Dive Brief:
- Old Dominion Freight Line’s Q2 revenue totaled $1.41 billion, a roughly 6% year-over-year decline though an increase of 2.4% compared to Q1, according to earnings reports.
- While sequential comparisons are not as useful due to seasonal trends throughout the year, every bit of revenue improvement helps amid a three-year downcycle, EVP and CFO Adam Satterfield said on an earnings call Wednesday.
- “We continue to believe that our business model contains meaningful operating leverage, and we remain confident in our ability to improve our operating ratio over the long term,” President and CEO Kevin “Marty” Freeman said on the call.
Dive Insight:
Old Dominion’s operating ratio in Q2 rose to 74.6%, compared to 71.9% a year ago. When volume decreases, operating costs can rise due to the company’s commitment to superior service, Freeman said.
Despite the setback with the less efficient OR, the LTL giant is managing costs and protecting service in a very weak environment. The industry is contending with volumes some 15% lower than when demand surged during the COVID-19 pandemic, Satterfield said.
“We don't feel like we need to go out and try to chase bad revenue that doesn't fit in our thinking for the long term,” Satterfield said.
Other LTL peers experienced a similar revenue uptick in Q2 sequentially, even as YoY comparisons showed the slower environment. Compared to Q1, for example, ArcBest’s $1 billion in revenue was up 5.7%, and TFI International’s LTL segment was up 3.6%.
ArcBest attributed its YoY revenue decline to a soft rate environment and a higher mix of managed transportation that typically involves smaller, lower-revenue shipments.
“We remain disciplined in our pricing strategy, securing deferred increases averaging 4%, a strong outcome in a market where many shippers are focused on cost savings,” ArcBest CFO Matt Beasley said on an earnings call.
