A couple of less-than-truckload carriers reported Thursday a hot start to the fourth quarter has continued through November.
In a filing with the Securities and Exchange Commission, ArcBest (NASDAQ: ARCB) announced its asset-based unit, which includes LTL operations, saw revenue per day increase 24% year-over-year in November. That followed a 20% revenue increase in October. Tonnage was up 7% year-over-year in November (+1% in October) with revenue per hundredweight, or yield, up 16% (+18% in October).
The numbers were in line with the company’s record third-quarter results, which came in ahead of analysts’ expectations as earnings per share were more than double the same period in 2020. A modest tonnage increase along with a 17% jump in yield resulted in an 86.7% operating ratio during the quarter, 570 basis points better year-over-year.
On the quarterly call, management didn’t back away from the prospect of maintaining the mid-80s OR going forward either. They said recent investments in equipment, terminals and staff would drive a mid-single-digit percentage increase to shipment capacity in 2022. And that the real margin lever would continue to be yield improvement initiatives, which were evident again in the November update.
Less-than-truckload carrier Saia (NASDAQ: SAIA) also provided an update on Thursday. It reported a 9.7% year-over-year tonnage increase in October (shipments +1.3%, weight per shipment +8.3%) followed by a 9.3% increase in November (shipments +3.7%, weight per shipment +5.4%).
On a two-year stacked comparison, both carriers recorded tonnage increases in the midteen percentages compared to 2019.
Responding to Saia’s update, Deutsche Bank (NYSE: DB) analyst Amit Mehrotra said the tonnage result was slightly better than his forecast. “Looking a bit deeper into the numbers, … the November update marks the second month of decent acceleration in 2-yr stack trends, with tonnage up 16.6% on a 2yr stack basis in November vs. +15.4% in October,” a note to clients read.
He noted acceleration in shipment growth rates but said that a deceleration in weight per shipment, which is often tied to margins, could be a modest headwind. “Nonetheless, this is a great release and we would expect SAIA shares to recapture some recent lost ground on the back of today’s release,” he concluded.
Saia doesn’t provide revenue or pricing metrics in its intraquarter updates, but carriers throughout the industry continue to see yields move higher.
Carriers industrywide have been using an extremely tight capacity environment to replace less desirable freight with shipments that better fit the network and move on the most profitable lanes. Along those lines, annual general rate increases (GRIs) have been implemented earlier than normal and at higher percentages than in the recent past.
ArcBest installed a 6.9% GRI in mid-November with Forward Air (NASDAQ: FWRD) announcing Wednesday that freight hauled under tariff codes not subject to a contract would see a 7.9% bump on average. Yellow Corp. (NASDAQ: YELL) kicked off the increases with a 5.9% raise on Nov. 1.
By comparison, most carriers issued a 5.9% increase during the first quarter of 2021.
Revenue in ArcBest’s asset-light segment increased 107% year-over-year in November, in large part due to the acquisition of truckload broker MoLo Solutions, which closed at the beginning of the month. MoLo is expected to generate revenue of $600 million in 2021. Excluding the deal, revenue was up 39% year-over-year in November compared to a 46% increase in October.
Purchased transportation expense in the asset-light segment as a percentage of revenue increased 50 bps year-over-year to 85% in November after moving 100 bps lower in October to 83%.
Shares of ARCB were up 4% on the day while shares of SAIA were up 1%. The S&P 500 was up 1.4%.
