What Trucking Executives Are Saying About Falling Demand

Overall freight demand has slowed, largely due to a pullback in retail orders, prompting many companies to shift their priorities to cutting costs after years of profit-chasing.

Some, including CH Robinson, announced layoffs. Others like Yellow Corp. are desperate to keep the workers they’ve worked hard to recruit and will pursue other cost-cutting efforts.

Here’s how a handful of logistics executives talked about year-end demand levels in their third-quarter earnings calls.

CH Robinson

Falling demand for freight, a weak retail market and further slowing in the housing market have developed for logistics provider CH Robinson Worldwide.

During second and third quarter earnings updates, CEO and Chairman Bob Biesterfeld described the demand deceleration the logistics provider expected for the second half of 2022. “We are now seeing those expectations come to fruition and with the slowdown freight demand and lower prices in the freight and surface transportation markets,” he said on the Nov. 2 earnings call.

Shortly after the call, the company announced that approximately 650 layoffs had taken place. The layoffs come as the company pursues a $150 million annual cost savings plan amid slowing economic growth and efficiency seen by the logistics provider, Biesterfeld said.

Werner

Werner Enterprises expects a moderate peak season in the fourth quarter with demand moderating.

“We expect industry demand for truck freight to continue to moderate, more for discretionary goods and less for consumer staples,” CEO, Chairman and President Derek Leathers said at the conference. a conference call on November 2.

Despite the challenges, the carrier has underscored its resilience, and Chief Financial Officer John Steele told Stephens’ annual investment conference on Tuesday that there were no plans for layoffs or downsizing. But the company will be careful with hiring as it enters a tougher economy, he said.

Yellow Corp.

Demand remains firm among Yellow’s industrial customers, but more than half of its top 10 accounts are in retail, CEO Darren Hawkins said during a third-quarter earnings conference call Nov. 2.

“While we didn’t lose any significant accounts in this area, we saw a general decline in shipments and tonnage in these areas in October,” Hawkins said.

The carrier will sell 28 terminals as it completes its One Yellow transformation into a super regional carrier. Yellow hopes to reduce purchased transportation and other costs, and the company wants to avoid downsizing after working to boost its recruiting pipeline.

“We spent a lot of time and money in 2022 on our driving academies and all of our hiring efforts, and then also a lot on training,” Hawkins said. “We would like to keep these employees on board.”

Saia

Saia shipments were down around 4.5% and its tonnage fell 3% in October, chief financial officer Doug Col said in a conference call Nov. 1.

“October was the first month in a while where we saw a kind of more normal sequential flow from September to October,” Col said. “We’ve resisted seasonality all year, but this was the first month where it felt seasonally normal to us.”

“That will be our expectation for the rest of the year,” he added, “and we’ll see how it plays out.”

XPO logistics

XPO defied macro and industry trends, reporting tonnage above seasonality, with most competitors reporting declines in the third quarter. The carrier’s year-over-year tonnage improved every month during the quarter, turning positive year-over-year in September, executives said on an Oct. 31 earnings call.

Founder Brad Jacobs, who stepped down from his role as CEO following the spinoff of RXO, the carrier’s brokerage firm, projected positive tonnage year-over-year for the fourth quarter.

“Our goals are to gain market share, optimize pricing and improve operational efficiency,” he said. “It starts with our investment in capacity.”

Knight-Swift Transportation

Carrier executives were among the first to note expectations of a muted peak season, citing third-quarter conditions as warning signs.

Knight-Swift Transportation noticed that freight demand tended to be below typical seasonal trends in the second half of the third quarter and continued through October, Chief Financial Officer Adam Miller said in an earnings call on Tuesday. October 19. The decline follows a bonanza in the fourth quarter of 2021 spot market demand.

“In a way, we are seeing sub-seasonal demand as we approach the end of 2022,” CEO and President David Jackson said on the call, noting that the carrier is preparing for the next cargo downturn. since before the last in early 2020.