Dive Brief:
- Saia plans to spend roughly $1 billion on real estate, equipment and technology this year, EVP and CFO Doug Col said during a Q4 earnings call this month.
- The 17 terminals and 11 leases Saia won in Yellow Corp.’s bankruptcy auction account for about a quarter of the planned spending. Col projected spending another $300 million on real estate, about $400 million to $450 million on equipment, and roughly $50 million on technology.
- President and CEO Fritz Holzgrefe anticipates capital expenditures will step down, then normalize over time. But Saia hasn’t finished growing its real estate network, he noted on the call. “Over time, as we grow the company, you're going to see elevated levels of capex investment reflective of that growth,” the CEO said.
Dive Insight:
Saia, XPO, Estes Express Lines, Knight-Swift and others jumped at the opportunity to snatch up Yellow’s former real estate, particularly in densely populated, high-demand areas.
Yellow terminals are among the 15 to 20 new locations in Saia’s network expansion pipeline for 2024, and the bulk of the carrier’s spending will be dedicated to real estate. The spending includes large facility expansion projects, too.
“There's a lot of construction going on across the network,” Col said. “We're upsizing some major terminals, in some different markets.”
The carrier will also seek to catch up on equipment purchases after orders were limited in recent years due to supply chain issues. Saia was forced to rent tractors and trailers to meet demand as volumes soared by as much as 20% in a matter of weeks around Yellow’s demise last summer, Col said on the earnings call.
“We want to do that with our equipment and get rid of some of those costs,” Col said. “We've upped our trailer buy this year. ... If we can put more trailers in [customers’] hands, they'll fill them up for us.”
Driver handheld devices, information technology and security tech at terminals will make up the final capex line item for the company.
XPO similarly accelerated planned real estate spending to make its $870 million in Yellow property acquisitions, underscoring the window for grabbing more market share that opened up in the wake of the bankruptcy.
XPO CEO Mario Harik told Trucking Dive in an interview that the carrier placed a premium in the auction on Yellow terminals in areas where other available facilities and land were scarce.
“You can't build them anymore,” Harik said.
