Saia plans rampant spending to expand its terminal network

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Diving Brief:

  • Saia increased its net capital expenditure to $155 million in the first half of the year, mainly through property acquisitions, and plans to spend up to $500 million for the year, according to a filing. July 27 results.
  • The LTL carrier and 3PL increased their net cash investments by 55% for the first half year-on-year as they seek to expand their footprint and add more locations in key markets.
  • Saia sees opportunities in an industrial real estate market that has cooled since the frenzy of the past few years, Chief Executive Officer Fritz Holzgrefe said on a second quarter earnings conference call. “We are focused on expanding our footprint,” he said.

Overview of the dive:

Terminal acquisitions and expansions help Saia grow, and Holzgrefe noted in the latest earnings call that more opportunities arise as regional players exit.

These additions involve a multi-pronged approach. A Saia spokesperson told Transport Dive that it plans to modernize its network by expanding terminals, moving terminals to larger facilities or better locations and changing from leased to owned facilities.

The company, aiming to add 10 to 15 terminals each year, reached half of that goal in the first half with five new additions. Shortly after, a terminal addition near Binghamton, New York announced Aug. 1 bringing its total to 182 terminals, with seven to 10 more expected to open this year, the company said in a press release.

“We have a lot of real estate transactions going on,” executive vice president and chief financial officer Doug Col said on the July 27 earnings call. Col noted that Saia has already purchased land this year, hopes to secure additional terminal deals this year and is preparing for business next year.

Of the $500 million in investment planned for this year, about half is for equipment, with the rest split between real estate and technology.

Several other companies have sought to increase the number of terminals this year, including Old Dominion, Knight-Swift and XPO Logistics. Some, like Pitt Ohio, have relied on mergers and acquisitions to do this.

But others have consolidated their footprint. Yellow Corp. CEO Darren Hawkins noted in the company’s second-quarter earnings call Aug. 3 that he would reduce the company’s terminal count from 315 to 307 over the next few weeks and possibly to 300 by the end of this year.

It’s part of a transition from four operating company networks to a super regional service called One Yellow.

“Once we complete the transformation to One Yellow, we expect better asset utilization, improved network efficiency, cost savings and increased capacity without the need to add new terminals, we will operate as a modernized super regional carrier that will provide our customers with an all-in-one solution,” said Hawkins.

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