LTL carrier Old Dominion Freight Line Inc. disclosed Tuesday that it has added three service centers and relocated three more centers to larger facilities.
The new centers are in Benicia, California, between San Francisco and Sacramento; Phoenixville, Pennsylvania, about 30 miles northwest of Philadelphia, and Kenosha, Wisconsin, in the state’s southeastern region, Old Dominion (NASDAQ:ODFL) said. With the three facilities, Old Dominion said it will add 178 dock doors with room to add 51 more in Phoenixville and 30 in Kenosha.
Old Dominion relocated a facility to larger quarters in Colorado Springs, Colorado — where it now has three centers — and in Warren, Ohio, in that state’s eastern region, by building new facilities in both cities. Old Dominion also acquired and expanded an existing facility in Milford, Connecticut, located on Interstate 95 along the state’s coastline. The Colorado Springs facility has 51 doors, while the Warren and Milford locations have 60 and 49 dock doors, respectively.
The expansion, which was actually completed over a four-month period starting in the spring, brings to 248 the number of Old Dominion’s U.S. service centers. It is also part of the carrier’s long-range plans to expand its number of facility doors, without which no LTL carrier could operate. Old Dominion has expanded its door network by 50% over the past decade as part of a $1.7 billion facilities expansion program. The company does not publicly disclose the total number of doors in its network.
On the company’s conference call last week. Greg Gantt, Old Dominion’s president and CEO, said it wants to have nine facilities open by the end of the year or no later than the first part of 2022. The company is also adding doors at a dozen service centers, Gantt said.
Over the past 10 years, LTL carriers’ investments in facilities and technology have lagged what has become a significant upward demand curve. During the first half of the 2010s, an industry battered by destructive price wars coming out of the Great Recession didn’t see the need or lacked the capital needed to make significant capital expenditures in physical infrastructure and information systems. Now, with demand increasing, rate increases sticking and operating margins in the low teens from low- to mid-single-digit levels not long ago, the carriers feel they can justify these badly needed expenditures. The challenge for the carriers is playing catch-up as the tailwinds blow in their favor.
Gantt said on the conference call that, based on the information Old Dominion sees from the publicly traded LTL carriers, the number of service centers over the 10-year span has stayed the same or slightly declined.
ArcBest Corp. (NASDAQ:ARCB), which operates a large asset-based LTL subsidiary, ABF Freight, has boosted 2021 capex by around $10 million to support facility upgrade projects by the end of the year, company executives said on their conference call earlier this week. Included in the plan is an expansion of ABF’s San Bernardino, California, facility to increase capacity by 30% and add 40 doors. The unit plans to build a facility in Fort Wayne, Indiana, where it will relocate its operations. It also plans to move into an expanded distribution center in Salt Lake City, ArcBest executives said.
LTL carrier Saia Inc. (NASDAQ:SAIA) has opened one terminal in Maryland and another in Delaware, and plans to open five more by the end of 2021, President and CEO Fritz Holzgrefe said last week on his company’s conference call.
