ArcBest has reported flatish metrics for February as it waits for a more meaningful change in less-than-truckload demand. Results in its asset-based segment appear lower than January, but January 2025 is particularly weak compared to last year.
The company’s asset-based unit, which includes LTL subsidiary ABF Freight, posted no year-over-year change in daily revenue for February, according to a filing with the Securities and Exchange Commission. A 2% y/y increase in tonnage (driven entirely by higher weight per load) was offset by a 2% decrease in revenue, or yield, per hundredweight. (Higher shipping weight and lower fuel surcharges were the key points for yield calculations.)
ArcBest (NASDAQ: ARCB )’s latest results for January came in slightly better than last disclosure. Tonnage was 9.9% higher y/y than its initial expectation for an 8% increase, which was provided in the quarterly call at the end of January. The significant y/y decline in volume growth during February was due to January’s soft comp (minus -9.2%). Comparing the two-year stockade, tonnes were up 0.7% in January and flat in February. (Its daily earnings and yield metrics were also near flat over the two-year outlook.)
The company said in January that it was buying more dynamically priced truckloads due to weakness in the manufacturing and homebuilding sectors — higher freight weights but lower yields.
ArcBest had previously forecast first-quarter tonnage per day to rise 4% to 5% y/y, which would be flat to 1% compared to the two-year stockade. Quarter-to-date, tonnes are up 6% y/y.
Manufacturing activity moderated in expansion territory for the second straight month in February. The PMI recorded a reading of 52.4 during the latest month, which was 20 basis points lower than in January. (Readings above 50 signal expansion while below 50 indicate a contraction.) The data set has largely been in negative territory for three years.
The new orders sub-index – an indicator of future performance – came in at 55.8. (Inflation in PMI data usually leads LTL volume by several months.)
The asset-based unit reported a 3% sequential yield increase in February (per-shipment revenue was 2% higher) “due to price gains” and a step up in fuel surcharge revenue. Renewals of contract prices averaged 5% in the fourth quarter, the highest increase in six quarters and a 9.5% increase over the two-year stacked comparison.
ArcBest reiterated its previous asset-based operating margin guidance for the first quarter. The unit normally sees a sequential deterioration of 260 bps, but the company expects to offset the erosion this year by only 100 to 200 bps due to cost actions and lower starting points (“a softer than normal fourth quarter”). Guidance implies a 97.7% revision or at the midpoint, 180 bps worse y/y.
