Dive Brief:
- Old Dominion Freight Line said a drop in shipments in Q4 was the primary driver behind an 8.9% year-over-year decline in operating income to $304.3 million during the quarter, according to a Feb. 4 earnings release.
- Sluggish demand was reflected in Old Dominion’s LTL tonnage per day, which fell 10.7% YoY to 30,691 in Q4. LTL shipments per day fell 9.7% YoY to 41,308.
- President and CEO Kevin Freeman said that while the company’s operating ratio ended Q4 at 76.7%, up from 75.9% a year ago, the company’s commitment to cost discipline reflects “our team’s ability to operate efficiently despite the challenging environment.”
Dive Insight:
Old Dominion, as well as other carriers including Knight-Swift Transportation Holdings and Schneider National, are looking internally for ways to control costs while weathering a more than three-year freight recession.
EVP and CFO Adam Satterfield said during a call with analysts that the priority at Old Dominion is managing costs and efficiencies as well as discretionary spending. He added the carrier also leverages technology to drive efficiencies throughout its operations.
“We can’t take our eye off the ball when it comes to managing costs,” he said. “You’ve got to think about costs day in and day out in good times and bad.”
Weak demand led quarterly revenue to fall 5.7% year over year to $1.3 billion, per the release.
A gain in LTL revenue per hundredweight was a bright spot for the carrier, up 5.6% to $33.91.
Executives also said the market may be turning the corner.
Satterfield pointed to the Institute for Supply Management’s Purchasing Manager’s Index, noting to analysts that the improving index could be “an indication of hopefully, what things will be for the remainder of the year.”
