ODFL
#Good morning, <UNK>.
On a ten-year average basis, third quarter's weight per day is generally up 2%.
If things continue to move in August and September, according to the normal sequential trend, that's the number you would get.
The year over year is ---+ again, last year looking at it, I think we were little bit stronger sequentially than ---+ just slightly than the long-term average.
We'll just have to wait and see.
We're not ready to give a range on what we think our total tons for the quarter would be.
Again, looking at it ---+ now we're trying to look more at getting back on to a consistent sequential type of change with our volumes, knowing that we've mentioned it before, we've cycled out some business, and we'll continue to look at that.
That may impact, as were growing in the last year, some of the year-over-year trends.
We haven't talked about ---+ typically it happens the 1st of September.
Last year we gave about a 3.5% wage increase.
We haven't announced that to our employees at this point.
Based on current trends, we would expect that there would be a wage increase this year.
We're just not ready to talk about the amount.
No, I'm not really ready to give any guidance on where our OR is going to be for the third quarter at this point.
We'll still continue to have some head winds on the top-line basis as we go into the back half of the year.
We knew the first half of the year was going to be more challenging than the back.
The third quarter, we'll continue ---+ the fuel should moderate if prices stay where they are on that comparison.
But a non-LTL, really it was ---+ it was more so the fourth quarter that those services were fully out of our number.
We still had close to ---+ just call it $19 million of non-LTL revenue in the third quarter of last year.
While we gave that number in the first quarter, it was about $13 million, and that's about what it was in the second quarter, as well.
If that continues the trend, we'd still have that head wind there.
It's going to vary every year based on the investments that we're making ---+ what the contribution to expense for depreciation is going to be, what our CapEx size is, and so forth.
Obviously we need more growth ---+ our growth to start with at this point.
Good morning.
That's a good question.
I honestly don't have an answer why there is a disconnect with the ISM data.
Now ISM has improved a little bit, but we haven't seen it come through yet in terms of LTL tonnage.
The why is ---+ I'm not an economist, so I have no earthly idea.
I subscribe that there is a lag with the ISM data, and perhaps three months sounds good to me.
We have seen some improvement in our sequential trends in the last couple of months.
<UNK>, would you speak to that.
Because I don't see ---+ it does feel better, the daily tonnage, the daily shipments that we're seeing feel better every day when we're looking at how much business we did each day.
<UNK>, touch on what are sequential trends are doing recently.
As we went through the second quarter, our weight per day was up 0.6% in April versus March.
The ten-year average was up 0.3%.
But remember, this is ---+ and it's the last quarter we're going to have to talk about it, but with the Good Friday in the first quarter, these are thrown off.
We would've expected that number to have been up more.
Weight per day in May was up 2.1%, versus a 4.7% average.
It was up 2.4% in June, versus the 2.3% average.
Shipments were more in line.
We talked about that when we put our mid-quarter update.
Shipments per day in May was up 2%.
When you look at years when Good Friday was in the first quarter, the average is 1.4% for us.
We felt good about the way May's revenue built from start to finish.
We saw a similar trend in June.
July pretty much has been very similar, as well.
Things feel a little bit better.
Perhaps what we are seeing, though, is once ISM turned back and stayed above 50 pretty much consistently and marched forward, that may be supportive of these trends.
It was two things, <UNK>.
One was where we pulled back our ocean container dredge operations off of the West Coast.
We discontinued those, as well as Chicago.
The second non-LTL change had to do with our global freight forwarding, where we were booking the entire revenue of the ocean containers, and the purchased transportation against that.
We have partnered with Mallory Alexander to manage our ocean forwarding now.
We don't have that top-line revenue.
We're getting a ---+ we work basically off of a commission-type basis on the net revenue.
Those are the two primary areas.
<UNK>, did I miss anything.
No, that's it.
I'll add, though, that the decrease in the second quarter was not $9.7 million, not the $6 million that was mentioned.
Correct.
Right.
That's correct.
Thank you
That was $225 million at the end of first quarter ---+ I think it's $226 million (multiple speakers).
