Old Dominion reports muted November
A weak freight environment was to blame for a dip in tonnage during November, less-than-truckload carrier Old Dominion Freight Line said Tuesday after the market closed.
The company reported a 2.3% year-over-year (y/y) drop in tons per day during the recent month, which followed a 1.9% decline in October. The carrier was up against weak comps from a year ago, which included y/y declines of 6.5% and 8.6% in October and November 2022, respectively.
Many carriers benefited from an early October cyberattack at Estes, which forced some shippers to seek capacity elsewhere. However, most of the repositioning was short term, with freight finding its way back to Estes’ network by the end of the month.
Old Dominion’s (NASDAQ: ODFL) latest y/y tonnage declines were smaller than the 6.9% drop it recorded in the third quarter. Shipment counts were modestly positive in the recent two months, but shipment weights continued to erode.
Industrial-related freight can account for roughly two-thirds of total revenue for many carriers. The Purchasing Managers’ Index for manufacturing has been in contraction territory for more than a year now. A 46.7 reading in November (50 is neutral) was unchanged from October. Further, the new orders subindex, an indicator of future production, improved but continued to contract at 48.3.
Old Dominion did benefit from the freight reshuffle following Yellow’s exit, but management recently said it hasn’t altered its freight selection process in efforts to keep yields high.
Revenue per hundredweight, or yield, was 3.1% higher y/y in the first two months of the fourth quarter, up 7.6% excluding fuel surcharges. However, the metric was again aided by a decline in shipment weights. When comparing Old Dominion’s yields to two years ago, the growth rates are roughly 20%, which is likely the highest in the industry.
“The decrease in our November revenue reflects continued softness in the domestic economy,” said Marty Freeman, Old Dominion president and CEO. “We were pleased, however, to see both the continued improvement in our yield metrics and a slight increase in our LTL shipments per day.”
Old Dominion was not mentioned in a Delaware court filing naming the winning bidders of Yellow’s terminals on Monday. It briefly held the top stalking horse bid at $1.5 billion but was later outbid by Estes. Old Dominion could still pursue some of the properties at a later date, or it may continue on its current course of adding more than a handful each year to its network of more than 250.
The company has made roughly $2 billion in real estate investments over the past decade, which it credits for its industry-leading operating results.
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