Dive Brief:
- Old Dominion Freight Line’s tonnage per day rose 1.9% in Q2 despite ongoing softness, particularly in the industrial accounts that make up over half of its business, the carrier reported Wednesday.
- While customers’ inventories vary, the LTL sector’s overall capacity remains lower than when Yellow Corp. filed for bankruptcy around this time last year, executives said.
- “It’s still tough to tell,” CFO Adam Satterfield said on an earnings call. “I feel like things are starting to thaw a little bit. ... It seems like we’re coming close to the end of a long, slow cycle.”
Dive Insight:
The LTL giant previously forecast a rebound in Q2 of last year that never materialized. The down cycle has lasted longer than Satterfield expected, he acknowledged to investors.
“But it will turn back to the positive at some point, and we're in a great position to capitalize when it does,” he said.
Old Dominion has opened three service centers so far this year and has about 30% excess capacity available in its network, ready for any rebound, Satterfield said.
The carrier attributed its Q2 revenue growth of 6.1% year over year to a 4.4% increase in LTL revenue per hundredweight, alongside the improvement in tonnage.
Old Dominion expects sequential growth in the third quarter before the seasonally slower fourth and first quarters.
Its yield and tonnage held the line despite the ongoing sluggish freight transportation environment, TD Cowen analysts said in an investor note.
“ODFL came in above our forecast and consensus expectations in Q2, as investor uncertainty lessens,” the analysts wrote in an investor note.
