnage and revenue is down 23%, and weight per shipment is down 3%. Even excluding Yellow Corp from the mix, tonnage and revenue among the remaining carriers is down 11%. The 2nd quarter of 2022 was about as good as it has ever been for LTL carriers, as seen by their mostly robust OR figures. ORs were at historic lows and business was strong. Maintaining an OR within several points of those marks while keeping market share and yields steady is quite the accomplishment. There are some sharp operators in this industry indeed. But continued softness could begin to really test their mettle.
- Scooter Sayers As we continue to review 3rd quarter 2024 LTL carrier earnings, Old Dominion is up next. They released earnings on October 23rd. ODFL continues to churn out a best in class operating ratio, with its continued separation from their peers quite the impressive feat in this tough LTL market. How do that do it? By simply doing what they do. Let’s take a peak: 🔴 Revenue was down moderately at -3.0% over last year, with shipment counts down -1.9% and tonnage down -3.2%. 🔴 Their OR worsening from 70.6 to 72.7. 🔴 Weight/shipment remains weak, dropping -1.4%. Avg haul was flat, dropping modestly by -0.4%. Freight mix appears quite stable at ODFL. 🔴 Rev/cwt excluding fuel was up 4.6%, a nice bump in this tough market. ODFL is still getting solid pricing action in the face of declining fuel surcharge revenues. That kept revenue/shipment with fuel rather flat. 🔴 On a sequential basis, shipment counts were down -1.0% and tonnage down -3.2%. Revenue was down -1.9%. ODFL appears to be losing a bit of market share, but not significant. 🔴 ODFL continues to provide 99% on time service with a 0.1% claims ratio. 🔴 Mastio rankings were recently announced, and ODFL was again for the 15th year in a row the #1 National carrier. Leadership noted ODFL came out #1 overall in 23 of 28 categories and maintained their sizeable lead over their national competitors. 🔴 Leadership feels they are seeing a floor right now in terms of business levels, that maybe the are coming to and end of this down cycle. Declining interest rates and getting the election behind us are fueling this viewpoint. 🔴 ODFL does feel more LTL shifted to TL during this down-cycle, with the Yellow closure. Thus, when freight levels improve, we could see accelerated benefit for LTL carriers as a greater amount of freight shifts back to LTL. This is one of the reasons ODFL and other carriers are bullish about the future. 🔴 ODFL noted they have dimensioners in most of their major service centers and are dimensioning about 75% of the freight in their network. They expect the upcoming NMFC changes to be a positive, even a strategic advantage for ODFL relative to their competition. So are we finally hitting a bottom in the soft LTL freight environment as ODFL seems to be seeing? Or do we have more quarters of soft business and not enough revenue to leverage against for OR improvements? To get a deeper dive on the ODFL 3Q24 earnings release plus additional commentary and insight from the LTL Observers, check out the 🚛Let's Talk 🚛newsletter. A link to the newsletter is in the comments.
- Scooter Sayers LTL shippers: I highly encourage you to watch the NMFTA’s Shippers Only Listening Session on NMFC changes coming in 2025. It is linked in the comments below. Big changes are indeed coming to LTL classification. This listening session will help you prepare. Specifically, a very large and set of proposed changes will be issued on 01/30/25. These changes will be considered and voted upon at a public meeting on 03/03/25. Approved changes will then be implemented on 05/03/25. The proposed changes provide for classifying commodities by a 13-sub class-by-density scale when density is the primary transportation characteristic. These changes will include: 🔴 132 existing 11-sub items with CL60-CL400 ratings such as Plastic Articles, Athletic Goods, and Furniture will be extended to 13 subs. The two new subs will provide CL55 and CL50 ratings which allow shippers with very-dense handing units to get a lower class than the current CL60 minimum. 🔴 3,814 single-class items such as Poker Chips CL70, Brake Drums CL60, and Greenhouses CL200 will be cancelled and move under an exiting or new 13-sub item as noted above. Classes will range from CL50 for 50 PCF and above, to CL400 for less than 1 PCF. 🔴 129 modified density scale items such as Asphalt with 3 subs (CL55 for >=30 PCF, CL65 for >=22.5 but < 30 PC, and CL85 for <22.5 PCF will be cancelled and move under an existing or new 13-sub item as noted above. 🔴 1,198 sub-provision items such as Camera Tripods (CL200 if setup, CL100 if knocked down) will be cancelled and move under an existing or new 13-sub item as noted above. 🔴 In all, roughly 75% of the 7,000 NMF items in the NMFC could potentially be impacted with these changes. The list of items potentially impacted is extensive. See the comments for a link to this list. You can search the NMFC items you ship to see if they may be impacted. The LTL industry is rapidly moving towards the day where shippers must know the weights and dimensions of their handling units (pallets, crates, etc). While this will undoubtedly cause some disruption, the best plan of attack is to get in front of these changes and be prepared. Put in a plan now to capture accurate handling unit dimensions and weights. There are many topics to cover with these changes, and I will address them in future posts. One unexpected issue is that the NMFC’s Mixed Commodity rule will not be changed, at least not yet. That means if you ship multiple commodities on a pallet, you may still have to itemize each commodity in order to be correct. This will depend upon the carrier(s) you use. Note sure why the NMFTA chose not to modify this rule to align with their other changes. While you may feel otherwise, these are all very positive changes for shippers. Classification will be simpler, invoicing issues will reduce, and you can gain the benefit of reduced freight charges as you learn to build denser and more-squared off pallets.
- Elizabeth Brown LTL vs. Dedicated Trucks: What You Need to Know 🚚 LTL Shipping: Pros: Cost-effective for smaller shipments, flexible, eco-friendly, and offers good tracking. Cons: Longer transit times, higher risk of damage due to handling. Dedicated Trucks: Pros: Predictable delivery, increased security, and tailored service. Cons: Higher costs, less flexibility for varying needs. Market Trends: 📈 Costs are rising, tech is improving, and sustainability is a key focus. Which is right for you? LTL for cost-efficiency and flexibility, dedicated trucks for reliability and security. Share your thoughts or experiences below! 👇 #LTL #DedicatedTrucks #Logistics #Shipping
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