How has the less-than-truckload business changed over the past decade? Stifel Transportation & Logistics Research Group decided to explore that topic in a recent note to investors.
How has the less-than-truckload business changed over the past decade? Stifel Transportation & Logistics Research Group decided to explore that topic in a recent note to investors.
"There has certainly been a changing of the guard at the top, as Old Dominion has replaced FedEx Freight/Con-way Freight as the most profitable carrier in the industry," reports David Ross, managing director at Stifel.
Roadrunner acquired Dawes and Bullet to become the only national asset-light general commodity LTL carrier.
Today, the top five carriers have roughly 55% of the market: FedEx Freight, YRC Worldwide, Con-way Freight, UPS Freight, and Old Dominion Freight Line.
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"The next 10 years should be very interesting, in our view, as we expect to see the LTL industry gain some share back from truckload and then be shaken up again (more consolidation) during the next recession (and we could easily have more than one recession by 2025)," Ross predicts.
YRC Freight, he says, will likely again be at risk when freight volumes turn negative, especially if aggressive industry price-cutting follows, unless significant changes are made to its current financial position.
Stifel's analysts believe the pricing landscape could shift to density-based pricing, as is used in most other modes, and longer-combination vehicles could provide the opportunity for more efficient operations (while also adding linehaul capacity). And it expects a continuation of market share shifting from union to non-union companies.
The big winner in all this, they say, is Old Dominion Freight Line. While FedEx is the industry leader by revenue, ODFL has made the biggest leap in the industry market share rankings, from No. 9 to No. 5, and Stifel says it could overtake UPS Freight.
Old Dominion "remains a family-run company with a strong culture and primarily an LTL service provider with some additional logistics offerings. It is the growth leader, and from the way it continues to invest ahead of the competition in terms of service center infrastructure and IT, we believe it will again be the growth leader."
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