Scooter Sayers’ Post

ARE PRIVATELY HELD LTL CARRIERS OUTPERFORMING PUBLICLY TRADED? Scooter Sayers delivers a solid analysis of the publicly traded LTL companies. I have to wonder, though, do the privately held carriers outperform in every category? -they set their market share priorities -they reinvest profits in developing innovative solutions -they effectively manage the customer mix to ensure highest yields -they independently build their optimal suite of offerings -they focus their priorities on customer centered needs -they build brand loyalty -they build longevity in their workforce.

3Q24 Earnings releases from the publicly-traded LTL carriers are now in the books. We have two carriers left to report on: ABF and Forward Air. ABF released their earnings on November 1st. Let's see what they had to say:   🔴Revenue was down -4.2% over last year, with shipment counts down only -0.8% but tonnage significantly at -9.9%.  🔴 Weight/shipment was down an alarming -10.7%, a much larger drop than other carriers saw. This is the 3rd quarter in a row that ABF has seen double-digit drops in shipment size.  🔴 Interestingly, avg haul was up notably by 7.3%. That’s greater than AAA Cooper, who is growing a national network, saw. ABF is definitely seeing some big shifts in their freight mix. 🔴 Rev/cwt with fuel was up strongly at 7.4%, but this is driven in part by the steep slid in wgt/shipment and increase in length of haul. Accounting for fuel and these profile factors, ABF’s 3Q24 Rev/cwt excluding fuel surcharge may have realized a reduction compared to last year. Not good. 🔴 While ABF is exhibiting some signs of price weakness, their overall Rev/cwt with fuel figure of $50.76 is quite remarkable. ABF has always been the leader with this metric. Their next closest competitor, FedEx Freight, came in well below at $40.73.    🔴 Margins slid in line with their peers, with ABF’s OR rising from 89.9 to 91.0. This does indicate good cost control given the tough LTL environment coupled with the big drop in tonnage. 🔴 The 91 OR is not where ABF wants to be. But it does reflect an 8 point improvement since 2016 which is quite the success story. 🔴 Sequentially, revenue was fairly flat at -0.4% down. Shipments were up 0.6% while tonnage was down -2.6%. Their OR degradation, from 89.8 to 91.0, was in line with their peers. 🔴 ABF instituted a 5.9% general rate increase in early September, which impacts about 20% of their business. Contract renewals came in at 4.6% for the quarter, notably lower than some of their peers have claimed. Over the last 2 years, ABF has seen their average shipment size fall from 1,318 lbs to 1,086 lbs. That 18% drop is significant, and concerning. To be sure, use of their Dynamic Pricing, modal shifts to FTL, and softness in their UPack HHG moving business are playing a role. But it may also indicate an inability for ABF to compete for larger shipment sizes like they used to. Too many peers are chasing this business. Simply put, ABF’s labor costs are not scaling with their tonnage declines. With their high labor costs, and new Teamster contract, ABF is relying on technology tools and longstanding business practices to help manage this issue. To get a deeper dive on the ABF 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.

We are now heading to the homestretch of 1Q24 LTL carrier earnings season. Next up is ABF Freight, the asset-based subsidiary of ArcBest. You might recall that back in 1Q24 ABF Freight flexed their new Dynamic Pricing model to goose business levels given the very soft freight market. While most carriers reported a soft 1Q23, with tonnage down around -11% and shipments down around -10%, ABF reported a solid 9% growth in shipments and 4% in tonnage. That was the Dynamic Pricing spigot being turned on. And soon after 1Q23, ABF began turning that spigot off. They still seem to be working with that spigot. Let’s take a look. 🔴 Revenue was down -3.8%, driven by a drop in shipment count of -6.9% and a whopping -17.5% drop in tonnage. 🔴  Rev/cwt was up impressively at 15.6%, with large tailwinds coming from a concerning -11.3% drop in weight/shipment. ABF also attributed this yield growth to pricing up their Dynamic Pricing business plus price increases on “core” business. 🔴  Their OR for 1Q24 was a 92.0, or a 1.2 point improvement from the 93.2 reported in 1Q23.  🔴  On a sequential basis, revenue was down -5.4%, with shipments up slightly at 1.4% and tonnage down -2.7%.  🔴  While total tonnage was down -17.5% compared to last year, ABF reported that “Core” tonnage was up a positive 9.0%. This indicates a stunning drop in transactional business.  🔴  The OR on a sequential basis dropped notably, from 87.7 in 4Q23 to 92.0 in 1Q23. This is a bit surprising.  🔴  Contract renewals averaged 5.3%, and ABF continues to raise prices on their transactional business (Dynamic Pricing).  🔴  ABF is seeing a deceleration in business from March to April, but is also expecting a turn-around due to growth from Core business. One positive tailwind that ABF will see later in 2024 is the lessening impact of their new Teamster agreement. It was front-loaded with a 13% wage increase in the first year, dropping down to 2.5% starting in mid-2024. So if ABF can maintain price increases and productivity improvements, they could begin to see a notable turn-around. Check out the 🚛Let's Talk Logistics 🚛newsletter where additional management commentary and insight regarding FedEx Freight's recent quarter results and future plans will be expanded and expounded upon by the LTL Observers. You can check out other LTL carrier earnings news there as well. A link to the newsletter is in the comments.

