Old Dominion Freight Line, Inc. — 2024 Q1

Yes. I think that's a difficult one to answer. It's obviously dependent on the top line. Typically, the second quarter is when we see the big acceleration in revenue and historically speaking, the 10-year average increase in revenue from the first to the second quarter is 8.7%. And we're not starting out with that type of growth in April. Things still feel good to us, and we're finally seeing some year-over-year revenue growth, but it's not quite at the levels of getting back to seasonality.

Yes, I would say right now, underlying domain has felt relatively consistent, but it does feel like things are improving a bit. And obviously, like I just mentioned, we've seen some sequential acceleration obviously, January, we see pretty good with winter weather, and we saw the impact of that. But we increased from there through February and then saw again some of the sequential improvement in shipments through March and thus far into April.

Yes. That's why we wanted to be clear with the comments earlier that we don't see this in any way as being a reflection on the overall environment. And certainly, there is no change with respect to what our yield management initiatives are. We continue to target trying to achieve yield improvement that ultimately leads to our revenue per shipment outperforming our cost per shipment.

Yes. I think certainly, time will tell and it's something that we continue to watch. And the business levels, our market share trends. All of those are pretty much have been in line with what we would have otherwise expected when we go through a slower economic environment. It's something where our market share is generally flattish and a little hard to track market share right now with the disruption post Yellow's closure.

Well, if you remember, we have done a 69.6 and a 69.1 in the second and third quarters of 2022 when we had more revenue growth going on and felt like we had room to go from there. So nothing's changed with respect to where we feel like we can take the operating ratio long term, which is part of the reason why we repeated the goal of being able to achieve a sub-70 annual operating ratio.

Look, we're not just sitting back doing nothing. We're fighting every day to get better and working with each one of our customer accounts to make sure that we're in there. We're having conversations about how we're going to be able to grow with them. But we also don't have to feel the need to go out and try to chase volume, which many of competitors have done in the past, and then they get their network full and they're unable to grow.

Yes. I mean certainly in the past 2 years have felt more like 2009 recession. When you look back last year and see double-digit tonnage in some periods and overall for the year, we were down 9%. It was a very tough operating environment. But again, we continue to try to power through it and position ourselves for future market share opportunities.

Yes. I've got a teenage daughter, so I can't help but hear certain types of music in the house. But on the pricing front, we've not really seen any material change in activity or bid activity. And for us, it's pretty consistent through the year in terms of how bids come in. And so pretty much just business as usual there. And again, like we said earlier, continuing to get the same types of increases on a core basis that we've seen in the past.

Yes. From a headcount standpoint, I mentioned that we've added about 500 people since September of last year. So I feel like we're in good shape there. The other thing is that we are running our truck driving schools. And so some of the people that we pulled from a platform position and put them into a truck in the fall to respond to that sequential acceleration in business, we've been able to backfill those platforms roles with the hiring, but also have trained more drivers to have those employees and drivers and ready reserve, if you will, to respond to an increase in demand if it continues to accelerate from here. So it's pretty much in balance right now with the change in full-time employees with shipments.

Yes. From a capacity standpoint, we always try to maintain at least 25%. And with the 30% that we have now, some of that comes from what we started as a -- enlarging some of our docs that we had experienced some tight door pressure in which we keep a door pressure report going on a monthly basis. But some of those things are finishing up from expansions in 2022, that's the reason for the 30%.

This is Joe Hafling on for Stephanie. I hate to ask again on the capacity question, but you've mentioned a couple of times how you think that the strategy of the past would continue to work and the environment itself will become tight. But with sort of all the rest of the national players essentially copying the Old Dominion playbook and trying to keep a 20% to 30% excess capacity figure themselves, how are you thinking about keeping incremental capacity or adding incremental capacity?

Yes. I think that at the end of the day, capacity is not what wins business. It allows you to achieve market share initiatives. So having capacity doesn't necessarily mean that anyone is going to be able to grow, it just gives the ability to grow. Service is ultimately what wins share and relationships in this business as well.

Great. And then maybe just on that point, have you heard any maybe anecdotes from customers lately on any service issues? Or is the environment just still too weak right now, so that's really become an issue?

I haven't heard anything out of the ordinary, things that we wouldn't normally hear. But the reporting -- we've had some improvement in our -- the national account reporting that we get with wins and losses. And service issues are starting to increase, I would just say, generally. We're starting to see those start to pick up. So just something that's kind of on the press pace of one other item that's kind of changing in our favor.

Yes, I think so, Jason, I agree with you. And I felt like post-pandemic, we were going to stay in more of an adjusting case type of inventory management style. But once things get tight and you start managing cost, you have to look at all elements and managing tighter inventory is one way for shippers to improve their overall bottom line.

In terms on a sequential standpoint or...

Yes. So far, I mean, obviously, we're not completely done, but we're somewhere around 48,000 shipments per day. So just up slightly from where we were in March. And we'll see hopefully, that will increase a little bit that average count, if you will. But when we look at what normal seasonality, the 10-year average is a 0.4% increase from March into April for shipments.

Yes, this is Marty. I agree with Adam that some of this Yellow freight did move over to full truckload carriers in the form of stop-offs where they take 3 or 4 shipments along with a 75% load and charge a couple of hundred bucks to do stock offs. They don't really like to do that nor do their drivers like to do it, but I do believe this moved over there because of the slowness in the truckload market this year and last year.

Yes. We hope to see it continue to increase. That's typically an indicator of an improving economy as well. Like I mentioned, an increase from February to March, it's increased a little bit from March thus far into April as well. So that's something that we're probably on the low end of the scale in terms of how that metric changes.

Yes. Overall, the retail continued to reflect -- or the industrial rather reflect the weakness that we've seen in the industrial economy. And in the first quarter, we had 1% revenue growth, but it was actually a slight decrease when you look at just our industrial-related accounts group together. So a little bit better performance on the retail side to offset that in the first quarter.

Yes. And again, to repeat, nothing is changing with respect to the core contract increases that we're achieving and that we're targeting. We continue to target cost plus increases, and we're getting those. It's just a little bit different in the mix of freight that we're seeing. We've seen a little bit of a decrease in length of haul.

No, but it's staying consistent with where we were. The rev per shipment performance in April thus far is pretty consistent with what we just had in the first quarter. We were up 3.8% revenue per shipment in the first quarter, excluding the fuel surcharge.

Well, I think that's something that obviously depending on how much volume growth we actually see in the quarter or not sequentially. We've invested significantly in many factors that we detailed earlier that create short-term costs. So if we can see some further improvement and if weight and shipments really accelerate kind of from here forward, and obviously, there's a lot of leverage that would therefore come from that.

Yes. I don't have my Carnac the Magnificent happier handy to be able to predict on when things are going to change, but that's probably the most buzziest thing is when will the inflection point happen. We -- obviously, it's called a cycle for a reason, and we will get back into a robust demand environment at some point. And when we do, we will be able to take advantage of that.

And that's a great observation.

Yes. I'd like to thank all of you today for your participation, and we really appreciate your questions. If you have anything further, please feel free to give us a call, and we'll be glad to answer it. And I hope you have a good rest of the week. Thank you.