Dive Brief:
- Old Dominion Freight Line’s revenue fell more than 15% YoY in Q2, with LTL shipments per day down 11.5%, the carrier reported. Executives blamed the poor performance on a persistently weak freight market in an earnings call Wednesday.
- But CFO Adam Satterfield expressed optimism about a late-July pickup in shipments. Satterfield attributed the increase to end-of-month shipments from existing customers, as well as new freight from shippers diverting loads from Yellow Corp., which remains at risk of bankruptcy.
- “Some of the conversations that we've had with customers would suggest this normalization and freight actually picking up and moving again,” Satterfield said. “Obviously, we've had some recent developments that have accelerated things a little further here over the last week or so.”
Dive Insight:
While the Q2 freight rebound Old Dominion projected in February didn’t materialize, the LTL carrier’s industrial and retail accounts are performing consistently and it hasn’t lost any major customers — even if they have shipped less freight in the market downturn.
“We feel like we're getting towards the end of the slow cycle and would expect to start seeing business levels start to return to us at the end of the year,” Satterfield said.
The Thomasville, North Carolina-based truck line earned $1.4 billion in revenue in Q2, down 15.2% YoY from roughly $1.7 billion.
Old Dominion updated its forecast at the end of Q1, advising investors that Q2 would likely be a tough quarter as a rebound remained out of sight.
But if Old Dominion’s 50,000 shipments per day in late July hold steady, rather than dropping back to the daily average of about 47,000 it has reported since December, the sequential change in revenue and shipments per day for this month will be in line with the carrier’s 10-year averages for the first time in 2023.
Marty Freeman, who took over as CEO this month, threw cold water on the notion Old Dominion would see meaningful wins from a Yellow bankruptcy — and he and Satterfield were careful not to discuss the competitor directly.
“We’re not really seeing any major business coming out of that,” Freeman said.
Satterfield acknowledged identifying the source of additional freight can be challenging. But the increase in the final full week of the month outperformed the carrier’s typical end-of-month surge, and it followed a strong end of June, he noted.
“It's really hard to try to bifurcate and put your finger on what's driving any type of acceleration there,” he said. “Is that just because we've got more business from an existing customer that's having their own end-of-month surge? Yes, that's part of it. Is it freight that's coming in where there's been some freight diversion? Yes, that's a part of it.”
