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At TFI’s US LTL unit, cost reduction trumps all

TForce Freight still struggling with high OR, stubbornly high costs, TFI CEO says

AT TFI unit, cost-cutting takes priority (Photo: Jim Allen/FreightWaves)

At TFI International Inc.’s (NYSE: TFII) still-struggling U.S. less-than-truckload business, TForce Freight, the focus for the rest of the year and through 2024 will be on how to reduce costs rather than building volumes or increasing prices, the parent’s CEO said Tuesday.

The U.S. LTL unit reported a 0.8% year-over-year tonnage decline and a 7.5% drop in shipments. Revenue per shipment, excluding fuel, was flat. Adjusted operating ratio, the ratio of revenues to expenses, was also flat at 90.8%. Alain Bédard, TFI’s chairman, president and CEO, said he’s pushing for an operating ratio in 2024 of 87% to 90%. Achieving next year’s goals will be complicated by a roughly 5% increase in labor costs under the first year of the unit’s new five-year contract with the Teamsters union. The contract was ratified at the end of July.

In July, TFI reported that the U.S. LTL unit would gain 3,000 additional daily shipments in the wake of Yellow Corp.’s bankruptcy and departure from the LTL market. That brought TForce’s daily shipment count to 26,000. It has since backed off to between 24,000 and 25,000 shipments per day. However, the unit had to bring on additional labor to handle the volume increase as it rose over the summer, Bédard said.

Bédard told analysts in the wake of TFI’s third-quarter results disclosed late Monday that TForce Freight needs to be more efficient and to “do more with less.” U.S. terminal managers will have new technology at their disposal to give them more real-time visibility into their costs, Bédard said.

Up to now, managers have real-time visibility only into labor cost per shipment. Once the technology is installed, managers will no longer have any reasons not to act and react quickly to changes in their cost structures, he said.

Bédard said he expects a subpar U.S. LTL market to continue to 2024. Pricing initiatives will take a back seat to the increased focus on cost reduction at the unit, he said. “We aren’t focused on getting more money from our customers,” he said.

TFI’s overall third-quarter results reflected the bleak macroenvironment. Revenues declined at its four business units, with LTL revenues dropping year over year by $100 million and truckload revenues, which make up a smaller part of TFI’s trucking mix, dropping by $109 million. Truckload operating income was nearly cut in half year over year, with the unit’s 87.5% operating ratio much worse than analysts’ estimates. TFI’s logistics unit reported the only year-over-year gain in operating income.

Third-quarter adjusted diluted earnings per share of $1.57 was well below consensus estimates. Total revenues of $1.64 billion was down from $1.86 billion in the year-earlier quarter. Operating income of $200.6 million was off by nearly $118 million from the 2022 period.

TFI last quarter lowered its 2023 earnings guidance to between $6 and $6.50 per share. The outlook at the time did not account for any gains from Yellow’s exit. On Tuesday’s call, Bédard expressed optimism that the full-year guidance will be closer to the higher end of the range.

He said he expects fourth-quarter results to show sequential improvement, albeit small. He said that 2024 could be a transition year but that it was hard to tell at this time.

At mid-day on Tuesday, shares of TFI were trading lower by more than 7%.


  1. Dock

    Cut routes, Place customer freight on call trailers.
    Leave driver’s at home
    Constantly miss 15 to 25 pickups per day.
    Have driver’s to work am dock, and run their route 14 hr a day
    Driver’s Wait 1 to 2hr’s to get trailer loaded to start route

  2. Ricky Slezak

    This All is Very important Comments,The Drivers See and Hear ALL. Diplomacy and Tact in this Situation is Key, Maybe Call in Your Top Drivers, and Listen to their individual Beliefs and Suggestions, Into this Matter of CUTTING OUT and TRIMMING THE FAT. Security in your Profession, is Paramount for the Team of Drivers. Executed Plans of Longevity Should Be Everyone’s Endeavor. Success is Carefully Planned. Thanks Rick

  3. Kevin

    They seem to have undercut.. terminals r cut thin.. pushing over time through the roof.. also the departure times aren’t being met…delaying drivers 1 to several hours and having to pay them while waiting for trailers to be loaded..cutting city driver’s routes for the day and then missing pickups is loss in revenue..

  4. Curt

    5% increase in labor due to new contract in 2024? Please.

    You must recognize that labor was barely getting a 1% increase in the previous five years and had NOT been keeping up with inflation. The truth is that they will not be giving their labor a raise AT ALL in 2024. The 5% this past summer was marketed as a catch-up. They’re doing a great job at keeping labor costs down, so it’s quite disingenuous to take that shot at the union in this article.

    You could argue that they’ll have to contend with the 5% increase throughout 2024, but it’s already been given to their employees a few months ago. I would argue that during the high inflation period, rates have increased while labor costs didn’t as the employees were locked in to what was negotiated in 2018. (40¢ per hour.)

  5. Jamie Hunte

    So just today. A customer redirected 15 pallets of brakes to ship with another carrier. The operations manager/dispatcher told them we wouldn’t sent a second truck. That second truck could have been me. 2 trucks went yesterday. I was one. TForce was getting 50k a week from this place. I returned todY almost empty. Management is the problem.

  6. Alice

    My husband works for TForce at a satellite in MI. They got rid of 2 people so there is only 3 guys working. All are getting crazy OT. You would think keeping the other guys and paying straight time over OT would account for something. And that’s only one thing that is wrong. If you ask the drivers what they think… You might get an insight on what would help.

  7. Joe

    90.8 is excellent in this slow LTL economy. Plus Bedard is updating old UPS freight equipment and properties. Once that’s all done I really see O.R. at mid to low 80’s.

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.