Quarterly Review of Publicly-Traded LTL Carriers: A 2-Year Stacked Analysis
As part of my quarterly reviews on publicly-traded LTL carriers, I find it beneficial to examine results on a 2-year stacked basis. This approach is particularly relevant following the closure of Yellow/YRC in August 2023, as it allows us to assess the performance of each carrier both before and after this significant event. By doing so, we can gain insights into the state of the remaining carriers and the overall industry.
Here are some key observations:
- Total Revenue Decline: Total revenue for publicly-traded LTL carriers has decreased by 17.8% from 4Q22 to 4Q24. This substantial drop in revenue reflects the severity of the freight recession and indicates that a significant portion of Yellow’s business has transitioned to private LTL carriers or exited the sector entirely.
- Adjusting for Yellow: When excluding Yellow’s freight, the revenue decline for the remaining carriers is a more moderate 4.9%. This suggests that the surviving publicly-traded LTL carriers have successfully retained segments of the Yellow business to varying extents.
- Tonnage and Shipment Counts: Changes in tonnage and shipment counts align closely with revenue trends. This correlation is partly due to the decline in fuel surcharges resulting from lower diesel prices.
- Market Share Winners: Knight-Swift LTL and Saia have emerged as significant winners in terms of market share, both showing revenue, tonnage, and shipment counts increasing by 20% or more. Notably, Saia has achieved this growth with minimal impact on their operating ratio, while Knight-Swift LTL has faced greater challenges due to higher network costs.
- Market Share Losses: TForce Freight has experienced the most considerable market share loss, with ABF, FedEx Freight, Forward Air, and Old Dominion also showing varying degrees of deterioration in their performance.
- XPO’s Performance: XPO has recorded modest market share growth; however, a noteworthy aspect is their significant reduction in operating ratio (OR) by 4.1 points, bringing it down to 86.2.
Conclusion
Despite navigating a severe freight recession, the LTL industry is holding up remarkably well. The absorption of business from the YRC/Yellow closure has helped cushion the impact, although it hasn’t completely offset the challenges posed by the current soft market environment.
Furthermore, the remaining carriers are not just weathering the storm but are also continuing to invest in their operations, with some making significant investments aimed at future growth. This demonstrates a strong belief in their business models and a commitment to positioning themselves for better days ahead.
