Transportation and logistics provider ArcBest provided a mixed bag of an update to the first quarter Monday ahead of the market open.
Tonnage in the company’s asset-based unit, which includes less-than-truckload services, was up 1.6% year over year (y/y) in January and 2% higher in February. Shipment counts were up by mid- to high-single digits but mostly offset by declines in shipment weights.
ArcBest’s (NASDAQ: ARCB) tonnage trends were better than recent reports from competitors, which showed mid-single to low-double-digit declines. However, ArcBest’s comparisons to 2022 were much more subdued (up 2.1% y/y in January and up 4.6% in February).
Saia (NASDAQ: SAIA) reported tonnage declines of 3.7% and 7.6% in the first two months of the year, respectively. Old Dominion Freight Line’s (NASDAQ: ODFL) tonnage was off 7.8% and 12.4% respectively in January and February. Both carriers were working off comps of up 8% in January and high teens in February.
ArcBest leaned on a dynamic pricing model, which utilizes technology to adjust rates to changes in capacity on a lane-by-lane basis, to offset softer volume trends.
“Our tech-enabled dynamic market-based LTL-rated pricing program continues to be effective in optimizing revenue and managing to more consistent business levels by filling available capacity in our network during this weaker economic environment,” an ArcBest filing with the Securities and Exchange Commission read.
The mix change supported tonnage growth but weighed on yields in the period.
Revenue per hundredweight was flat y/y in January and down 1% in February. Old Dominion said yield was up 12.1% y/y for the first two months of the year. Both companies were working off high-teen yield comps from a year ago, with ArcBest’s comps a little more formidable, 310 and 220 basis points higher than Old Dominion’s in January and February, respectively.
ArcBest’s revenue per shipment was down by mid-single digits in both months.
“The February 2023 revenue per hundredweight measure has been impacted by dynamic market-priced LTL-rated shipments being a higher proportion of business versus core LTL-rated shipments,” the filing said.
The company said the LTL side of its asset-based business drove the volume growth, which was offset by “fewer heavier-weighted TL-rated shipments” and a “reduction in U-Pack household goods loads associated with changes in the housing market.”
“The pricing environment continues to be rational,” the report said. ArcBest said yields on core LTL freight excluding fuel surcharges were up y/y by a high-single-digit percentage on average in February and by low-single digits when compared to January.
Old Dominion’s yield excluding fuel surcharges was up 8.6% y/y in the two-month period.
ArcBest reported revenue in its asset-light business, which includes brokerage, fell faster in February. Revenue per day was down 26% y/y in February, following a 22.8% decline in January. Shipments were up slightly in both months, but revenue per shipment was down 26.3% y/y in January and 31% lower in February.
Purchased transportation expenses as a percentage of revenue continued to moderate in February, down 60 bps from January to 85% and 40 bps lower than in the 2022 first quarter.
The numbers excluded results from roadside services and preventive maintenance provider FleetNet America, which was sold for $100 million on Tuesday.
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