Old Dominion Feels Ripple from Yellow's Closure
Old Dominion Freight Line's August performance rebounded after Yellow Corp's shutdown, with revenue resilience and growth.
August brought some interesting twists and turns for Old Dominion Freight Line, thanks to major competitor Yellow's shutdown.
Here's a quick breakdown:
August vs. July
- Revenue per day dropped only 1.4% year over year in August, a stark contrast to the 13.3% decline in July. Old Dominion resisted lowering rates to maintain its network's freight flow.
Tonnage Impact: Tonnage dipped by 6% in August, following an 11.1% decline in July. These figures marked an improvement from the second quarter's 14.1% decline.
One of Old Dominion's biggest competitors, Yellow Corp, ceased operations in July, indirectly boosting Old Dominion's August shipments by 6%.
- The Manufacturing Purchasing Managers’ Index remained in contraction territory in August.
- However, Old Dominion's revenue per hundredweight grew by 1.8% year over year in the first two months of the third quarter.
- Yield growth accelerated from July to August, driven by competitive dynamics and lower weight per shipment.
- Old Dominion expected to gain market share as competitors onboarded Yellow's freight quickly, potentially negatively affecting service levels.
- The full impact of Yellow's closure on Old Dominion might take some time to unfold.
- Analysts anticipate higher earnings estimates for Saia and Old Dominion due to better-than-expected results.
- Fuel Prices: Less-than-truckload carriers benefit from higher diesel prices, and diesel costs increased sequentially in the third quarter.
In July, Old Dominion reported having roughly 30% excess capacity, 5 percentage points higher than normal.
Despite the industry's challenges, Old Dominion Freight Line navigated the rough seas in August with resistance and growth prospects.