How ArcBest Defied Expectations with Stellar Q2 Performance
Speaker 1 [0:00] We have a great treat. This is earnings season. This is an opportunity to talk to the folks that are actually moving the freight. And our first guest, we have Seth Runzer. He’s the president and CEO of ArcBest, one of the most storied LTL carriers, if not overall transportation carriers. Has been around for a long time, for decades upon decades, well pre-regulation, is now one of the— You survivors of pre-deregulation that’s still around. Seth, welcome to FreightWaves Today. Speaker 2 [0:35] Yeah, thanks for having me, Craig. I appreciate being on. Sorry about those technical issues. I think we got them resolved. Speaker 3 [0:41] We had— Speaker 1 [0:42] it gave us the opportunity for Julie and I to catch up on— by the way, technical issues are a part of putting on FreightWaves Today. Speaker 4 [0:50] Live TV is, yeah. Speaker 1 [0:51] Live TV has its own set of things, so you’re certainly excused. On that, but let’s talk about an area that you don’t need an excuse, is your earnings. You guys are absolutely rocking and rolling. How does it feel to be CEO of a business in this climate when, you know, you guys are putting up some really impressive numbers compared to historically how this market’s been? Speaker 2 [1:12] Yeah, it feels great. So you think about our performance normally sequentially from the first quarter to the second quarter, We improved about 300 basis, 350 basis points. That’s really just the seasonality. The first quarter’s always kind of the weakest. And we improved about 650 basis points within our asset-based operation. And then asset light saw a meaningful step up as well. So really proud of the team for them executing. It’s a combination of factors when you think about everything that’s going on with supply, demand, we’re starting to see some early signs there. And then just what we’ve seen in the marketplace as customers are navigating all the disruption and complexity They’re really turning to those trusted providers that have 103 years of experience like us. So it’s been a great feeling to get out there with earnings this week and spend time with our people talking through what we were able to accomplish together in the second quarter. Speaker 1 [2:07] Well, Seth, let’s talk about demand. You talked about demand feels like it’s recovering, you’re seeing signs of recovery. You know, that is a, I would say in many ways, a lot of folks have not come in with conviction about demand. I think everyone recognizes that this is a capacity-led recovery. I don’t think we dispute that. I don’t think you dispute that at all. But let’s talk a little bit about the demand side. That’s an intriguing perspective that’s different than what a lot of people believe is happening. Speaker 2 [2:33] Yeah, I think demand, it’s kind of in the early stages, I would say. We’re not anywhere near like a mid-cycle or even an upcycle. It’s really supply-driven, like you said. That’s really what’s driving a lot of the things. So customers are trying to navigate as truckload capacity tightens, They’re looking to logistics companies like ArcBest to help them navigate all those different disruptions. And we saw that come through in results, which was great. But we are seeing some early signs. You know, it’s good to see that PMI has been in expansion territory for the past, you know, 5 to 6 months after 4 years of it being depressed. But what really encourages me is our pipeline continues to be strong. We continue to have great conversations with customers. I feel like as that truckload capacity tightens, it kind of turns the light on, hey, we wanna partner with companies we know, like, and trust that can actually navigate this with us. And that’s what’s been so impactful throughout the quarters. Our pipeline’s only strengthened, but I wouldn’t say it’s robust demand yet. I think it is supply-driven, like you said, but we are kind of seeing some early signs, especially as we’ve seen some of this more truckload-rated freight kind of come into LTL, very, very small amount, but we’re starting to see those early signs of those plus 10,000-pound shipments making their way back into our network. And they just work better in an LTL environment, so. So I’d say we’re early stages, but yeah, definitely supply is what’s driving a lot of the results you’re seeing out of all the carriers who have announced this week. Speaker 1 [4:03] Seth, we’ve been watching the LTL. We know that LTL recovers a little bit later than truckload typically does. You had any tightness in the truckload market? Because shippers take advantage of direct point-to-points not being handled through a dock network when they can consolidate. And then when the freight market tightens, a lot of that LTL volume, as well as in the earliest parts of the cycle, they’re building out Larger truckloads because larger volume segments. We only recently, you know, Cassis Shipment Index, which is more weighted to LTL than it is truckload, is reflecting the