State of Logistics 2024: Less than truckload (LTL)

The reshuffling of capacity and market share has begun in earnest in the $56 billion LTL industry.

Rivals Estes Express Line, XPO and Saia—which were the leaders in purchasing vast numbers of terminals after Yellow went bankrupt last August, opened those terminals in March. Many more sites that were converted from
Yellow will open shortly.

Analyst Satish Jindel, principal of Pittsburgh-based SJ Consulting, which closely tracks the LTL sector, told LM that all that extra capacity coming on line during a so-so economy might not be good for carriers.

“LTL is the bright spot in trucking, but they’re ruining it,” says Jindel. “When Yellow went out of business, it took capacity out. But the carriers that benefitted from that, they’re bringing terminals back on line and bringing capacity back on line. It’s starting to look like 2009, which was an awful year for trucking.”

Jindel says that rival carriers scooping up ex-Yellow terminals at auction was a great strategic move long-term. But not in 2024. “It’s great you bought terminals, but you don’t need them now,” he adds. “They have no one to blame but themselves. Wishing for the economy to get better doesn’t make it better. Add capacity when demand comes, not when there’s overcapacity. Do it when the market changes.”

Knight-Swift recently reported on a conference call that its LTL sector was the lone bright spot in its portfolio. Excluding fuel surcharges, Knight-Swift’s LTL revenue grew 13% year over year on a 6% increase in shipments per day. More importantly, revenue per thousand weight was up 3% year over year.

2022 vs. 2023 YoY change in shipment count and revenue per shipment

Knight-Swift officials say that they’re seeing continued demand strength in LTL and mid- to high-single-digit shipment growth in the third quarter. Adjusted operating ratio (OR) was 90, which was hurt by harsh weather.

“LTL remains the focus of expansion at Knight-Swift, with management expressing intent to engage in mergers and acquisitions to grow out the network in the Southwest and Northeast,” says analyst Jason Seidl of Cowen.

Meanwhile at LTL market leader Old Dominion Freight Line (ODFL), it’s a slightly different story. ODFL has hired 500 new workers since September. That gives the Thomasville, N.C.-based carrier a headcount of 22,891 workers—that’s slightly less than the nearly 23,000 people it employed in the same quarter last year.

“We tried to get a little bit ahead of it, but we’re cautiously optimistic…and have been for the last quarter, so that was why we went ahead,” said ODFL CFO Adam Satterfield on a recent earnings call. “We’ve tried to continue to do all the things to get ahead of anticipated growth.”

LTL rates made year-over-year gains in April. The Bureau of Labor Statistics’ Producer Price Index for LTL long-distance trucking rose 8.2% year over year.

Saia, the nation’s 8th-largest LTL carrier, is making a bet on growth and acquired several large terminals formerly operated by Yellow. Saia saw tonnage increase 6.2% in the first quarter. Its shipment count grew 15.7%, while weight per shipment fell 8.2% and length of haul fell 0.4%. Tonnage per day in April has trended up 6.5%, after falling 5.2% in March.