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Dive Summary:
- Some LTL customers are moving cargo to trucking companies to take advantage of low rates amid one of the worst freight markets in decades, carrier executives said during first-quarter earnings calls.
- Old Dominion Freight Line CEO Kevin “Marty” Freeman; described a diffusion of volumes in trucking, “given the overall weakness there and the players who are willing to move freight, take some maybe big, heavy LTL shipments at cost or less than their operating costs, just to keep the trucks on track.”
- Douglas Col, Saia’s retired EVP and CFO, said sophisticated, national customers are increasingly taking advantage of a “lower-for-longer environment and finding ways to consolidate and move more things on the truck before breaking them into a single palette. “
Dive Insight:
The dire state of the trucking market is no secret to shippers aiming to get the lowest prices possible before the recovery.
As LTL carriers note recent network investments during rate hike negotiations with customers, some traditional carriers are accepting low rates and offering additional flexibility to capture business.
“Maybe some of these other things happen, where a smaller truck decides to make a lot of stops,” said Col.
Smaller companies in the fragmented trucking market have more room to accept unsustainable rates than large, publicly traded companies, which must reject such rates, Knight-Swift Chief Executive Adam Miller said on an earnings call.
“You have smaller, private companies that right now are just trying to keep the doors open in hopes that they can survive when there’s a market tilt and they can cover some of the losses they’ve taken,” Miller said. .
TFI International Chairman, President and CEO Alain Bédard called the trucking market one of the worst in 30 years during a first quarter earnings call.
“If you asked me six months ago, ‘What do you think about early ’24?’ I would never have said it would be that bad,” Bédard said.