Old Dominion again sees yields improve as volumes sag

Core Insights - Old Dominion Freight Line reported a mid-single-digit revenue decline in November, primarily due to weak volumes, although higher yields partially offset this decline [1][2]. Revenue Performance - Revenue decreased by 4.4% year over year in November, with a 6% increase in revenue per hundredweight partially offsetting a 10% decline in tonnage [2]. - The revenue decline in November showed slight improvement compared to October, where revenue fell by 6.8% year over year, with tonnage down 11.7% and yield up 5.6% [2]. Economic Context - The domestic economy's ongoing softness has contributed to decreased volumes for Old Dominion, as noted by the company's CEO [3]. - Manufacturing data indicates a slump in the industrial sector, with the Purchasing Managers' Index (PMI) at 48.2, signaling contraction [4]. Shipment and Tonnage Trends - Daily shipments were down 9.4% year over year in November, following a 9.8% decline in October [5]. - Weight per shipment decreased by 0.6% year over year in November, after a 2.2% drop in October [5]. Yield Management - Old Dominion has maintained yield discipline during the downturn, achieving a year-over-year yield increase of 5.9% and 5.2% excluding fuel surcharges [6]. - A general rate increase of 4.9% was implemented on November 3, aligning with the percentage increase planned for 2024 [7]. Margin Outlook - The company anticipates a sequential margin degradation of 250 to 350 basis points in the fourth quarter due to soft demand, with a projected operating ratio of 77.3%, which is 140 basis points worse year over year [8].