How ArcBest Defied Expectations with Stellar Q2 Performance

Speaker 1 [0:00] We have a great treat. This is earnings season. This is an opportunity to talk to the folks that are actually moving the freight. And our first guest, we have Seth Runzer. He’s the president and CEO of ArcBest, one of the most storied LTL carriers, if not overall transportation carriers. Has been around for a long time, for decades upon decades, well pre-regulation, is now one of the— You survivors of pre-deregulation that’s still around. Seth, welcome to FreightWaves Today.

Speaker 2 [0:35] Yeah, thanks for having me, Craig. I appreciate being on. Sorry about those technical issues. I think we got them resolved.

Speaker 3 [0:41] We had—

Speaker 1 [0:42] it gave us the opportunity for Julie and I to catch up on— by the way, technical issues are a part of putting on FreightWaves Today.

Speaker 4 [0:50] Live TV is, yeah.

Speaker 1 [0:51] Live TV has its own set of things, so you’re certainly excused. On that, but let’s talk about an area that you don’t need an excuse, is your earnings. You guys are absolutely rocking and rolling. How does it feel to be CEO of a business in this climate when, you know, you guys are putting up some really impressive numbers compared to historically how this market’s been?

Speaker 2 [1:12] Yeah, it feels great. So you think about our performance normally sequentially from the first quarter to the second quarter, We improved about 300 basis, 350 basis points. That’s really just the seasonality. The first quarter’s always kind of the weakest. And we improved about 650 basis points within our asset-based operation. And then asset light saw a meaningful step up as well. So really proud of the team for them executing. It’s a combination of factors when you think about everything that’s going on with supply, demand, we’re starting to see some early signs there. And then just what we’ve seen in the marketplace as customers are navigating all the disruption and complexity They’re really turning to those trusted providers that have 103 years of experience like us. So it’s been a great feeling to get out there with earnings this week and spend time with our people talking through what we were able to accomplish together in the second quarter.

Speaker 1 [2:07] Well, Seth, let’s talk about demand. You talked about demand feels like it’s recovering, you’re seeing signs of recovery. You know, that is a, I would say in many ways, a lot of folks have not come in with conviction about demand. I think everyone recognizes that this is a capacity-led recovery. I don’t think we dispute that. I don’t think you dispute that at all. But let’s talk a little bit about the demand side. That’s an intriguing perspective that’s different than what a lot of people believe is happening.

Speaker 2 [2:33] Yeah, I think demand, it’s kind of in the early stages, I would say. We’re not anywhere near like a mid-cycle or even an upcycle. It’s really supply-driven, like you said. That’s really what’s driving a lot of the things. So customers are trying to navigate as truckload capacity tightens, They’re looking to logistics companies like ArcBest to help them navigate all those different disruptions. And we saw that come through in results, which was great. But we are seeing some early signs. You know, it’s good to see that PMI has been in expansion territory for the past, you know, 5 to 6 months after 4 years of it being depressed. But what really encourages me is our pipeline continues to be strong. We continue to have great conversations with customers. I feel like as that truckload capacity tightens, it kind of turns the light on, hey, we wanna partner with companies we know, like, and trust that can actually navigate this with us. And that’s what’s been so impactful throughout the quarters. Our pipeline’s only strengthened, but I wouldn’t say it’s robust demand yet. I think it is supply-driven, like you said, but we are kind of seeing some early signs, especially as we’ve seen some of this more truckload-rated freight kind of come into LTL, very, very small amount, but we’re starting to see those early signs of those plus 10,000-pound shipments making their way back into our network. And they just work better in an LTL environment, so. So I’d say we’re early stages, but yeah, definitely supply is what’s driving a lot of the results you’re seeing out of all the carriers who have announced this week.

Speaker 1 [4:03] Seth, we’ve been watching the LTL. We know that LTL recovers a little bit later than truckload typically does. You had any tightness in the truckload market? Because shippers take advantage of direct point-to-points not being handled through a dock network when they can consolidate. And then when the freight market tightens, a lot of that LTL volume, as well as in the earliest parts of the cycle, they’re building out Larger truckloads because larger volume segments. We only recently, you know, Cassis Shipment Index, which is more weighted to LTL than it is truckload, is reflecting the fact exactly what you’re seeing. Do we think that we’re well past the point where this market truly is recovering from a demand side?

