Dive Brief:
- ArcBest’s ABF Freight increased its daily shipments by 2.4% year over year, driven by an influx of new LTL customers, according to its Q4 earnings report.
- The gains — which first began in Q2 — mark a reversal from earlier declines tied to weakness in manufacturing, industrial and housing-related freight.
- “It’s hard to predict when that will stabilize,” said Eddie Sorg, chief commercial officer, during ArcBest’s Jan. 30 earnings call. “But we're very committed to get the most out of every opportunity and every piece of business that we have to produce the profit that we want that supports our long-term targets.”
Dive Insight:
More than three years into the freight recession, ArcBest’s results are increasingly defined by changes in its freight mix.
While taking on new customers helps to lift volumes, the heavier weights of their shipments affects the overall performance of ABF Freight.
For example, ArcBest reported asset-based pricing gains of 5% during Q4, but billed revenue per hundredweight, including and excluding fuel, fell 2.7% YoY. The decline was shaped by mix shifts towards heavier freight rather than weaker pricing discipline.
ArcBest President and CEO Seth Runser said the company is balancing growth with cost control and efficiency as its customer pipeline expands.
“When I think about our company, we're built for any environment because we stay close to our customers,” he said during the earnings call. “The way we've built this company is to be responsive and say, ‘Yes,’ regardless of the market conditions. So our customers continue to come to us with challenges, and we're really focused on what's in our control.”
Near-term results are already being affected by factors outside of management’s control. Severe winter weather led shipments per day to fall 3% from December to January.
Even so, executives expect Q1 performance to hold up better than in a typical year despite the seasonal impacts.
In the past, the company’s asset-based operating ratio, an indicator of costs relative to revenue, worsened by 2.6 percentage points from Q4 to Q1. This year, ArcBest expects that impact to be limited to roughly 1 to 2 percentage points.
That outlook reflects a weaker-than-normal Q4 and continued softness across the freight industry. It also signals that seasonal declines may be less pronounced than in past cycles.