Acquiring land and building the freight service center has been a problem ---+ a difficult endeavor for the last 30 years that I can remember.
I believe it always will be.
Unfortunately, everyone enjoys the clothes on their back and the food that they eat.
They just don't want to see a truck in the neighborhood bringing the product to them.
Our cost per door on construction has definitely risen.
The various environmental concerns, neighborhood concerns, landscaping, stormwater run-off, all those kind of things have caused the cost per door to rise.
As far as acquisition of use facilities, one of the issues we face today is most of the facilities that are out there on the market are just not big enough for us.
If we're lucky enough to find one that has some additional land that we can renovate and add doors, we've found that to be the case from time to time.
Real estate is always a challenge.
Historically, we talk about a real estate budget; but historically, we don't usually spend what we said we're going to spend in a given year, because of the time delays in acquiring land and getting through the permitting processes and so forth.
Do you have that, <UNK>.
No, and we don't necessarily break that down, Tyler.
I would say that the investments we're making are generally more in expanding existing locations.
The fact that we've only added one facility this year, it's primarily been expanding existing locations in that dollar amount.
We may add a couple of more facilities this year.
No, we haven't heard anything like that.
Bids for us is not any kind of seasonal thing.
They come in on a fairly regular basis throughout the year.
It's just something that constant communication that you have with our customer base, and between our (inaudible - cut off) department and our sales department, as well.
Obviously, that's going to vary as we grow and get bigger.
We may find that we need spin-off locations.
But right now, I think that we've got another 35 to 40 facilities when we think long term where we may grow to.
There's probably going to be some ebb and flow there as we continue to make our way and achieve our long-term growth objectives.
Right now, I will add too, that probably the capacity in the system that we have is somewhere in the ball park of 25%, plus or minus.
<UNK>, our pricing philosophy is that we target the increases we need on a fairly consistent basis to be in line with what our cost inflation is.
I think there have been periods where maybe the industry is going up more, based on capacity, or they may be cutting rates from an environment that capacity has flipped, and they're needing to get that volume.
I think our customers like our consistent approach, and we've had good success with that.
It varies.
We obviously continue to look, <UNK>, and try to figure out what we think would make sense long term for us.
We're doing a couple of different things here, as it is.
LTL is really the growth engine of the Company.
First and foremost, we've only got 8% to 9% market share.
We're going to continue to focus on this long runway of growth that we have within LTL.
If there are other services that are complementary, those other non-LTL services that we have today are the drayage, which we've changed our business model, and we're trying to focus and be able to capture coming growth, and maybe changes in capacity within that market place.
We've got a truckload brokerage operation, and we can continue to enhance that offering.
Really, we're going to focus on things that are complementary to our LTL business.
Maybe a service that when we're making sales calls on a decision-maker at our existing customers that we can leverage those relationships.
Okay.
Yes, some of those things and changes that were made is just it's always looking at what our costs are doing.
The industry changed fuel surcharge rates early in 2015.
We had just gone through a GRI, and felt like it wasn't the right thing to do to sit across our customer and say that fuel is going down, but we need a rate increase.
We worked through that.
The fuel surcharge has just become a variable component to pricing.
Like <UNK> mentioned earlier in the call is that we've got target ORs for our customers, and we're managing base rates, and any type of [bastasorial] charge, based on what the cost of handling that customer's business is.
That's been a consistent approach we've had.
We try to put in place fair pricing programs that's beneficial for both parties involved, and continue to support the growth of our Company.
Are you speaking of that new tariff that we put in.
Right.
That's been pretty small in terms of acceptance.
We went through that process of identifying it and working through it, because there were some customers that wanted to switch and not have that fluctuation and variance with their fuel, and have to update their systems every week as the DOE price is changing.
It's been responded to by some customers that really were asking for it.
We didn't really anticipate that that would become widespread and the most adopted tariff option that we have.
We've got multiple tariff options, but our 559, the most traditional one, continues to be what most of that business moves on.
