Saia’s tonnage turns negative after 22-month run

After 22 months of consecutive tonnage increases following Yellow Corp.’s shutdown, less-than-truckload carrier Saia reported a modest decline in volume during May.

Saia (NASDAQ: SAIA) announced Thursday that tonnage per day dipped 0.4% year over year in May following a 4.4% increase in April (and a 12.8% increase in the first quarter). The May decline was the combination of a 3.2% drop in shipments, which was largely offset by a 3% increase in weight per shipment.

The Johns Creek, Georgia-based carrier was very aggressive after Yellow’s (OTC: YELLQ) exit, acquiring 28 of the defunct company’s terminals and quickly onboarding its customers. (A filing with a federal bankruptcy court in Delaware last month showed it was acquiring three more service centers from Yellow’s estate.)

In the months that followed the acquisitions, Saia’s volume growth significantly outpaced the rest of the industry even with a freight recession as the backdrop. But after nearly two years of increases, and further protraction of the downturn, the comps are increasingly more formidable.

On a two-year-stacked comparison, Saia’s tonnage was up 9.4% in May following a 12% increase in April. The stacked comps peaked in February at plus-23.2%.

Manufacturing activity, which generates nearly two-thirds of the LTL industry’s freight, slumped again in May. The Manufacturing Purchasing Managers’ Index remained slightly in contraction territory at 48.5 (a 50 reading is neutral). The new orders subindex, which is indicative of future near-term demand, remained in decline at 47.6.

The Thursday update from Saia was its first since late April when it reported first-quarter results significantly worse than analysts were expecting, pushing shares 30% lower on the day.

An unfavorable lane mix and costs from getting new terminals up to speed pushed its operating ratio (inverse of operating margin) 670 basis points higher y/y to 91.1% – its worst operating performance since the COVID-marred second quarter of 2020.

Saia doesn’t provide any revenue-based metrics in its intraquarter updates.

During the first quarter, yields were negative (down 5.1% y/y excluding fuel surcharges). Heavier shipment weights were a headwind to yield (revenue per hundredweight) in the quarter, but when adjusted for weight and length of haul, yields were likely still negative in the period. However, management said on the call that it hadn’t changed its approach to pricing and noted that contractual rate increases averaged 6.1% in the period. The stickiness of those rate increases, however, remains to be seen.

The company previously guided an 89% OR for the second quarter, which would be 570 bps worse y/y.

Shares of SAIA were off 3.9% at 10:46 a.m. EDT on Thursday compared to the S&P 500, which was up 0.2%.

More FreightWaves articles by Todd Maiden:

• XPO sees modest tonnage decline in May
• Old Dominion’s May update in line with prior Q2 guide
• Transportation pricing grows faster than capacity again in May

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