Old Dominion again sees yields improve as volumes sag

Less-than-truckload bearer Old Dominion Freight Line reported a mid-single-digit gross diminution successful November arsenic anemic volumes were again partially offset by higher yields.

The Thomasville, North Carolina-based company’s November update showed gross was down 4.4% twelvemonth implicit twelvemonth arsenic an astir 6% summation successful gross per hundredweight, oregon yield, partially offset a 10% tonnage decline. The latest effect was a flimsy betterment from October erstwhile gross declined 6.8% y/y (tonnage was down 11.7% but output was up 5.6%).

“Old Dominion’s gross results for November bespeak ongoing softness successful the home economy, which contributed to a alteration successful our volumes,” stated Marty Freeman, president and CEO, successful a Tuesday evening quality release.

Manufacturing information released connected Monday showed the concern analyzable has been successful a slump for 35 of the past 37 months. The Purchasing Managers’ Index (PMI) registered a 48.2 speechmaking successful the latest month, 50 ground points worse than October. (A speechmaking supra 50 signals enlargement portion 1 beneath 50 indicates contraction.) The caller orders scale — an indicator of aboriginal enactment — fell 200 bps to 47.4.

(Between 55% and 60% of Old Dominion’s gross is tied to the concern economy.)

Old Dominion’s (NASDAQ: ODFL) regular shipments were disconnected 9.4% y/y successful November, pursuing a 9.8% diminution successful October. Weight per shipment was down 0.6% y/y successful the caller period aft falling 2.2% successful October.

Weak tonnage trends done the archetypal 2 months of the 4th fourth travel arsenic the bearer is really up against a favorable y/y examination (tonnage was down 8.2% y/y successful the 2024 4th quarter).

The institution has maintained output subject passim the downturn and continues to seizure mid-single-digit increases. Quarter-to-date, Old Dominion’s output is up 5.9% y/y and 5.2% higher (excluding substance surcharges).

“We continued to present best-in-class service, which supports our output absorption initiatives and quality to summation our LTL gross per hundredweight,” Freeman said. “Our squad volition proceed to absorption connected these halfway elements of our semipermanent strategical plan, which we judge has produced a beardown way grounds of fiscal performance.”

Old Dominion implemented a 4.9% wide complaint summation crossed assorted tariff codes connected Nov. 3. The summation was successful enactment with the header percent summation taken successful 2024, but the implementation day was 1 period earlier.

The bearer typically experiences 200 to 250 bps of sequential borderline degradation successful the 4th quarter, but antecedently forecast 250 to 350 bps of deterioration this twelvemonth owed to the brushed request backdrop. At the midpoint, the usher implies a 77.3% operating ratio (inverse of operating margin), 140 bps worse y/y, but inactive apt the champion retired of the group.