Old Dominion again sees yields improve as volumes sag

Less-than-truckload carrier Old Dominion Freight Line reported a mid-single-digit revenue decline in November as weak volumes were again partially offset by higher yields.

The Thomasville, North Carolina-based company’s November update showed revenue was down 4.4% year over year as an approximately 6% increase in revenue per hundredweight, or yield, partially offset a 10% tonnage decline. The latest result was a slight improvement from October when revenue declined 6.8% y/y (tonnage was down 11.7% but yield was up 5.6%).

“Old Dominion’s revenue results for November reflect ongoing softness in the domestic economy, which contributed to a decrease in our volumes,” stated Marty Freeman, president and CEO, in a Tuesday evening news release.

Manufacturing data released on Monday showed the industrial complex has been in a slump for 35 of the past 37 months. The Purchasing Managers’ Index (PMI) registered a 48.2 reading in the latest month, 50 basis points worse than October. (A reading above 50 signals expansion while one below 50 indicates contraction.) The new orders index — an indicator of future activity — fell 200 bps to 47.4.

(Between 55% and 60% of Old Dominion’s revenue is tied to the industrial economy.)

Old Dominion’s (NASDAQ: ODFL) daily shipments were off 9.4% y/y in November, following a 9.8% decline in October. Weight per shipment was down 0.6% y/y in the recent month after falling 2.2% in October.

Weak tonnage trends through the first two months of the fourth quarter come as the carrier is actually up against a favorable y/y comparison (tonnage was down 8.2% y/y in the 2024 fourth quarter).

The company has maintained yield discipline throughout the downturn and continues to capture mid-single-digit increases. Quarter-to-date, Old Dominion’s yield is up 5.9% y/y and 5.2% higher (excluding fuel surcharges).

“We continued to deliver best-in-class service, which supports our yield management initiatives and ability to increase our LTL revenue per hundredweight,” Freeman said. “Our team will continue to focus on these core elements of our long-term strategic plan, which we believe has produced a strong track record of financial performance.”

Old Dominion implemented a 4.9% general rate increase across various tariff codes on Nov. 3. The increase was in line with the headline percentage increase taken in 2024, but the implementation date was one month earlier.

The carrier typically experiences 200 to 250 bps of sequential margin degradation in the fourth quarter, but previously forecast 250 to 350 bps of deterioration this year due to the soft demand backdrop. At the midpoint, the guide implies a 77.3% operating ratio (inverse of operating margin), 140 bps worse y/y, but still likely the best out of the group.