Is LTL the NEW King? Market Shift & Carrier Investment Explained

Speaker 1 [0:00] Welcome back everybody to FreightWaves Today. Of course, we are at the Univar Solutions Carrier Kickoff event here at the Westin in the heart of Chattanooga, Tennessee. Of course, Malcolm Harris as well as Julie Vandekamp. We are now joined by Brad Hadley from Sire. He is the VP of National Accounts. Brad, hello. It’s good to see you. Speaker 2 [0:19] Is this an incredible event or what? Speaker 3 [0:21] It’s very cool. Yeah, we’re thrilled to be here. Speaker 1 [0:23] This is great. Speaker 2 [0:24] I wish more customers would do something like this. It really, It brings the carrier and the customer together and it’s more educational as well as on our pick-it lots. So good stuff. Speaker 3 [0:33] Yeah, that’s a great place to start. Talk a little bit more about what it means to you and how this positions Univar as a shipper of choice for you guys. Speaker 2 [0:40] So we’ve been doing business with Univar for a long time, probably close to 15 years, but it really was like the last 5 years when we saw the relationship grow because of events like this. So we got to know more of their people that are from the different regional transportation people. And get a better idea of kind of the direction they were looking to go. So for us, this, it’s been a great kind of kickoff to the next season with them going into the bid. Speaker 3 [1:06] Very cool. Speaker 1 [1:07] Brad, just because I’m a dork, I want to put this in perspective for myself. Speaker 2 [1:11] Okay. Speaker 1 [1:12] Why has there been such a transition from a lot of full truckload to now LTL? Why are we seeing this trend across the board? Speaker 2 [1:19] Well, I think a lot of it has to do with money. Right. So the root of all evil. So basically what we’ve seen is capacity’s tightened, truckload prices have increased, of course. And then they look for shipments that might have been half loads that were cheaper for customers to move via truckload have now shifted back to the LTL side. So that’s kind of what we’re seeing really started probably in the beginning of Q2. Speaker 3 [1:46] So truckload rates rise, it creates more opportunity. Speaker 2 [1:50] And customers kind of shift modes over to LTL for some of those half loads or, you know, moves like that. Speaker 3 [1:57] And is that resulting in more LTL volume that you all are seeing? Speaker 2 [2:01] Absolutely. Yeah. When you look at it, we’ve definitely seen the weights increase in our average shipment. I mean, you look at our Q2 results, which we released today, it was a record quarter for us for tonnage. So we’ve seen that transition. Speaker 3 [2:19] Great. I know I didn’t get a lot of time to dig into it because it was— the release came out today after we were already here. Any headlines you want to share? Speaker 2 [2:26] I’ll leave that to Fritz, our CEO. But you brought it up or I wouldn’t have. Yeah, I understand. But now we’re, you know, we’re pleased with the direction our company’s going. You know, we’re poised for, for what we think going to happen within the industry going forward with what we’ve invested into our company to this point. Speaker 3 [2:48] Good. Speaker 1 [2:49] So when it comes down to this, what you just discussed, is this temporary given the current aspect? Or you think this is going to be more so a permanent shift as we continue through this market cycle? Speaker 2 [3:01] If I had that answer right, I would be a very rich man. But yeah, I think the way we’re looking at it, Is the trend is definitely heading that way. I mean, we’ve basically been in a 4-year freight recession. All right. And what we’ve seen happen in Q2, you know, we think is going to continue. And as I mentioned before, it’s kind of what we’ve been building towards. I mean, you look at Cy as a company in the last 2 years, we put $1.6 billion into CapEx. You know, we’re a $3+ billion a year company. That’s a significant percentage of our revenue going back into CapEx. preparing for this type of expansion. I mean, we opened— we’ve opened 70 new terminals in 7 years. We’ve 26 terminals, not including those 70, another 26 terminals we’ve relocated or expanded. So we’re poised for what we think is coming now. Speaker 3 [3:55] So with a tight truckload capacity creating more opportunity for LTL, what are you seeing happening in pricing? I read earlier this week, I think it was ARK Invest, maybe, I don’t know, somebody pulled their GRI up 6 weeks sooner than normal. So what are you seeing regarding that and how pricing in the LTL world is reacting to this market? Speaker 2 [4:17] Yeah, I think, you know, we know that we need to get paid for the services that we’re providing and we’re providing quality service to our customers. We’ve tried to be consistent even through the downside with our you know, with our partner customers like Univar that we’ve been doing business with for a long time. But, you know, I think we’ve seen there’s probably other customers that maybe have taken advanta