Dive Brief:
- Saia could delay plans to open 10 to 15 new terminals next year if the economy worsens, President and CEO Fritz Holzgrefe said during a Q3 earnings call.
- The LTL carrier would pull back on its expansion plan in the face of shifting market demands or a “significant economic contraction,” Holzgrefe said.
- “What we see is a long-term opportunity for us to continue to improve our service map,” the CEO said. “And if we think there are opportunities for us to do that, we will. If the market isn't accepting of that, I think we back off or we slow down or delay.”
Dive Insight:
Saia is finished cutting ribbons on new terminals for the rest of the year, after growing its network to 187 facilities this year. The company added 11 since January, include five in new markets in the past quarter.
“We have the ability to slow [the network expansion], delay that, maybe even in some cases accelerate it, depending on the environment,” the CEO said during the earnings call. “Three months or a couple of quarters into next year ... we might say, let's pause.”
The LTL carrier still won’t shy away from expansion opportunities should the market call for it — and the company is willing to sit on real estate, if necessary, before developing it.
Saia expects capital expenditures to approach $500 million this year. With a healthy pipeline of real estate opportunities, next year’s spending levels should look similar, Executive Vice President and CFO Doug Col said on the call.
“You might see us act on some real estate activities, be it land or terminals, and not necessarily have to open them,” Col said. “It wouldn't be a bad thing if we end up stockpiling a few things, so I don't think we're going to be shy about making good investments even if we don't open them.”
But as shipments and tonnage decrease, Saia appears more willing to consider tapping the brakes on its network plans than some of its LTL competitors.
Even as Yellow laid out plans to sell 28 terminals, CEO Darren Hawkins insisted the carrier’s “One Yellow” network transformation would not change regardless of economic conditions. XPO Logistics has shown no indication of scaling back plans to reach 900 doors by the end of next year.
Old Dominion Freight Line CEO Greg Gantt told investors the carrier’s $2 billion revenue increase in the past two years relied on its service center network expansion.
That level of revenue growth “would not have been possible if we had not consistently increased our network capacity,” Gantt said.