FedEx Freight released their most recent quarterly earnings on December 19.  The rest of the public LTL carriers will release 4Q24 earnings next month. The big story of course is the potential for the FedEx Freight to be sold or spun off. FedEx announced this possibility back in June. Fast forward to now, and FedEx has confirmed they do intend to spin off Freight within 18 months. Wow! But there is another big story underlying this spin-off: continued revenue loss and now significant profit decline. Let’s dive into both stories:   🔴 Revenue was down -11.2% due to lapping the YRC closure. This was a larger revenue drop than expected. Shipment counts were down -8.1% and tonnage was down a larger -11.3%. Fedex Freight’s market share may be declining again after having stabilized the last few quarters. 🔴 Margins dropped a surprising 4.5 points (after accounting for terminal sales last year), with their OR jumping from 81.2 to 85.7.  FedEx blamed this significant stepback on lower fuel surcharges, lower volumes, and a dropping weight/shipment. Will their peers show similar OR fall-off? 🔴Shipment size continues to be an issue, falling -3.5%. At 913 pounds, FedEx Freight has one of the lowest shipment sizes amongst their peers, and it continues to show weakness. Not good.     🔴 On a sequential basis, shipment counts were down -4.2% and tonnage down -5.7%.   Revenue was down -6.5%.  🔴 Once concern noted by management is that the majority of Freight’s small customers have bundled deals with Parcel. If those deals un-bundle it could expose these small customers, who tend to be more profitable than larger customers, to other LTL carriers. 🔴 Freight did note that going forward they expect to “play more offense” on the LTL sales front, to be more strategic including looking closer at the 3PL market. Freight could be setting up for some big changes in their Sales focus. Something to watch. 🔴 Fedex Freight expects revenue to continue declining over the next several quarters due to continued softness in business and modest yield improvements. There are obviously some shared benefits of having FedEx Freight and FedEx Express work together. For Freight’s sake, the spin-off will mean that Freight will only move forward with such shared pursuits where it obviously benefits them. That might not have been the case with the current structure. For example, expect to see bundled Parcel + LTL deals. On the other hand, FedEx Freight will absorb extra cost to operate as a separate entity. They announced the hiring of 300 new sales reps, which could be upwards of a $50M annually. So expect their OR to face some headwinds. Further, Freight receives business just because, well, they are part of FedEx. As a separate entity, customers might be less inclined to use Freight for their LTL just because they use Express for parcel.  Sales forces, after all, are splitting apart. 2025 is setting itself up to be one interesting year for LTL.

