Dive Brief:
- Old Dominion shaved $5.1 million in salaries, wages and benefits expenses over the past year through worker attrition and headcount adjustments, according to the company’s Q4 earnings call and report.
- “Through the back-half of [2022], in particular, we've been letting attrition take place, and just consistently adjusting our headcount and the hours worked by our people in relation to what the volume environment dictates,” CFO Adam Satterfield told investors. “We continue to be focused, obviously, on managing those costs.”
- The company’s overall workforce nevertheless grew slightly last year, indicating it has leaned on reductions in hours and other measures to achieve the savings.
Dive Insight:
The Thomasville, N.C.-based LTL carrier’s largest expense is its workforce.
“It's certainly the biggest area of focus as we try to continue to run our network as efficiently as possible without giving any sacrifice to service,” Satterfield said.
Old Dominion lowers labor costs in 2022
A declining share of overall operating expenses in recent years
Following a yearslong hiring spree that brought in 6,000 new workers, the company stopped filling vacancies as demand waned in the second half of the year. But it still grew its employee base by 0.8% YoY to 23,799 average full-time employees in Q4.
Old Dominion welcomed 1,300 graduates from its driver training academies in the past two years, outgoing CEO Greg Gantt announced on the call last week.
Gantt has previously emphasized the importance of retaining the employees the company has gained. In last week’s call, he shed light on one strategy Old Dominion uses to maintain staffing levels during periods of slow demand. The carrier has temporarily shifted some drivers into other roles as it awaits an expected freight rebound in the spring.
“While this comes at an increased cost to the company, we believe this bigger pool of licensed drivers will provide us with a strategic advantage once the freight cycle turns and additional volume opportunities become available to us,” Gantt said.
Others in LTL have also adjusted their labor costs, executing temporary furloughs amid softening overall demand. FedEx Freight announced another round of furloughs last week, and XPO offered furloughs to drivers and dockworkers over the holidays.
Correction: An earlier version of this story misspelled Gantt’s last name.
