Old Dominion Freight Line issues operating metrics for February

Thomasville, N.C.-based national less-than-truckload (LTL) Old Dominion Freight Line (ODFL) provided guidance for key operating metrics for the month of February.

ODFL reported that revenue per day dropped 1% from February 2019 to February 2020, which the company attributed to a 5.2% decrease in daily tonnage that was partially offset by an increase in LTL revenue per hundredweight.

And it added that the change in daily LTL tonnage was due to a 3.7% decrease in daily LTL shipments and a 1.5% decrease in LTL weight per shipment. On a quarter-to-date basis, ODFL said LTL revenue per hundredweight and LTL revenue per hundredweight excluding fuel surcharges headed up 4.3% and 4.5%, respectively, on an annual basis.

“We are off to a good start in 2020, and our revenue trends for the first two months of the year are in alignment with our initial expectations,” said Greg C. Gantt, President and Chief Executive Officer of Old Dominion, in a statement. “While our revenue for February was down on a year-over-year basis, our volume trends were consistent and yields also continued to improve. Our revenue accelerated throughout the month, and we expect to see continued acceleration through the end of the quarter. We are mindful, however, of increased risks to the domestic economy and the potential impact on the demand for our services. Regardless of the macroeconomic environment, we will remain focused on the consistent execution of our long-term strategic plan. The foundation of this plan is to deliver superior service at a fair price while also investing in service center capacity to position us for long-term growth in market share.”

Robert W. Baird & Co. analyst Ben Hartford wrote in a research note that ODFL’s metrics are consistent with soft freight trends, which are partially attributable to the slowdown in manufacturing output in China in February.

“Daily tonnage growth decelerated between January and February off of relatively easy 2019 comparisons which, in our view, underscores the notion that freight trends have not yet bottomed,” noted Hartford. “Shipment count and weight/shipment declines also indicative of softness in industrial end-markets. February's ISM PMI reading of 50.1 saw modest contraction (from 50.9 in January), which is consistent with ODFL's reported February results, in our view. Look to data points through the month of March for signs of bottoming in industrial trends; however, COVID-19-related impacts likely linger until month-end when Chinese factory output resumes in earnest, leaving 1Q20 estimate risk for ODFL and broader transports, which we believe is increasingly discounted by the market.”