Large shippers are asking Old Dominion Freight Line (CCJ Top 250, No. 9) for multiyear contracts, which the company’s executives view as a sign of improving demand.
Old Dominion President and CEO Kevin Freeman said during the company’s earnings call this week that contracts typically run two years and cover base-rate increases, with no volume commitments. He added that some larger customers are “seeing the future bright” and want to negotiate rates upfront so they don’t absorb a steep increase if the economy inflects.
Chief Financial Officer Adam Satterfield said shippers are “trying to get ahead of some things that they foresee changing in the space overall.”
Old Dominion reported a 26.9% increase in third-quarter net income to $343.7 million, up from $270.9 million a year earlier. Revenue rose 13.1% to $1.59 billion from $1.41 billion in the third quarter of 2025. The less-than-truckload (LTL) carrier leaned on disciplined pricing and cost control while demand stabilized.
Demand improved as the quarter went on. Satterfield pointed to September, when LTL tons per day rose 1.6% year over year and 3.9% from August, better than the 3.1% gain the month has averaged over the past 10 years. Tonnage slipped sequentially in July (0.5%) and August (1.6%).
Pricing did the heavy lifting. Freeman said the revenue increase was primarily due to LTL revenue per hundredweight jumping 13.3% to $38.40. Excluding fuel surcharges, it rose 5.1% to $30.25. Revenue per shipment climbed 15.5% to $570.55, or 7.1%, excluding fuel.
Tonnage was essentially flat, down 0.1%, which reflects the net impact of a 2% decline in shipments per day and a 1.9% increase in weight per shipment to 1,486 pounds.
Satterfield said October is tracking even stronger. Revenue per day is up about 22% year over year, and LTL tons per day are up 1.6%. October weight per shipment is up about 3% year over year, which he called a positive demand indicator.
Freeman attributed rising weight per shipment partly to tight truckload capacity.
“Customers are putting more widgets on a pallet,” he said.
Satterfield said service wins share, and some competitors are struggling to make consistent pickups due to “generally a lack of labor capacity” and are likely tightly managing costs.
ODFL, he added, has room to absorb volume.
Real estate capacity “continues to be north of 35%,” he said, and the company has trimmed its fleet only selectively.
[RELATED: Supreme Court's Montgomery ruling could give Landstar a $100 million tailwind]
Operating leverage
Old Dominion’s operating ratio improved 280 basis points to 71.5%. Salaries, wages and benefits fell to 44.3% of revenue from 47.1% a year ago. That offset a rise in operating supplies and expenses to 11.9% of revenue from 10.3%, driven by diesel and other petroleum-based costs.
Overhead costs improved 170 basis points on leverage from increased revenue and tighter spending.
Employee costs remain a pressure point, a common drag on financial results of publicly traded carriers, including Werner (No. 14) and J.B. Hunt (No.5).
Satterfield said fringe benefit costs, driven mainly by health and dental, were up 39.7% from the prior year and came in higher than expected. He called the impact “about a full operating point headwind” and said it will likely continue in the fourth quarter.
[RELATED: Higher truckload rates lift Marten's Q3 earnings, but diesel pulls it back]
Nine-month results and capital allocation
For the first nine months of 2026, Old Dominion reported:
- Total revenue: $4.48 billion, up 6.9% from $4.19 billion
- Net income: $932.6 million, a 17.4% increase from $794.2 million
- Diluted EPS: $4.47, up 19.5% from $3.74.
Operating cash flow was $469.5 million for the quarter and $1.1 billion year to date. Capital expenditures were $67.1 million for the quarter and $206.7 million for nine months. The company held its full-year capex plan at about $380 million: $180 million for real estate and service centers, $155 million for tractors and trailers; and $45 million for information technology and other assets.
Satterfield said 2027 capex will likely fall below the typical 10-15% of revenue.
Old Dominion spent $400.6 million on share repurchases and paid $180.7 million in cash dividends through the first nine months. It ended September with $466.2 million in cash.
