ArcBest's MoLo deal fuels contract growth in softening spot market

Dive Brief:

ArcBest's acquisition of TL broker MoLo Solutions has increased customers' access to capacity and led to more loads per day from newly integrated accounts, Danny Loe, president of asset-light logistics and chief yield officer, said on an April 29 earnings call.
The integration is in its early stages, with ArcBest currently migrating its TL platform and some of its accounts over to MoLo's platform. "We're looking to roll everything together to have all shipments on a platform by the end of the year," Loe said.
The acquisition will also help ArcBest grow despite softening demand in the TL spot market, as MoLo bolsters the company's contract business, Loe added.

Dive Insight:

Although there is still "a lot to do on the integration side with MoLo," ArcBest remains confident it can hit the long-term financial targets it's aiming for with the acquisition, CEO Judy McReynolds said. ArcBest's asset-light segment more than doubled its revenues from the year before in Q1, jumping from $311.5 million to $673.7 million.

"The purchased transportation that we do with our Asset-Light business, we feel like we've gained an advantage with the MoLo acquisition," McReynolds said. "One, because we have more carriers and two, because of the approach that they've used and some of the tools that they have to be better informed about buy rates and that sort of thing."

The deal doubled ArcBest's brokerage capacity, making it a top 15 TL broker in the U.S., per a news release last year announcing the deal.

MoLo will also shield ArcBest from challenges facing the spot TL market, executives said on the call. Spot prices have cooled in the face of waning demand, although contract rates remain firm. With MoLo, ArcBest is closer to its goal for long-term balance between contract and spot market business, Loe said.

Despite analysts' concerns over a looming freight recession, demand remains strong overall for ArcBest's services, even amid customers' broader supply chain challenges, Chief Customer Officer Dennis Anderson said. In the company's asset-based segment, tonnage per day increased 3.6% YoY and shipments per day increased 0.2% YoY in Q1.

"They're definitely having some slowdowns related to shortages and backlogs ongoing, maybe, in their supply chains," Anderson said. "But other than that, they are still telling us of a strong demand and really looking ahead to meeting that demand and we're seeing that in our business as well."