Speaker 2 [4:44] Yeah, I think we’re still in the early stages of the market recovering from the demand side. There’s still just, if you look at historical averages, and like you said, we’ve been around a long time, so we’ve seen a lot of cycles. When you look at a lot of the subsectors within that, there’s still weakness in a lot of different places, but there’s also bright spots in a lot of places. I talked about it on our earnings call the other day, the data center buildout, we’re seeing a lot of demand there. Customers who are shipping ATVs, we’re seeing a lot of demand there. But there’s other areas like apparel that we’re not seeing demand. So, it’s uneven, I would say. So I think as demand strengthens, that’s going to ultimately improve results for everybody. But the way we’ve built this company and transformed over the last 10 years is we’re an integrated logistics company. So we can go to market and we try to say yes to our customers regardless if they’re looking to move truckload to LTL or go to a managed solutions or they need a more premium service. That’s really what we’ve designed this company to do is say yes to our customers no matter what’s going on. in the supply or demand environment.

Speaker 4 [5:52] Yeah, congratulations on a near 90% OR on your asset portion of your business. But I do want to talk a little bit more about that asset-light part that you just alluded to. So 28% revenue increase, 15% increase in daily shipments, revenue per shipment up 11% to 12%. So it seems like everything is heading in the right market. Are you feeling the capacity squeeze on the other side of that? How has sourcing been?

Speaker 2 [6:18] Yeah, I think sourcing has been good. When you have the history that we have, we build long-term partnerships with a lot of our partner carriers, which is great. So I’m really proud of the team and the execution. If you look at what happened in asset light in the second quarter, we produced a little bit over $6 million in operating income. And when you compare that to all of 2025, we only made $1.5 million. So that shows you the progress on all the initiatives that we outlined at our Investor Day last September in New York City. Yeah. Really comes around to profitable growth, making sure we’re growing with the right customers, making sure we’re efficient with our resources, and make sure we’re partnering with companies that trust us and we trust them to haul our customers’ freight. And that’s been impactful. So with all the partnerships we have, we haven’t really felt the capacity crunch too much because, like I said, the way we’ve built this company is find a way to say yes. And we have a lot of different partnerships which allow us to do that.

Speaker 4 [7:17] So certainly a culture of trust across all of the business units. Would you talk a little bit about the decision to have Molo, Panther, those other brands move under the ArcBest name?

Speaker 2 [7:30] Yeah, yeah, we, so we went to market as an integrated logistics company back in 2017, and we’ve transformed, and we’ve done some of that through M&A, some of that through organic investments, and that really came from customer feedback. They were telling us, hey, we don’t just have LTL. We have truckload, we have managed, we have expedite, we have all these different solutions. So that really is what we started to do. So the announcement a few weeks ago where we consolidated the brands underneath ArcBest, that was really about simplifying our brand strategy to say, okay, we are ArcBest, that integrated logistics company, and we have solutions underneath, whether it be truckload brokerage, LTL, LTL brokerage, any of those areas. That’s really what it was about, was simplification. and going to market as One ArcBest. And we really heard a lot of that from our customers, from our employees that said, hey, why do we have all these sub-brands? So this is really the next step in that evolution to make it simpler and easier for our customers to access all of the solutions that we have. The feedback I’ve heard from customers and employees alike has been, has been very positive, kind of this long overdue type scenario. So I’ve been really encouraged by everything I’ve heard from the team and from our customers since the announcement came out.

Speaker 1 [8:48] Seth, you guys have been around since 1923. You’ve survived multiple world wars. You’re coming out of the first pandemic, or the major, the 1920 pandemic. You guys have had a storied history. One of the things that we’ve talked about when you guys made the announcements on the Molo and Panther consolidate— brand consolidation, we’ll call it— was the fact that the culture of ARKBEST is this legacy, very structured organization. Is one of the reasons you’re so successful. And we’re big fans of history and your history in particular as a pre-deregulation carrier. Molo had a very different culture. It was the Chicago Central, the Silvers, Andrew Silver, sort of a freight bro from Central Casting. When that announcement was made years ago, from where I stood, it seemed like a very strange or at least a counterculture to the typical Art Bus culture that we know. Is that part of the reason to rebrand is to change the way that business operates? Or what has that been like in terms of the overall integration into the overall ArcBest organization?

