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- A Four-in-One Earnings Breakdown: Spoiler Alert—It’s MESSY
A Four-in-One Earnings Breakdown: Spoiler Alert—It’s MESSY
Is this how LTL carriers are really performing?
Gabe Pankonin & The LTL Collective
June 06, 2024
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Next up, a detailed earnings analysis for Saia, XPO Logistics, ABF Freight, and Forward Air. Enough talk, let's get into it!!
The logistics industry as a whole, but particularly LTL carriers, witnessed varied financial performance in the first quarter of 2024.
As the reports rolled in from Saia Logistics, ABF Freight, XPO Logistics, and Forward Air, each company's financial health and strategic decisions painted a…unique picture of the current LTL landscape.
We wouldn’t miss offering our thoughts on what’s gone down with these LTL carriers so far in 2024 - but let’s shake it up a bit and look at them side-by-side!
So far in our 2024 Q1 Earnings series, we’ve covered FedEx Freight, Old Dominion, Knight-Swift, and TForce Freight; now, let’s get into what happened with Saia, ABF, XPO, and Forward Air!
To catch up with each of these carriers before we get started, don’t forget: we do this series each quarter, taking the reports from each carrier’s management team and offering our 2 cents on what it means for shippers in the LTL space.
Read previous analyses from the carriers we’re covering today to get caught up below!
For our first FOUR-IN-ONE look at how these LTL carriers fared in Q1…let’s get into it and see what has gone on!
Saia Logistics: Strategic Growth Amid Market Shifts
Saia Logistics demonstrated significant growth and strategic expansion during Q1, showing up as the star player in the LTL arena.
With a 14.3% increase in revenue, primarily driven by a 15.7% rise in bill count and a 6.2% increase in tonnage, Saia has shown some insane performance.
Even with an 8.2% drop in shipment size, they managed to flex a 10.5% increase in rev/cwt excluding fuel.
Saia’s OR dipped to a solid 84.4 from last year’s 85.0, proving they’ve got cost management secured even while bulking up.
And their strategy? Expansion on steroids—opening four new terminals, relocating four others, and aiming for 15-20 more by year’s end.
But don’t be fooled by their flashy numbers.
This expansion plan might look impressive, but it could all be smoke and mirrors if you dig a bit deeper…They spent a $456.8M through March by buying up Yellow’s terminals and splurging on new equipment.
Despite the seasonal lull and sky-high costs, Saia is banking on future price hikes to justify their spending spree. However, the real story is in the mixed signals.
Their ‘optimistic outlook’ for core business growth seems more like wishful thinking; and while they boast about a seamless expansion and a leaner OR, shippers should be wary.
Saia’s reliance on post-Yellow pricing might be driving customers to rethink their options.
So the question remains: Can Saia keep the balance, or will their pricing tactics and relentless expansion drive shippers to look elsewhere for more stable, more cost-effective solutions?
(If you’re a shipper, don’t be dazzled by these numbers—keep an eye on underlying trends)
ABF’s performance is a mixed bag - revenue fell 3.8% with a brutal 17.5% drop in tonnage and a 6.9% decline in shipments, but their rev/cwt shot up 15.6%.
Sequentially, revenue fell 5.4%, with shipments up a modest 1.4% and tonnage down 2.7%.
Their OR improved slightly to 92.0 from last year's cringe-worthy 93.2, though still far from their stellar 88.7 OR from 1Q22.
ABF’s Dynamic Pricing model, which boosted business in Q1 last year, now seems to be a double-edged sword—cranking up prices might be scaring customers away.
Their ‘Dynamic Pricing’ approach needs a rethink before they start driving customers away with excessive price hikes.
ABF’s been on a terminal spree, planning to open four new ones in 2024 after snagging spots from Yellow. However, the business deceleration from March to April casts doubt on their hopeful outlook for core business growth.
Core tonnage grew 9.0%, hinting that transactional business has taken a nosedive.
Looking ahead, ABF might catch a break later in 2024 as their Teamster agreement’s impact lightens - the initial 13% wage hike will drop to 2.5% by mid-year and could potentially ease some financial strain.
IF they can balance price increases with productivity improvements, ABF might just pull off a turnaround…Here’s to hoping they can keep the Dynamic Pricing from backfiring and regain some stability!