Next up with our review of 1Q24 LTL Carrier earnings announcements is Saia. Of the publicly-trade carriers, they still appear to be the biggest winner in terms of acquiring Yellow Corp business. And they have been quite active on the real estate front, buying and opening terminals to expand their capacity, get closer to their customers, and optimize their network. Let’s see what the Saia leadership team had to say: 🔴  Revenue was up a strong 14.3%, powered by a 15.7% increase in bill count and a 6.2% jump in tonnage. 🔴  Rev/cwt without fuel was up a very healthy 10.5%. Thus was aided by a surprisingly large drop in shipment size from 1,439 to 1,321 pounds of -8.2%. Length of haul was stable, dropping a slight -0.4%. 🔴 Sequentially, revenue was fairly flat a +0.5%, with shipment counts up 3.0% and tonnage up 3.5%. Rev/cwt excluding fuel was down -0.9%, suggesting the significant pricing-up of business post-Yellow is drawing to a close.  🔴 Saia’s OR of 84.4 was an improvement over their 85.0 last year. This improvement in margin is impressive when coupled with their big growth trajectory. Saia has managed costs well during their significant growth during 2023 and now into 2024. 🔴 Average daily shipment counts averaged 33,000 versus 28,500 during 1Q23. 🔴 Saia has not seen the typical season uptick in business normally seen in March and April. Could this be due to the aggressive pricing activity post-Yellow that is now leading to customers shifting their routings?  🔴 Saia feels the LTL market is primed for more price increase. They expect a strengthening of the TL market will provide another lever for LTL carriers to advance pricing. 🔴 4 new terminals have been opened thus far in 2024, and 4 terminals were relocated to a better spot or larger site, or both. Saia expects to open 15-20 terminals in 2024. 20 terminals have been added in the last 2 years. Opening new terminals is a core competency. 🔴 Saia continues to be aggressive on the pricing front, both in-cycle and out of cycle when profitability issues emerge. Contract renewals were 9.2%. Overall, Saia is doing a very nice job controlling costs while adding costs during their growth period. LTL carriers tend to increase their margins most when they are growing and not adding cost as fast as the business growth. Basically, doing more with less, or at least the same as what you had. Saia is increasing margin while growing, AND adding cost to get in front of future growth. It is a tricky play, but they are pulling it off well. Check out the 🚛Let's Talk Logistics 🚛newsletter where additional management commentary and insight regarding FedEx Freight's recent quarter results and future plans will be expanded and expounded upon by the LTL Observers. You can check out other LTL carrier earnings news there as well. A link to the newsletter is in the comments.

What should shippers expect to see for the remainder of 2024? As we’ve watched what’s happening in the truckload, parcel, and LTL markets, we’ve seen trends that make it more challenging for shippers to obtain favorable pricing. Here is a quick summary of three key items that should be on every shipper’s radar screen. First, the general consensus is that the truckload market has bottomed out. When you listen to the earnings calls from carriers like Knight-Swift, J.B. Hunt and Werner, their message is pretty direct: Carriers are basically saying they're going to commit more capacity to the spot market until the contract market rebounds. Second, you should expect further substantial increases in parcel rates beyond those at the first of the year. Like the truckload carriers, parcel providers are dealing with a difficult market and looking for new ways to increase revenue such as including distance traveled, weight, and extra services in pricing. Third, know that the LTL carriers have elevated their pricing game when it comes to collecting data. In many cases they know more about your shipment characteristics than you do and they are pricing accordingly. Read more here: https://hubs.la/Q02vMZHS0 #Logistics #LogisticsManagement #SupplyChain #SupplyChainManagement

Navigating the 2025 FedEx Rate Increase: What Businesses Need to Prepare For Come January 6, 2025, FedEx will introduce a new General Rate Increase (GRI) of 5.9%. While that number may seem like just another standard adjustment, this change is more than it appears on the surface. The rate hike will impact FedEx’s core services, including Express, Ground, and Home Delivery, but the real story lies in the details. Shippers who rely heavily on FedEx for logistics will need to face not only the overall rate increase but also a number of specific adjustments that could significantly affect their bottom line. The Bigger Hits Behind the Average Increase Though the 5.9% rate increase is presented as an average, not every business will feel it equally. Companies shipping large, heavy packages, especially across long distances, the price hike is likely to exceed the average. For example, services like FedEx 2Day and Express Saver, commonly used for quicker deliveries, will see rates increase by more than 7% in certain zones. The farther the package travels, the higher the increase, meaning businesses that serve national or international markets will feel the squeeze more intensely. Additional Handling and Oversize Fees Soar One of the most painful parts of the 2025 rate changes is the dramatic rise in surcharges, particularly for Additional Handling and Oversize packages. These fees are increasing by as much as 28%. Surcharges on Residential and Remote Deliveries FedEx is also taking aim at shipments to residential addresses and rural areas. The 2025 changes include increases in surcharges for these types of deliveries, with rates climbing between 6% and 9%. Ground and Home Delivery services, which are often seen as more cost-effective options, will also experience these surcharges. Minimum Rates and Floor Pricing In addition to rate increases, FedEx will continue enforcing minimum service rate floors in 2025, ensuring that businesses won’t be able to ship below a certain cost, even with significant discounts. This is especially relevant for services like Priority Overnight, where the minimum rate will exceed $34. Discounts that once made certain shipping options more affordable will have a hard cap, limiting the extent to which companies can negotiate better deals. What This Means for Your Business For businesses dependent on FedEx for logistics, these changes can’t be ignored. It’s crucial to reassess your shipping profiles—look closely at what you’re shipping, where it's going, and how quickly it needs to arrive. By analyzing these factors, you can explore more cost-effective solutions. For Companies that use FedEx to ship, now is the time to act, adjusting logistics strategies to mitigate these rising costs and avoid getting caught off guard in the coming year. #FedEx2025rateincrease #mindfullogistics