Speaker 2 [9:58] Yeah, so I’ll just take a step back to a few years before the Molo integration. So before we even announced the move. So really what we were hearing from our customers was, hey, we really trust you for LTL. You’re doing a great job with Panther and Premium Expedite, but your truckload offering really wasn’t as strong as it needed to be. So we had our own truckload brokerage at the time. It was probably $300 to $400 million, a lot of transactional-type customers. But what Molo brought and what was really attractive about them was, A, it filled a strategic gap for us because our customers were asking for truckload services, and B, what they built was really a service-first mentality. And that’s what ArcBest is known for, a premium experience for our customers. And that’s what made it so attractive to us. So we got to fill a strategic gap. They believed in being customer-led and servicing customers with excellence, and it just really fit perfectly. So as we’ve integrated, really what it’s done is it’s expanded the capabilities because all of our customers, we have about 30,000 active customers, they all have truckload needs. It’s their biggest spend. So by having a really strong offering in what we purchased with Molo, it only strengthens those relationships with customers. And we’re kind of past the integration phase, and I feel great about the progress we’ve made, and the team’s done an excellent job. And I’m really excited that we hired Mack Pinkerton to come in and lead our asset-light operation. He led CHR’s, you know, NAS product, and that’s the largest broker in the United States. So he’s really helping transform us into what we can ultimately be. And I feel like we’re in the second or third inning. We got a long way to go to get to where we ultimately want to be.

Speaker 1 [11:41] Well, that alumni network, the C.H. Robinson alumni network, there’s no denying that it is persistent across this industry. Specifically out of Chicago, that Chicago Central office, the old American Backhaulers office, has written a lot of the success of Chicago. Molo being a Chicago-based broker, I would argue 3rd or 4th generation, Julie, in terms of brokerage. If you start to think of the evolution of freight brokers, sort of the American Backhaulers, US Express was a big American Backhauler, C.H. Robinson Central.

Speaker 3 [12:11] Right.

Speaker 1 [12:12] This evolution, I think I would argue that Molo is sort of the 4th generation maybe.

Speaker 4 [12:16] So what’s the third?

Speaker 1 [12:18] Well, you have Echo. Echo is sort of that third. Command, even you could argue Command.

Speaker 4 [12:23] I mean, it goes from Backhaulers to the original CH, even some of those expansions. Command, uh, maybe even Coyote.

Speaker 1 [12:29] That group, Echo, Coyote would be maybe fourth. And now we’re third or fourth. But, but you’re in this sort of fifth generation, and really Chicago has become such a high concentration of freight brokers, its own culture. Like when you describe to somebody in freight about the Chicago Freight floor. Everybody knows what we’re talking about. What is what is going to change for you guys with Molo becoming an ArcPress? I’m sorry, I haven’t had a lot of sleep this week, so if I fumble my words, it’s but but what is the goal here in terms of of what can customers expect that’s going to change? Where are the where are the investments going to be made?

Speaker 2 [13:07] Yeah, to me, it’s not a matter of what’s going to change; it’s what’s what’s going to strengthen, and that’s really what we’re trying to do with this brand is we’re trying to. simplify our approach to the market, make it easier to access our solutions, and ultimately combine all the capabilities that we have as one ARCBEST into what our customers can get access to. So we really focus on 3 strategic pillars: growth, efficiency, and innovation. And I feel like across each of those pillars, it’s going to only strengthen with the brand. We don’t have to spread out our advertising dollars among 4 different brands. We don’t have to have different teams and different swag and all the different things, right? So ultimately, We want to be that integrated logistics company, and we feel like this is just the next step in the evolution of that strategy that we’ve been embarking on for over a decade. And this change is only going to strengthen and simplify and make us move faster in the market that we live in today.

Speaker 1 [14:02] Seth, if you’re looking for a place to park advertising dollars, just call us up.

