Saia expands as LTL truckers navigate softer market

Saia expands as LTL truckers navigate softer market

Saia will open two terminals in New York and one in Western Pennsylvania this month. Photo credit: Ari Ashe/JOC.com.

The United States economy and freight demand may be soft overall, but that isn’t blunting expansion at less-than-truckload (LTL) carrier Saia. The Johns Creek, Georgia-based carrier will open three terminals in New York and Pennsylvania this month, continuing a push into the Northeast LTL market that began in May 2017. Saia has opened 16 terminals in the region since.

Expansion into the Northeast helped fuel growth in second-quarter revenue and profit at Saia, a multiregional LTL operator based in the Atlanta area. Saia’s 8.3 percent increase in revenue, 3.6 percent uptick in shipment volume, and 22.4 percent leap in net profit demonstrate how trucking companies can prosper even in a weak freight economy.

The key is a sharp focus on operating costs and pricing and building density in the most profitable freight lanes. “We’ll continue to push the incrementals,” Frederick Holzgrefe, Saia’s president and COO, told analysts during a conference call transcribed by Seeking Alpha. Saia will continue to expand its network, he said, as LTL demand challenges capacity.

That’s happening in the Philadelphia area, where Saia is relocating its Cinnaminson, New Jersey terminal to a larger facility in nearby Pennsauken Township, also in New Jersey. “Philadelphia has been a true success story for us,” Paul Peck, Saia's executive vice president for operations, said in a statement. “We have exceeded capacity at our Cinnaminson facility.”

In Pennsauken, Saia’s new facility will have 90 dock doors, as well as a three-story office and shop on a 14-acre site. Saia’s new Northeastern terminals will be in Erie, Pennsylvania, and Tonawanda, near Buffalo, and Colonie, just north of Albany, New York. Saia in July announced plans to open six terminals by the end of the year, including one in Southern California.

The ninth-largest US LTL carrier’s freight volumes received a jolt in August, with shipments per workday rising 8.6 percent year over year, compared with 4.9 percent in July, and tonnage climbing 3.6 percent from a year ago, compared with a 1.6 percent gain in July. In June, shipments per day were up 6.5 percent and tonnage increased 1.6 percent.

In the meantime, overall US freight volumes fell year over year for the ninth straight month, according to the Cass Freight Index. The freight volumes index dropped 3 percent year over year in August, though it was up 2.8 percent from August 2017. On a sequential basis, the monthly index rose 1.8 percent.

LTL tonnage drops at ODFL, YRCW

Saia may be gaining some freight in the Northeast from the bankruptcy early this year of New England Motor Freight, once one of the largest regional LTL players. Larger publicly owned LTL operators Old Dominion Freight Line and YRC Worldwide have reported year-over-year decreases in LTL tonnage and revenue in the early part of the third quarter.

ODFL said LTL tons per day dropped 5.2 percent in August, pulling down revenue by 0.7 percent. Shipments per day dropped 4 percent, and ODFL’s weight per shipment fell 1.2 percent. At YRC Freight, the national subsidiary of YRC Worldwide, LTL tonnage per day dropped 3.6 percent in August, following a 3.3 percent decline in July, the company said.

“Old Dominion’s revenue results for August reflect continued softness in the domestic economy as well as a decline in fuel surcharges,” CEO Greg C. Gantt said in a statement. US on-highway diesel prices were 8.8 percent lower on average than a year ago for the week ended Sept. 9. But Gantt said the LTL pricing environment is still “stable.”

ODFL’s LTL revenue per hundredweight, or yield, rose 4.8 percent year over year in the quarter, he said, thanks in part to a decrease in weight per shipment as well as higher rates. At YRC Freight, LTL yield and revenue per shipment were up 1.6 and 0.8 percent from a year ago.

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy.