Dive Brief:
- Equipment delivery delays for Old Dominion are limiting the LTL carrier's ability to "match the receipt of new equipment with the expected seasonal increase in our volume,” Greg Gantt, president and CEO, said during a Q1 earnings call Wednesday.
- The company still plans $485 million in equipment spending in 2022, but it expects to receive fewer trucks than it ordered — and those typically delivered between Q1 and early fall to arrive later, Gantt said.
- “I’m not sure it’s going to get a whole lot better,” the CEO said. “We’re getting a little bit less than we had hoped to get. And we’re getting it a little later.”
Dive Insight:
Semiconductor issues and other supply chain woes have drawn out equipment lead times, pushed up prices and challenged trucking firms' ability to grow their fleets of trucks and trailers. But they're working on it: Landstar and Knight-Swift Transportation, for instance, aim to grow their trailer fleets by 11% and 10%, respectively, this year.
The wait for new trucks has pushed Old Dominion to delay the replacement of aging equipment and continue to rely on purchased transportation to supplement its fleet and meet demand, CFO Adam Satterfield said.
“We will get some relief later in the year, we hope, with deliveries of what’s been ordered,” Satterfield said.
Old Dominion’s spending to add trucks, employees and service centers provides the company with a competitive advantage in a tight freight market: available capacity. The company plans to keep hiring beyond its 18.5% workforce expansion in Q1 and open five to seven service centers this year.
“We believe that consistently providing customers with superior service at a fair price and regularly investing in our people, equipment and network capacity to stay ahead of anticipated volume growth will support our long-term growth initiatives,” Gantt said.
