Is the prospect of tightening capacity this fall overblown?

Softening industrial economy hits LTL volumes

XPO shares sank on Thursday following its tonnage report. (Chart: Barchart.com)

Old Dominion, XPO and ArcBest reported tonnage declines in August. XPO reported a 4.6% year-over-year decline in tonnage in August on a 4.5% decline in shipments and a 0.1% decline in weight per shipment. Old Dominion reported a 6.1% year-over-year tonnage decline. And ArcBest reported a 10% tonnage decline for the month. Bucking the trend, Saia reported an 8.2% year-over-year increase in tonnage, up 15% on a two-year stack. 

Two-thirds of XPO’s freight is tied to the industrial economy, which appears to be the primary driver of the shipment decline. Saia has seen a mix shift in favor of lighter, retail freight, which accounts for that carrier’s recent growth. 

The LTL volume declines suggest that CPG shippers should find available capacity in the segment. Still, that doesn’t mean they are going to get a break on rates – according to XPO, “the industry pricing backdrop remains constructive.” 

See Todd Maiden’s articles here and here. 

LTL pricing, by the measure of average base rate per weight, is trending roughly in line with year-ago levels. (Chart: SONAR)

Is the ILA too big to fail (or strike)? 

Last week in this newsletter, I gave a status update on the potential strike by the International Longshoremen’s Association (ILA), which could take place as soon as Oct. 1. That topic was touched on briefly on last Thursday’s special college kickoff edition of State of Freight. (Watch the replay here.) According to FreightWaves founder and CEO Craig Fuller, the risk of a work stoppage is likely to be short-lived, if there even is one. According to Fuller, the Biden administration will likely move to avoid an associated supply chain crisis that would take place only about five weeks before Election Day.

CSX CEO heightens focus on employee retention and customer service

(Image: FWTV)

I interviewed CSX CEO Joe Hinrichs for a special edition of People Speaking Rail (PSR)! We sunsetted PSR as a regular weekly podcast several months ago so, on FreightWavesTV, people don’t speak rail as much as they used to. It was a privilege to interview Hinrichs, who brings the unique perspective of a railroad customer to a Class I railroad, having spent many years in the automotive industry. What struck me was just how much he is focusing on employee morale and retention. Those issues bubbled to the surface when many employees were reluctant to return to their positions after being furloughed in the early days of the pandemic. Having insufficient numbers of trained workers in the right locations led to service meltdowns during the pandemic. In the interview, Hinrichs described ways to reduce the risk of a similar situation recurring. 

See interview here.

Brittain Ladd praises Costco on What The Truck?!?

(Image: FWTV)
Like most analysts who follow retail, consultant Brittain Ladd is impressed by Costco. Keys to the company’s success have included keeping SKU count to around 4,000, vertically integrating its food supply chain, catering to Asian and Indian demographics, and avoiding diversity, equity and inclusion “noise.” Despite its status as now the third-largest retailer, it has plenty of growth ahead as it further expands internationally. Ladd’s interview on WTT can be seen here.