Dive Brief:
- Old Dominion Freight Line’s operating income dropped 9.7% year over year in Q3, with a slow economy and lighter weight per shipment pushing revenue negative for the first time this year, the carrier reported Wednesday.
- But the LTL industry leader has observed encouraging volume trends so far in October, CFO Adam Satterfield told investors on an earnings call.
- “This is the first time that we've been, I would say, relatively close to what our normal sequential changes have been in the first month of a quarter,” he said. “So we feel pretty good about how volumes are trending.”
Dive Insight:
Heavier shipments are considered an early indicator of a freight cycle upswing, especially from a manufacturing sector that usually makes up 55% to 60% of Old Dominion’s revenue. Retail demand continued to outperform that of industrial customers, the company reported.
Old Dominion’s weight per shipment dropped 1.4% YoY in Q3, and average weight per shipment has been under 1,500 pounds all year, the company reported.
“The reduction in weight per shipment is definitely our customers just shipping less boxes on the skid,” CEO Marty Freeman said on the call. “We’re positive that that'll pick up in maybe the fourth and first quarter.”
The company’s industry-leading service allowed it to add new accounts while retaining existing customers and shipping lanes to mitigate its operating loss, Satterfield said.
“We've been able to keep those relationships intact, and we're primed and ready whenever those customers call,” the CFO said. “If they've got two shipments per week, and ... those two turn into three to four to five to 10 — all of a sudden, instead of making a stop, we're dropping the trailer and getting a full trailer load of outbound product from the manufacturing account.”
