Less-than-truckload carrier XPO announced Wednesday a continuation of modest volume declines during May as the industry awaits an inflection in demand.
The Greenwich, Connecticut-based company said tonnage per day was down 5.7% year over year during the month – the combination of a 5% decline in shipments and a 0.7% decline in weight per shipment. The update was in line with the company’s prior guidance calling for a tonnage decline similar to what it experienced in April (down 5.5% y/y).
The monthly declines are a modest improvement from the first quarter (down 7.5% y/y) and appear to be largely in line with typical seasonality.
XPO’s (NYSE: XPO) y/y comps get easier in the second half of the year as modest y/y increases recorded in the second quarter of 2024 give way to more pronounced declines in the third and fourth quarters of last year.
January marked the low for XPO’s tonnage on a two-year-stacked comp (down 9.6%). April and May were off 2% and 3%, respectively.
XPO is again likely to be the only LTL carrier to see y/y margin improvement in the second quarter.
The company previously guided second-quarter yield growth to be in line with the first quarter, which was up 6.9% y/y excluding fuel surcharges. Improved pricing from service enhancements and a change in freight mix to local accounts (which carry higher margins) were behind the pricing guide.
The company normally sees margins increase 250 to 300 basis points from the first to the second quarter. The combination of a continuation of seasonal volume trends along with better pricing and idiosyncratic efficiency initiatives has it expecting to hit the high end of that range (or higher). That implies an 83% operating ratio (inverse of operating margin) for the second quarter, which would be 20 bps better y/y.
XPO also reiterated on its first-quarter call in April a full-year 2025 outlook for 150 bps of y/y OR improvement. That guidance follows 370 bps of OR improvement over the past two years, which, too, bucked the industry trend.
Carrier Old Dominion Freight Line (NASDAQ: ODFL) also reported Wednesday an in-line update for May.
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