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From SCDigest's On-Target E-Magazine

- May 20, 2015 -

Logistics News: Old Dominion Once Again Blows Away the Field - Q1 US LTL Results and Trends

Profits Up 56% over 2014 in Continued Strong Rate Environment

SCDigest Editorial Staff

US less-than-truckload (LTL) carriers posted generally improved but still somewhat shaky results for Q1, while Old Dominion once again blew away the field.

SCDigest Says:

Old Dominion's operating ratio of 85.1% was more than seven percentage points ahead of next closest Saia, which had an OR of 92.8%.

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We're back as usual every quarter with our review of the results and trends across freight modes. We started lwith US rail carriers, which enjoyed a generally positive Q1. (See Q1 2015 Rail Carrier Review.)

Last week, we covered the US truckload sector, which posted blow out type results in Q1, with net income up 56.9% on strong rate increases. (See US Truckload Carriers Blow It Out in Q1.)

This week, it's time for a look at the LTL sector and the five public carriers we follow. We'll noteÂ that does not include two of the largest LTL providers - UPS and FedEx -Â because neither UPS nor FedEx breaks out their numbers in a way that allows the LTL portion to be isolated out from other freight business such as truckload carriage (FedEx) and supply chain services (UPS).

Normally, we summarize both the current quarter and year to date results, but as in Q1 those are one in the same, just the Q1 numbers are needed.

All told, it was a rather week freight environment, with four of the five carriers reporting tonnage was down in Q1. The major exception was Old Dominion, which went strongly the other way, with tonnage gains of 11.4%. Maybe all the other carriers simply lost market share to the seemingly invincible Old Dominion.

But a strong rate environment partially made up for that. Revenue per hundredweight excluding fuel surcharges were up a very strong 8.6% at Con-Way Freight, for example. The same measure was up 6.6% at Old Dominion.

All told, profits for the group were $91.6 million in Q1 - and that includes a $21 million loss at still struggling YRC Worldwide. That's up from a $20 million loss for the group in Q1 2014, driven by an $88 million loss at YRC last year.

Old Dominion saw it operating ratio, or operating expense divided by operating revenue, a key transport sector metric, fall to just 85.1% in the quarter, down from 87.1% in 2014. That put it more than seven percentage points ahead of next closest Saia, which had an OR of 92.8%.

You'll find all that data and more in the table below.

LTL Sector Q1 2015 Operating Results

Source: SCDigest

(Transportation Management Article Continued Below)

CATEGORY SPONSOR: SOFTEON

As usual, we end with some selected comments from each carrier's earnings reports, although the LTL carrriers as usual did not have al that much to say.

YRC Worldwide

Despite overall loss, YRC did eke out $3.7 million in operating income in Q1, versus an operating loss of $32.4 million in 2014.

Company said that in Q1 IT entered into new leases for approximately 225 tractors and 600 trailers with a total capital value of $35.1 million, adding that "Each of these new units is equipped with the latest safety technology including adaptive cruise control, lane departure and stability controls, which provide further enhancements for our safety initiatives."

The once significant spread in operating ratio between the national YRC Freight and its Regional division continues to shrink, with Freight having an OR of 100% in the quarter versus 99% for Regional. Neither number, of course, is good.

YRC continues to manage about $1 billion in debt, flat with the level in 2014.

ArcBest/AF Freight

It wasnâ€™t exactly a blow out, but company said this was its best first quarter in seven years.

The ABF Freight unit had $775,000 in operating income in the quarter, while the Panther expedited logistics unit - acquired a few years ago - had operating profits of about $1.2 million, both basically break-even businesses in Q1.

Old Dominion

Said it was able to increase LTL tons per day by 11.4% "while also maintaining our pricing discipline."

In fact, revenue per hundredweight was up a strong 6.6%, representing a "favorable pricing environment," the company said.

The 85.1% operating ratio was a Q1 record and two percentage points better than was seen in Q1 2014.

Company continues to "to expect capital expenditures for 2015 to total $463.3 million, including planned expenditures of $164.7 million for real estate and service center expansion projects, $271.8 million for tractors, trailers and other equipment and $26.8 million for technology."

Con-Way Freight

Operating income of $37.4 million, more than double the $18.6 million in the previous-year first quarter. The higher operating income was attributable to increased pricing and lower operating expense.

Revenue per hundredweight, or yield, increased 3.6% compared to the prior-year first quarter. Excluding fuel surcharge, yield rose 8.6%, implying strong rate increases.

Saia

Operating income increased 39% to $21.2 million compared to $15.2 million.

LTL revenue per hundredweight increased by 4.6% even with materially lower fuel surcharges.

LTL operating ratio of 92.8% was a Q1 record.

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