Speaker 3 [14:07] Media is a tough environment.

Speaker 1 [14:08] You think trucking’s hard?

Speaker 3 [14:10] Media sometimes can be a little harder. We’d love to We’d love to talk about that.

Speaker 1 [14:14] Panther 2, also a storied name, not a legacy name in terms of the history of ArcBest, but a name that if you know expedite, Panther 2 has been a market leader. You guys acquired it almost, I think, 17, 18 years ago. Is it going to be ArcBest Expedited? What’s the future of that business?

Speaker 2 [14:35] Yeah, it’s also going to be ArcBest. And then underneath ArcBest, the logistics company, we describe it as premium logistics because they don’t just do expedite. They do temperature validated, they do Department of Defense. It’s kind of that premium logistics shipment cannot fail. So it’s not just, hey, we’re going to shut down a product line and we got to expedite that shipment. It’s become so much more than that. And that’s what makes me really proud. So I think what’s going to happen is it’s just going to continue to simplify exactly what I talked about. And what’s been interesting is as we’ve had customer conversations around the branding change, they’re like, well, we already thought Panther was our best. And that’s because it was. We’re all ArcBest team, right? So this just makes it a lot clearer to say, hey, ArcBest is a logistics company, can offer all these different services. What is your problem? What is your solution that you’re trying to find? Because we’ll find a way to say yes, whether that’s truckload brokerage or managed solutions, any solution. We’re able to say yes because that’s really what builds a trusted relationship over the long term and why we’ve stood the test of time.

Speaker 4 [15:41] So Seth, I don’t think we can talk about premium logistics or integrated logistics offerings without talking about technology. So I think I recently read that you just launched a new product called ArcBest View. Can you tell us what that is, what it does, and why now is the right time to roll it out?

Speaker 2 [15:59] Yeah, I think about ArcBest View, it’s something that we started building probably, I want to say, 3 or 4 years ago. And really, when you think about our traditional customer platform, it was our website, it was arcb.com. Well, that was really built based off of an LTL environment because that’s most of our history until we’ve made this transformation over the last decade. So what we heard from customers is they wanted a single source of the truth. They wanted to go to one place and find where they could track, book, quote, optimize their supply chain, get everything. And the old experience that we had, just they had to go multiple places to navigate that. We started building that platform side by side with customers from the very start. And that’s what I think is impactful is because you can build a great product, roll it out and be like, hey, I hope everybody likes this. But if you build it side by side with partners we’ve had for 10, 20, 30 years, they’re going to tell you what’s going to work. And that’s been very impactful for us. So really what that platform is, some people have described it as, hey, it’s just a refresh of arcb.com and it’s not. It is a completely new digital platform that I think is differentiated in the marketplace because now you can track, book, do all of those things across all modes. And that really is differentiating, differentiating for us. We have about 2,500 active customers signed up for it so far, and the feedback has been really incredible. And that’s what makes me feel so good as we roll out further enhancements and continue to refine. we’ll start getting more customers signed up for it. But a lot of customers are saying, wow, this is the best tool I’ve ever used. I have now complete supply chain visibility, which adds to that simplicity that we’ve been talking about, right? We wanted to simplify our customer-facing tools so they can navigate everything that’s going on in their supply chain and not have to pick up the phone and call. They can self-serve or they can pick up the phone and call. So I’m really proud of the team that built that, got it out there, and we’ll continue to make enhancements as we move forward.

Speaker 1 [18:00] Seth, what are you guys doing in Arkansas that is enabling these old school legacy leaders? We covered JB Hunt extensively on the show. They’re killing it on their intermodal business. You guys are, you know, you, you completely transformed the business from an old school, sleepily sort of regulated trucker into one of the most dynamic logistics companies. Is there something special specifically about Arkansas that enables, I mean, when I go through the list, you guys were number 12.

Speaker 3 [18:30] Yeah.

Speaker 1 [18:30] in 1980 according to Transport Topics Top 100. And I go through the list of those carriers that are still around. Most of those carriers, United Parcel, Roadway, Consolidated Freightway, Yellow, McLane, Ryder Truck, North America Van Lines, Specter Red Ball, PIE, Allied, Smith Transport, Arkansas Best. You guys have been around. What is going on down there?