Last week was a busy week of 1Q24 earnings announcements for LTL carriers. Of the 8 publicly traded firms post-Yellow, 4 carriers announced last week. First up for review is Old Dominion. Old Dominion noted that the soft LTL market conditions continued through 1Q24. But they are seeing some positive signs.  Let’s dive in: 🔴 ODFL continues their reign as the OR King. Their 73.5 OR for 1Q24 was just a tad up from their 73.4 last year. It was notably up from their 71.8 during 4Q24. 🔴 Shipments were slightly down -0.5% over last year, and tonnage was down further at -3.2%. Revenue was up 1.6%, driven by a healthy Rev/cwt growth of 6.7% excluding fuel surcharge. 🔴 Sequentially, shipments were down -0.6% and tonnage was down -0.8%, with a 1.1% gain in Rev/cwt excluding fuel surcharge. 🔴 Shipment size continues to drop, falling -2.7% from 1,550 to 1,508 pounds. This continues to be a concern, and a drag on margins. 🔴 It is remarkable that with ODFL obviously gaining some of the Yellow Corp business, their tonnage and shipment counts are still down compared to the prior year. 🔴 ODFL continues to provide 99% on-time service with a 0.1% claims ratio. 🔴 ODFL noted that “challenges from the domestic economy have persisted for longer than we originally expected”. ODFL also noted they are seeing signs of demand improvement and are well positioned to take advantage of any positive change in demand. 🔴 ODFL is sitting on 30% excess capacity right now, well positioned for positive demand change. 🔴 ODFL believes that the industry will be capacity-constrained in the future. Carriers are adding Yellow terminals, but not all Yellow terminals will re-open. So there will be fewer doors and terminals than there was when Yellow was still operating. 🔴 They are seeing an increase in weight/shipment over the last several month, which is another encouraging sign. Shipments sizes increase as business levels improve. Hard to find much fault with Old Dominion and their performance in 2024 thus far. Sure, they had their worst 1Q or in some time, but they are still managing through a soft environment even after the injection of Yellow Corp business. They are seeing some positive signs of recovery, and feel that their spare capacity coupled with best in class service, culture, and personnel positions them to take market share and grow margins as business improves. Other LTL carriers have invested heavily on real estate over the last 6 months, through this soft LTL environment that remains soft. It will be interesting to see how the rest of the reporting for 1Q24 goes, and if the LTL industry improves in 2024. Check out the 🚛Let's Talk Logistics 🚛newsletter where additional management commentary and insight regarding FedEx Freight's recent quarter results and future plans will be expanded and expounded upon by the LTL Observers. You can check out other LTL carrier earnings news there as well. A link to the newsletter is in the comments.

