Dive Brief:
- ArcBest’s asset-based segment, anchored by LTL carrier ABF Freight, had revenue increase by 9.9% to $783.7 million in Q2, per an earnings release, as consumer spending in durables improved.
- Weight per shipment increased significantly at 8% compared to a year ago, but shippers sent less. That still allowed the segment to improve operating income.
- “We're seeing some good things there, some early signs, but it's still too early to say, hey, demand has flipped on us,” CEO and President Seth Runser said on an earnings call Wednesday.
Dive Insight:
Recreational vehicles and construction — but less so in terms of housing — are showing strength for ArcBest, whereas apparel and consumer brands are not, Runser said.
“Overall freight demand continues to be kind of muted, like we said, but we do have a very healthy pipeline, which makes me feel great,” Runser said.
Consumer spending on durable goods had its highest year-over-year increase for the month of June since 2021, based on personal consumption expenditures data released Thursday. The 4.5% YoY increase for that month came amid upticks in motor vehicles and parts along with household goods.
ArcBest is not seeing a broad-based inflection in manufacturing, but the purchasing managers' index and other indices are showing some underlying positives, Runser said. “We just haven't seen that demand show up yet,” he said.
Its asset-based Q2 operating income, $74.3 million, increased from $51 million a year ago, and its operating ratio improved to 90.5%, compared to 92.8% YoY.
With pricing changes, efficiency gains and a restructuring that seeks long-term changes, the company is focused on what it can control. The restructuring calls for consolidating 10 service centers.
“We continuously optimize that network day in and day out,” Runser said. “And we did a full review of the network and determined that these 10 facilities were not needed because we could service them at nearby facilities and not actually change the service that we're delivering to our customers.”