Speaker 2 [18:55] Yeah, well, we always, the way we position the company, like I said, we’re customer-led. And at the end of the day, if you listen to your customers and design solutions around them, that’s what’s going to stand the test of time at the end of the day, right? And we also, leaders before me, present leaders have built an amazing culture at our company. And that’s really, if you look at centurion companies, companies that have been around more than 100 years, really the 2 things that stand out, it’s a great culture and it’s the willingness and adaptability to change. And that’s what we’ve done throughout all the time. So we’re not thinking about next month or this quarter or next quarter. We’re planning 3, 5, 10 years out. That’s really the way we focus. And we always say internally, we have to focus on disrupting ourselves because if we don’t, someone else will. So I don’t think we’re that company that you described, the old school company. We’re focused on technology, we’re focused on AI, all the different things. But at the end of the day, it all comes back to where does the customer find value? And if you stay close to your customers, you have great people, you’re gonna deliver some amazing things in the future.

Speaker 1 [20:06] I think it’s an exception, Seth, to the rule. I mean, the reality is that you guys deserve a lot of credit for going through all of these iterations. I mean, we’re in a new cycle, we’re in a new market, it feels like. I mean, Matt, Dad, you’ve talked about the fact you’ve been in trucking since the 1960s. You talked about the fact that this freight recession and this market is completely different than any that you’ve experienced in your lifetime. But you guys have made it through another cycle, Seth. There must be some formula for that that has just enabled you to thrive so well that I think is really intriguing because so many of your other pre-regulation competitors just never made that transition.

Speaker 2 [20:41] Yeah, I agree. And a lot of that is just paying attention to what’s going on, focusing on what matters the most, and making the right decisions with integrity at the top of your mind. So I think about— I took over ABF and ran our LTL division in 2021 at the height of the pandemic. And I swear, every time I picked up the phone, it was like a new thing was going on. The East Coast ran out of fuel because the pipeline got hacked, or you couldn’t hire drivers, or you can’t buy trucks anymore. The list goes on. And then a 4-year freight recession. So it’s just, you have to know in the back of your head that disruption is the new normal. And if you prepare and build the company on a great foundation, you’re always focused on the future. Good things will happen, and that’s really what we’ve done at this company and what makes us so special.

Speaker 1 [21:26] Well, Seth, thank you so much. I mean, an institution.

Speaker 4 [21:29] Yeah.

Speaker 1 [21:29] Like I love talking to these. Look, I’m a big fan of history. I’m building a history museum in Tennessee. We’d love to have people.

Speaker 2 [21:36] Oh, Spirit, I’ll come down.

Speaker 1 [21:38] Be the largest indoor miniature transportation museum in the world. If the Smithsonian was doing transportation across all modes, it would be the Smithsonian. Real excited about that. Well, I have to have you out there. Also, the International Transportation Hall of Fame, we’re gonna announce that, that will be there as well. Certainly someone along the tenure of ArcBest deserves that.

Speaker 4 [21:57] Yeah.

Speaker 1 [21:58] I mean, amazing. I love these, I love these businesses that have seen so much, Julie, so much history, and yet are talking about new technologies and doing it right.

Speaker 4 [22:09] Yeah, I mean, I think it just shows you that in business and in life, probably the most important skill you can have is adaptability.

Speaker 1 [22:15] And you gotta survive.

Speaker 3 [22:17] You gotta be—

Speaker 4 [22:18] Like the coyote, right? That’s why they’re everywhere, ’cause they’re the most adaptable animals. Did you know that?

Speaker 3 [22:22] Exactly.

Speaker 4 [22:22] I watch Wild Cats with my son.

Speaker 1 [22:24] Most adaptable animals except for in my yard.

Speaker 4 [22:25] No, they are. Like, I think they are.

Speaker 3 [22:26] They figured out how to do it.

Speaker 1 [22:28] Anyways, well, Tessa, thank you so much for coming in to FreightWaves today. Would love to have you back and best of luck in your journey as you continue to build out your technology. And we know that you’ve got a lot going on over there and congratulations on great earnings. And we look forward to reporting next quarter. Hope to have you back.