ArcBest Corporation (ARCB): A Bull Case Theory

Company Overview - ArcBest Corporation is a century-old logistics operator with a unionized less-than-truckload (LTL) network and an asset-light brokerage and managed transportation business, operating 239 service centers across North America [2] - Approximately 56% of its ~15,000 employees are represented by the Teamsters, making it the last publicly traded predominantly unionized LTL carrier [2] Financial Performance - For 2024, ArcBest's revenue is projected at $4.53 billion, with the asset-based LTL segment contributing $3.33 billion (74% of total revenue) and the asset-light logistics segment contributing $1.20 billion [3] - The LTL segment has a 10.2% EBITDA margin, while the logistics segment has a 3-4% EBITDA margin [3] - The company has a collective bargaining agreement that ensures predictable 4.2% annual labor cost escalations through mid-2028 [3] Market Dynamics - The North American LTL market is valued at $85 billion, with the top 10 carriers controlling 75% of the revenue [4] - The liquidation of Yellow in 2023 removed approximately 9-10% of national capacity, benefiting ArcBest by redistributing assets to more rational operators and improving rate discipline [4] Industry Outlook - Despite a freight recession from 2023-2025, industry pricing has remained rational, and a modest manufacturing rebound could quickly normalize volumes [5] - ArcBest's higher-cost structure due to unionization creates significant operating leverage, with potential for earnings recovery if tonnage or oversized freight mix improves [5] Investment Thesis - ArcBest's shares are trading near their liquidation value of $50-$84 per share, based on terminal, fleet, and brokerage assets, presenting asymmetric upside potential [6] - A mid-cycle recovery could drive 2028 EPS to $10-12, while normalization in shipment weights could push EPS to $18-20, indicating a potential 2-3x upside [6] - Catalysts for growth include industrial recovery, tonnage normalization, terminal monetization, and potential mergers and acquisitions [6]