Company Overview - ArcBest Corporation is a century-old, multi-segment logistics operator with a unionized less-than-truckload (LTL) network and an asset-light brokerage and managed transportation business [2] - The company operates 239 service centers across North America, employing approximately 15,000 individuals, with about 56% represented by the Teamsters [2] Financial Performance - For 2024, ArcBest's projected revenue is $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 EBITDA margin for the LTL segment is 10.2%, while the asset-light logistics segment has a margin of 3-4% [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 expected from 2023 to 2025, industry pricing has remained rational, and a modest rebound in manufacturing could quickly normalize volumes [5] - ArcBest's higher-cost structure due to unionization provides significant operating leverage, with potential for dramatic earnings increases if tonnage or oversized freight mix recovers [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 an asymmetric upside opportunity [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] - Key catalysts for growth include industrial recovery, tonnage normalization, terminal monetization, and potential mergers and acquisitions [6]

Core Insights - FedEx Freight is set to become a standalone public company by June next year, with plans to invest $600 million in IT infrastructure ahead of the spinoff [1] - FedEx reported consolidated adjusted earnings per share of $3.83 for its fiscal first quarter, exceeding consensus estimates by $0.22 and showing a year-over-year increase of $0.23 [2] - FedEx Freight's revenue for the quarter was $2.26 billion, reflecting a 3.1% year-over-year decline, with tonnage per day down 2.5% and revenue per hundredweight down 0.6% [3] Financial Performance - FedEx Freight's operating ratio was reported at 84%, which is 280 basis points worse year-over-year, impacted by $9 million in separation costs related to the spinoff [5] - The decline in revenue and a 100-basis point increase in salaries, wages, and benefits as a percentage of revenue were significant factors in the financial performance [6] - For the fiscal year ending May 31, FedEx Freight's revenue is expected to increase by a low-single-digit percentage year-over-year, with modest yield improvements anticipated in the latter half of the year [7] Market Conditions - The Purchasing Managers' Index (PMI) for August was 48.7, indicating negative territory for 32 of the past 34 months, with the new orders subindex moving into expansion territory at 51.4 [4] - The LTL market is described as "rational," but top-line trends are constrained by a weak industrial economy and share loss to the truckload market, where capacity is abundant and rates are low [3]