Dive Brief:
- Old Dominion Freight Line on Wednesday reported Q3 revenues of $1.59 billion, a 13% year over year improvement as the freight market recovers.
- The carrier credited the quarterly lift to a 13.3% increase in LTL revenue (5.1% net of fuel surcharge) per hundredweight, compared to the same period last year, according to the earnings release. LTL weight per shipment also rose by 1.9% YoY.
- President and CEO Kevin Freeman said on a call with analysts Wednesday that heavier loads are the result of capacity constraints in the truckload segment. “That basically means that customers are putting more widgets on a pallet,” Freeman said.
Dive Insight:
Old Dominion executives said the company is poised to secure more business and increase revenues as market conditions improve.
EVP and CFO Adam Satterfield said on the earnings call that the carrier’s reliability is a strong value proposition that continues to play in the company’s favor. The carrier reported 99% on-time service during the quarter and a claims ratio of 0.1%. Satterfield said that track record makes Old Dominion attractive for budget-minded customers.
“When customers need to make sure their freight’s picked up and delivered when promised, they know who to call for that,” Satterfield said. This should aid the company in securing more business, he added.
Satterfield said Old Dominion saw strong performance from its industrial customers in the third quarter. Its retail customers also outperformed the company’s historical quarterly performance.
And while Old Dominion's tons per day fell slightly — by 0.1% — in Q3, Satterfield said that trend reversed in September, which saw tons per day increase 3.9% compared to August.
“We’ve had some really significant growth with a few really large accounts as they’ve given us an increased share of their wallet spend on LTL,” Satterfield said.
Looking ahead, executives said they are confident the freight market's ongoing recovery is sustainable, citing the Institute for Supply Management’s Index for manufacturing, which has shown several consecutive months of expansion.