FedEx is raising rates again! How will this impact your shipping costs? FedEx just announced a 5.9% average rate increase for 2025. This latest hike, detailed in a recent article [https://lnkd.in/gWzA4g8z], affects various services including residential deliveries, two-day air shipments, and bulky packages. 𝗞𝗲𝘆 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀: 💰 The increase mirrors the 5.9% hike implemented in 2024. 💰 FedEx is citing rising costs and investment needs as reasons for the adjustment. 💰 Businesses may need to re-evaluate their shipping strategies to mitigate the impact. While FedEx is navigating a softer demand environment than during the pandemic, the rate increase highlights the ongoing challenges faced by shipping carriers. Businesses may need to explore alternative services or negotiate for better rates to offset the rising costs. 𝗛𝗼𝘄 𝗪𝗶𝗹𝗹 𝗧𝗵𝗶𝘀 𝗔𝗳𝗳𝗲𝗰𝘁 𝗬𝗼𝘂𝗿 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀? 📦 𝘌𝘹𝘱𝘦𝘤𝘵 𝘩𝘪𝘨𝘩𝘦𝘳 𝘤𝘰𝘴𝘵𝘴, 𝘦𝘴𝘱𝘦𝘤𝘪𝘢𝘭𝘭𝘺 𝘧𝘰𝘳 𝘭𝘢𝘳𝘨𝘦𝘳 𝘱𝘢𝘤𝘬𝘢𝘨𝘦𝘴:  While the average increase is 5.9%, some zone/weight combinations may see steeper hikes. 📦 𝘉𝘳𝘢𝘤𝘦 𝘺𝘰𝘶𝘳𝘴𝘦𝘭𝘧 𝘧𝘰𝘳 𝘢 𝘫𝘶𝘮𝘱 𝘪𝘯 𝘈𝘥𝘥𝘪𝘵𝘪𝘰𝘯𝘢𝘭 𝘏𝘢𝘯𝘥𝘭𝘪𝘯𝘨 𝘢𝘯𝘥 𝘖𝘷𝘦𝘳𝘴𝘪𝘻𝘦 𝘧𝘦𝘦𝘴:  These fees are surging by more than 20%! 📦 𝘜𝘗𝘚 𝘭𝘪𝘬𝘦𝘭𝘺 𝘵𝘰 𝘧𝘰𝘭𝘭𝘰𝘸 𝘴𝘶𝘪𝘵: Historically, UPS announces similar increases soon after FedEx. To mitigate the impact of the rate increase, consider evaluating your shipping strategies and going multi-carrier to explore alternative services or carriers that may offer more competitive rates. Be sure to leverage your shipping volume to negotiate better terms and potentially secure discounts with FedEx. And finally, optimize your shipping practices by using the right-sized boxes, consolidating shipments, shipping during off-peak hours, and exploring alternative shipping methods like ground shipping. Remember, your shipping software provider should be able to help you with this. For example, ProShip’s Advanced Date Shopping can compare 2-day ground services with 2-day air services to help identify cost-savings opportunities. Overall, the 5.9% increase is an average. Some services and package types may experience even higher rate hikes, so it's important to carefully review the details of your specific shipping needs and costs. 🤔 Is this what you expected? How will this rate increase impact your business? Share your experiences, strategies, and concerns in the comments!

The FedEx Freight spin-off is certainly one of the biggest stories to hit the less-than-truckload (LTL) market this year (https://lnkd.in/e9M8DyVV), but let's not forget the LTL producer price index (PPI). The latest PPI, released Dec. 12, shows LTL pricing flat in November with not only October but September. The index reading for the long-distance LTL PPI has hovered around 243 for three months, and was 244 in August. Not coincidentally, that was the one-year anniversary of the Yellow bankruptcy. In the months following Yellow's bankruptcy, the LTL PPI shot up. By last April, it was up 8.2% year over year, reflecting higher LTL rates. But once August arrived, year-over-year comparisons became much tougher. What's more, the PPI is a measure of all-inclusive "selling prices" that include surcharges, and fuel surcharges as we know have dropped with diesel prices. That means the PPI, which also covers the entire sector, looks different than the high-single-digit rate renewals some carriers claim they're winning. You can find the PPI chart, and much more, on the Gateway at joc.com. Muted demand means LTL carriers pushing for rate hikes in annual contract talks may find it harder to move above the current plateau, in which the PPI is up about 1% from November 2023. The LTL index is still about 5.5% higher than July 2023, before Yellow's shutdown. But the PPI is on a flatline with September 2022. The demand catalyst everyone's been seeking since 2022 hasn't been triggered yet. Hopefully 2025 will surprise on the upside.