XPO Logistics: Leading in Margin Improvement and Operational Efficiency
XPO Logistics wrapped up their Q1 Earnings with a bang, showing the best margin improvement year-over-year AND sequentially.
Revenue surged 9.0% with shipment counts up 3.8% and tonnage up 1.8% - rev/cwt (excluding fuel) climbed 9.8% despite a slight 1.9% dip in weight per shipment and a 2.0% increase in haul length.
Sequentially, revenue rose 2.9%, with shipments up 4.1% and tonnage up 6.1%. Their OR also improved, dropping to 85.7 from last year's 89.6.
Mario Harik and Dave Bates like
While XPO’s claims ratio dropped to 0.3% due to a 70% reduction in damage frequency, their aggressive growth might not be all good for shippers.
Their eight-quarter service improvement streak sounds impressive…but at what cost?
XPO’s expansion includes opening 28 new terminals from Yellow, with intentions to have them all operational by early 2025.
They’re targeting more profitable small accounts and gradually reducing outsourced miles. However, shippers should be wary of the relentless price hikes—contract renewals jumped 8%, with more expected throughout 2024.
COO Dave Bates might have turbocharged their performance since joining in April 2023, but shippers should keep an eye on whether XPO’s aggressive strategies end up driving costs higher without delivering proportional service improvements…
In a soft freight market like this one, the true impact of their expansion and cost management will soon be revealed.
Forward Air: Overcoming Acquisition Challenges
Despite the chaos of a rollercoaster nine months post-Omni Logistics acquisition, revenues nudged up 1.4% with shipments growing 1.3% and tonnage up 8.9%.
However, their rev/cwt excluding fuel tanked by 6.2%, suggesting they had to slash prices to keep customers from bolting during all the turmoil.
Their OR spiked from 89.0 in 1Q23 to a cringe-worthy 92.9 in 1Q24—the worst among public carriers.
Sequentially, revenue dipped 2.1% with OR climbing from 90.4 to 92.9, showing the Omni deal’s damage.
Forward Air is now laser-focused on margin improvement - stating that this quarter’s disaster doesn’t reflect their hopes for the rest of 2024.
Their on-time rate was a brag-worthy 98.6%, but with the lowest liability limits in the biz, that claims ratio of 0.04% is a bit of an embellishment.
The Omni acquisition? A financial trainwreck, clocking a 112.7 OR in Q1 and piling on $40M in quarterly interest expenses.
Forward Air might need to sell off parts like Intermodal to manage this whopping $1.7B debt.
Their stock has nosedived from $118.84 pre-acquisition to a brutal $14.47 by mid-May 2024, an 88% plunge.
With $512M in liquidity, they've got some wiggle room, but 2024 is make-or-break for FA.
If they can’t turn this ship around, they might just become the next cautionary tale in overzealous M&A.
Conclusion: Insights for LTL Shippers
The Q1 Earnings reports of Saia, ABF, XPO, and FA reveal a landscape of strategic maneuvering, market adaptation, and operational challenges.
For a shipper, these reports offer valuable insights into the current state of the LTL market and the varying strategies employed by different carriers.
Saia’s aggressive expansion and pricing strategies highlight opportunities for shippers looking for robust service networks and competitive rates.
ABF's dynamic pricing approach and core business focus suggest a carrier adapting to market volatility, though with caution needed around their operational efficiency.
XPO’s leading margin improvements and service enhancements make them a strong contender for shippers prioritizing cost efficiency and reliability.
Forward Air's struggle with acquisition integration underscores the importance of financial stability and strategic clarity in choosing a carrier.
Understanding these dynamics can help you make informed decisions, optimize your LTL shipping strategies, and navigate the evolving logistics landscape effectively.
And remember: It's always smart to be testing the field to ensure you're getting a fair rate. Ready to start a conversation about diversifying your LTL carrier portfolio? Click here to connect with someone on our team today.
This article was collaboratively written by “LTL Observers” - a collective of industry veterans spanning the carrier, shipper, 3PL, and tech provider spaces who are willing to share their opinions.
Disagree with these opinions? We'd love to add you to the line-up to make sure we're including a diverse set of LTL observers. Contact us today.