Administration at LTL service Outdated Dominion Freight Traces has stated often that their purpose is to get the corporate again to a sub-70% working ratio (OR), the place it was for a few quarters in 2022.
It nearly acquired there within the second quarter of 2026, helped by a lift from actual property transactions that administration on the corporate’s quarterly earnings name with analysts stated aren’t more likely to be repeated.
Adam Satterfield, the corporate’s CFO, stated on the decision that eradicating the actual property affect from the corporate’s third quarter OR would doubtless enhance it 150 to 200 foundation factors from the second quarter determine of 70.1%. That was an enormous enchancment from 74.6% a yr earlier.
However the sub-70 OR continues to be the magic quantity for Outdated Dominion (NASDAQ: ODFL). It’s placing extra money into that push with a rise in its capital expenditure finances.
Within the launch of its second quarter earnings, Outdated Dominion stated it expects complete capital expenditures to succeed in $380 million for the yr. That may be after a primary half during which complete capex spending was about $140 million, $77 million of that coming within the second quarter.
Which means to succeed in that purpose, Outdated Dominion might want to spend $240 million within the second half of the yr, sharply increased than the primary half spending.
The breakdown of that $380 million in spending, in response to the corporate, will likely be $180 million for actual property and repair heart growth; $155 million for tractors and trailers; and $45 million for what it known as data know-how and different belongings.
Properly beneath the 2022 spending degree
For perspective, Outdated Dominion had capital spending within the banner yr of 2022 that totaled $775.1 million. It spent $415 million final yr. However in its first quarter earnings report, Outdated Dominion stated it anticipated to spend $265 million this yr, so the present plan marks a major improve.
Satterfield stated even when the affect of the actual property achieve was backed out, “that was one of many strongest working quarters that we’ve ever had.”
One of many quarters the place the corporate did submit a sub-70 OR was the second quarter of 2022. Satterfield stated the second quarter of this yr had direct working prices as a p.c of income that was about 200 to 250 foundation factors lower than that quarter in 2022. “There’s an incredible quantity of leverage that may not solely take us down into the 60’s or simply hitting it proper there at a 69 working ratio,” Satterfield stated. “It’s going to have the ability to enable us to drive it even a lot decrease.”
Advancing 2027 plans
Satterfield stated among the elevated spending on gear “would have been allotted to 2027, so we’re form of pulling a few of these purchases into the fourth quarter of this yr.”
“Our operations staff felt like it will be higher to go forward and pull among the gear into this yr,” Satterfield added.
The freight market is presenting itself with different alternatives, Sattefeidl stated. “From an actual property standpoint, you’ve additionally acquired some tasks that you already know we’ve continued to spend on our community due to the arrogance we’ve in our long-term market share alternatives,” he stated. A few of these alternatives, Satterfield stated, are “distinctive…the place it might be one thing that matches within the long-term plan in a market the place it’s laborious to search out actual property.” He added that he wouldn’t focus on these alternatives intimately.
Satterfield rattled off the corporate’s areas of enchancment in comparison with the second quarter of 2025, which got here whilst tonnage numbers have been down.
However he additionally cited sequential enhancements: income per day was up 14.6%. LTL tons per day was up 4%. Shipments per day have been up 3.2%. Satterfield then offered as some extent of reference the common 10-year sequential change in these metrics,exhibiting that the features aren’t all enhancements over historic developments: income per day often averages a 7.1% enhance between the primary and second quarters, tons per day is often up 4.4% and shipments per day are often up 5.2%.
However the market improved because the quarter went on. For instance, tons per day have been down 2.8% sequentially in April relative to March. However Could was up 3% from April and June was up 0.9% from Could.
July isn’t within the quarterly report, however Satterfield stated income per day is up 7.5% to eight% this yr in comparison with July 2025.
The place’s the amount?
The transportation analysis staff at TD Cowen, in a post-earnings name evaluation, highlighted the optimistic–improved metrics in points like income per hundredweight–but additionally famous the detrimental: weak quantity.
“Quantity power has but to be seen in (the second half) and (are) beneath expectations when accounting for six consecutive optimistic manufacturing ISM reads,” the analysts wrote.”Most carriers anticipated to see the ISM inflection mirrored in shipments developments which have but to indicate up in outcomes.”
“Regardless of commentary on low stock/gross sales ratio on the decision, we don’t count on any outsized re-stock that can shock shipments to the upside in (the second half),” TD Cowen added.
Spillover freight not all the time welcome
When trucking markets get tight, LTL carriers typically face a double-edged sword: shippers that may’t discover truckload capability flip to LTL carriers. And the LTL carriers don’t prefer it.
Dropping truckload freight into an LTL market can create a number of issues, as it might disrupt tightly scripted markets created to go out and in of the LTL carriers’ warehouses. The issue is creeping up once more.
In response to an analyst query, Satterfield stated that pattern “is within the early innings,” however that he has heard from some clients that they have been turning to Outdated Dominion due to tight capability in truckload.
“I count on that can proceed because the truckload fee surroundings continues to be actually robust,” Satterfield stated. However he didn’t sound an alarm: “Total for us, demand continues to enhance,” Satterfield stated. “We’re proud of the developments that we’re seeing.”
CEO Marty Freeman, addressing the identical difficulty, stated driver availability could also be an element within the pattern of freight spilling over from truckload to LTL.
“We’re listening to some speak about a few of our rivals having issues selecting up on the finish of the month,” Freeman stated (and the corporate in its earnings announcement touted a 99% on-time fee). “Now we have seen a few of that freight transfer over briefly, and if we get a serious inflection within the economic system, I feel we’ll see it each day.”
Why it’s vital: The plans to extend capital spending present that Outdated Dominion, which did higher financially within the quarter however not on the idea of any important development in quantity, continues to be optimistic for the remainder of the yr.
Extra articles by John Kingston
Trump promise on navy CDLs sounds just like current applications
Briefs in as sides will get learn to rumble over non-domiciled CDLs
Werner CEO Leathers: simply the third inning in driver attrition
The submit Eyes on sub-70 OR, Outdated Dominion plans extra capex appeared first on BigRig.