Old Dominion Freight Line (CCJ Top 250, No. 9) posted lower revenue and earnings year over year as less-than-truckload shipment volumes declined.
The Thomasville, N.C.-based carrier reported net income of $238.3 million, down 6.4% from $254.7 million in the same quarter last year, as softer LTL demand continued to pressure volumes. Total revenue declined 2.9% at $1.33 billion from $1.37 billion.
Despite the revenue decline, President and CEO Marty Freeman said demand and trends were heading in the right direction.
“While our first quarter revenue decreased on a year-over-year basis, demand for our LTL service improved as the quarter progressed. The improvement in demand, coupled with our ability to consistently deliver superior service to our customers, contributed to both the acceleration in our LTL volumes and improvement in our yield during the quarter,” said Freeman.
According to financial results, LTL tons per day dropped 7.7% year over year, driven by a 7.9% decline in shipments per day. Weight per shipment was essentially flat, up just 0.3%. Revenue per hundredweight rose 5.7%, and excluding fuel surcharges, yield improved 4.4%.
Looking across the quarter, January shipments declined 3.4% from December, while February grew 4.9% from January, and March increased 4.6% from February.
In April, weight per shipment is up on a year-over-year basis roughly 1%, though tons were still down around 6.5%, said Chief Financial Officer Adam Satterfield during a call with investors. “That is usually a leading indicator of an improving demand environment.”
Satterfield said the company expects to see “some sequential improvement” in volumes. Management anticipates the retail and industrial sector to contribute to the volume performance.
However, Satterfield also added, “We are optimistic with a hint of caution given geopolitical risk.”
Truckload crunch opens door for LTL gains
Major carriers such as Werner (No. 14) and J.B. Hunt (No. 5) have flagged a tightening truckload market in recent investor calls, attributing the shift to supply-side constraints.
This is beginning to spill over into LTL, Satterfield said, driven by rate and capacity changes in the truckload market.
Late last year, Satterfield said several large shippers had anticipated this environment.
“I can think of a couple of large accounts that said part of their supply chain strategy over the last year or so had been taking advantage of that market by consolidating some loads, and that they were going to revert back to moving more freight LTL. I can look at a couple of specific customer accounts and see that trend has reversed,” he said.
Load consolidation by shippers has been a headwind for the past couple of years, which needed to be fixed in the truckload industry, Satterfield said. “I do think that will unwind and will be a big benefit to the industry and something that we will be able to benefit from as we get back to market share opportunities.”
Will FedEx Freight bring a new threat?
Management also touched on FedEx Freight spin-off and whether FedEx’s dual priority/economy service model and dedicated sales force post-separation would bring a formidable competitor.
“We expect them to continue to be a good competitor, but it does not really change the competitive landscape. If anything, they have to go through a lot of change as they go through that separation, and we will see how they handle it,” Satterfield noted.
Old Dominion plays the long game on capacity
Looking ahead, the executives addressed three consecutive years of negative year-over-year volume growth. “We are not immune to the economy, and the last three years have been difficult. Every year we have reaffirmed our strategy. Typically, we maintain market share through the downturn and then win significant market share as demand improves,” Satterfield said.
The carrier has consistently invested in new capacity over time to grow its business and prepare for network growth, with ODFL investing nearly $2 billion in capital expenditures and planning another $205 million in 2026.
Excess capacity helped the carrier in early recovery cycles, Satterfield pointed out, with the carrier producing “double-digit volume growth while competition was in single digits.”
“Many carriers are talking about excess capacity today, but the numbers do not bear that out,” he noted. “We still see the industry as capacity constrained. That is why we are confident that once demand starts to improve, we will get back to outgrowing our competition like we have in prior cycles.”
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