Thomasville, N.C.-based national less-than-truckload (LTL) carrier Old Dominion Freight Line (ODFL) provided guidance for key operating metrics for the month of May this week.
ODFL reported that revenue per day fell 15.7% in May compared to May 2022, which it said was mainly driven by a 14.4% decrease in LTL tons per day. And it said that the decrease in LTL tons per day was due to an 11.4% decrease in LTL shipments per day and a 3.4% decrease in LTL weight per shipment. ODFL also noted that for the quarter-to-date period, LTL revenue per hundredweight and LTL revenue per hundredweight, excluding fuel surcharges, was up 0.1% and 7.9%, respectively, on an annual basis.
“Old Dominion’s revenue results for May reflect continued softness in the domestic economy as well as a decrease in fuel surcharge revenue,” said Greg C. Gantt, President and Chief Executive Officer, in a statement. “While our volumes decreased on a year-over-year basis, our LTL shipments per day remained relatively consistent with the first quarter of 2023 and our yield continued to improve. Our quarter-to-date LTL revenue per hundredweight, excluding fuel surcharges, increased 7.9% due primarily to the ongoing execution of our yield-management strategy.
We remain focused on delivering superior service at a fair price to support our consistent, cost-based approach to managing yields, despite the year-over-year decrease in volumes. As we continue to deliver our unmatched value proposition, and consistently execute on the other key elements of our long-term strategic plan, we believe we will win market share and increase shareholder value over the long term.”
In a recent interview, ODFL CEO Adam Satterfield explained that ODFL pays a lot of attention to the ISM [manufacturing] index, which has been below 50 (a reading of 50 or higher indicates growth is occurring) for several months now.
“We are kind of getting to the end of what a normal average down cycle might be…and would look to start seeing some industrial strength returning,” he said. “And industrial related revenue is about 60% of our overall revenue base. But, I think, right now, we're going to start seeing some things turn around with our retail customer, base as well, which is about 30% of overall revenue. And we still believe, in looking at things like the inventory-to-sales ratio, that inventory levels are low. They are still below where we were before the pandemic, and then we've had feedback from customers that kind of supported our belief of freight flowing again, suggesting that that they're going to see an increase in their shipment levels this year. So, you know, it's somewhat reading the economic tea leaves, but really a lot of our base level forecasting comes from feedback that we get from our customer base. In the fall each year, we go through a robust forecasting process and build a bottoms-up forecast, taking data that our sales team are able to get from our customer base. And, so, it's taking all that information into account as we go through our planning process.”