Saia’s margins slip as LTLs await rebound

On a y/y comparison, Saia’s tonnage deteriorated throughout the quarter. After logging a 0.9% increase in July, tonnage fell 2.2% and 3.3% in August and September, respectively.

October tonnage is down 4% y/y, with management noting on a call with analysts that the first couple of weeks of the month were a little weaker than normal. Knight-Swift Transportation (NYSE: KNX) voiced similar commentary about the first half of October when it reported results last week.

Saia’s monthly tonnage declines were against tough prior-year comps, ranging from plus-5% to plus-10%.

Daily shipments were down 2% y/y but increased 3% from the second quarter. Both its new and legacy terminals saw sequential improvement.

Shipments per day were up 4.2% sequentially at the 39 terminals it opened since the beginning of 2022. Legacy terminals saw a 3% sequential increase in shipments. Approximately 70% of the volume growth occurred in 1-day and 2-day lanes, with two-thirds of the wins coming from existing customers.

Management countered questions around flattish yields on the call, saying the pricing environment “remains very rational.” It pointed to contractual rate increases averaging 5.1% in the quarter and a new 5.9% general rate increase that was implemented on Oct. 1.

The company reported an 87.6% adjusted operating ratio (inverse of operating margin), which was 250 bps worse y/y but 20 bps better than the second quarter. The result was ahead of management’s guidance (100 bps of sequential deterioration) and normal seasonality (100 to 200 bps of degradation).

Adjusted cost per shipment was up 4.6% y/y and just slightly offset by a 0.9% increase in revenue per shipment (a 370-bp negative spread).

The new terminals reported 100 bps of sequential OR improvement in the quarter and are now operating below a 95% OR on average.

Salaries, wages and benefits expenses (as a percentage of revenue) increased 50 bps y/y. Headcount was down 3% y/y in the quarter. Saia implemented an annual wage increase of 3% on Oct. 1.

The company normally sees 250 to 350 bps of margin degradation from the third quarter to the fourth quarter, but management said the OR will likely be off by 300 to 400 bps this year due to the subseasonal demand trends. That implies a 91.1% OR (at the midpoint), 400 bps worse y/y, and tied for its worst operating since the pandemic. (Saia reported a 91.1% OR in the 2025 first quarter.)

Shares of Saia were up 1.6% at 3:10 p.m. EDT on Thursday compared to the S&P 500, which was down 0.7%.

More FreightWaves articles by Todd Maiden:

• Schneider’s tough Q3 unlikely remembered if TL capacity resets
• Old Dominion leaning on cost controls, yield management amid tonnage declines
• Pamt Corp. books another loss in Q3