Old Dominion Freight Line’s tonnage metrics have turned positive for the first time in nearly two years. The less-than-truckload carrier’s second-quarter update shows improvement from the first quarter but a slight deceleration in growth rates from April to May.
The company announced Wednesday that revenue per day was 5.6% higher year over year (y/y) in May, better than the 1.2% growth rate in the first quarter but slightly below a 6.3% increase in April. May’s tonnage was up 1.5% y/y as shipments increased 2.3% and weight per shipment fell 0.7%.
The carrier reported a 4.2% y/y increase in revenue per hundredweight, or yield, for the first two months of the second quarter. The metric was 4.7% higher excluding the impact of fuel surcharges.
“We are pleased with the ongoing improvement in our LTL revenue per hundredweight, which reflects our consistent, cost-based approach to pricing as well as stability in the overall pricing environment,” said Marty Freeman, president and CEO, in a news release.
The company historically sees an 8.7% sequential growth rate in revenue from the first to the second quarter along with 350 to 400 basis points of margin improvement. However, the trend through the first two months of the quarter implies revenue is up less than 3% sequentially. A weaker sequential revenue trend in April prompted management on its first-quarter call to forecast just 150 bps of margin improvement for the second quarter.
Old Dominion’s (NASDAQ: ODFL) midquarter update highlighted its cautious approach in taking market share during the current downcycle.
In comparison, competitor Saia (NASDAQ: SAIA) has been aggressively onboarding orphaned freight following Yellow Corp.’s (OTC: YELLQ) shutdown last summer. Saia bought 28 terminals from the bankrupt estate and plans to grow its door count by 12% to 14% this year.
Saia’s Tuesday update showed a 19% y/y increase in shipment counts during May, a slight acceleration from an 18% increase in April. On a two-year stacked comparison, its tonnage was up 7% for the April-May period compared to a 12% decline for Old Dominion.
Old Dominion purposefully sat out the recent jump ball for freight but has historically captured market share at a higher clip than its peers. It invests in infrastructure ahead of the demand curve and currently sits on 30% latent network capacity.
“We believe our service metrics and value proposition remain best in class, which puts us in a strong position to win market share and increase shareholder value over the long term,” Freeman said.
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