Old Dominion Freight Line issues third quarter operating metrics update

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 August this week.

ODFL reported that revenue per day was down 1.4% annually in August, driven by a 6.0% decrease in LTL tons per day, which was partially offset by an increase in LTL revenue per hundredweight. And it added that the decrease in daily LTL tonnage was related to a 1.2% decrease in LTL shipments per day and also a 4.8% decrease in LTL weight per shipment.

On a quarter-to-date period, ODFL said that LTL revenue per hundredweight and LTL revenue per hundredweight, excluding fuel surcharges, increased 1.8% and 8.8%, respectively, on an annual basis.

“The decrease in Old Dominion’s tonnage for August reflects continued softness in the domestic economy as well as a change in the mix of our freight,” said Marty Freeman, President and Chief Executive Officer of Old Dominion, in a statement. “Through July of this year, our daily shipment count averaged approximately 47,000 shipments per day and that average increased to approximately 50,000 shipments per day in August. This incremental increase is due in part to the direct and indirect impact of one of our largest competitors ceasing operations in July, as we believe underlying demand has remained relatively consistent. Our team responded well to this inflection in our volumes and our service metrics have remained best-in-class. We will continue to focus on providing our customers with superior service at a fair price, as we believe this element of our long-term strategic plan continues to support our ability to win market share.”

In its second quarter earnings, ODFL revenue was down 15.2% annually, to $1.413 billion, net income fell 22.3% annually, to $292.3 million.

In a previous 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.”