Christopher Kuhn

Christopher Kuhn asked about any specific AI initiatives Old Dominion is undertaking for 2026 and beyond.

Answer

Adam Satterfield, CFO, placed AI within the broader context of Old Dominion's decades-long investment in technology, noting 'OD Technology' as a branded product. He emphasized that investments, including in AI tools, must yield a return and drive operating efficiencies, citing 2025 cost performance as proof. He also highlighted the importance of technology in creating strategic advantages and stickier customer relationships, rather than just investing for the sake of buzzwords.

Christopher Kuhn from Benchmark inquired about any specific AI initiatives Old Dominion is undertaking for 2026 and beyond.

Answer

CFO Adam Satterfield placed AI within the broader context of Old Dominion's long-standing technology investments, emphasizing that new initiatives must demonstrate a clear return. He highlighted the company's focus on leveraging technology to drive operating efficiencies (e.g., line-haul, dock, P&D) and create strategic advantages for customer service and stickier relationships.

Christopher Kuhn asked about XPO's long-term operating ratio (OR) potential, specifically if it could exceed best-in-class levels given its service, pricing, and shipment performance.

Answer

CEO Mario Harik explained that the OR differential with best-in-class carriers, which was 15-16 points when XPO's plan started, is now down to about 800 basis points. He stated that as XPO bridges the 11-point normalized price differential and leverages AI tools for cost efficiency, there is no reason why its OR cannot eventually get down to the '70s, including the mid-'70s and low-'70s, over the years to come.

Christopher Kuhn asked about XPO's long-term potential for its operating ratio to exceed best-in-class levels, considering its strong service levels and pricing opportunities.

Answer

Mario Harik (CEO, XPO) explained that the operating ratio differential, which has narrowed from 15-16 points to 800 basis points, is primarily driven by price and mix. With an 11-point normalized price differential and enhanced cost efficiency from AI tools, he sees no reason why XPO's operating ratio cannot reach the mid-70s and eventually the low-70s in the long term.

Christopher Kuhn asked if the process of removing poorly priced freight from the network was largely complete and what the outlook for pricing is from current levels. He also inquired whether the company was considering any further portfolio reshaping or divestitures.

Answer

President, CEO & Director Shawn Stewart confirmed that the initial, major pricing fixes are done, though it remains an ongoing assessment, and suggested current pricing is a stable run-rate for the market. CFO Jamie Pierson highlighted the resulting 500 basis point margin improvement in Expedited Freight. Regarding the portfolio, Mr. Pierson stated that unwinding the integrated network would be 'value destructive,' but conceded that there 'might be one' non-core business the company would consider divesting.

Christopher Kuhn of The Benchmark Company asked if the shedding of unprofitable freight was complete, if those customers might return, and if network capacity was sufficient for a rebound. He also inquired about the Intermodal segment's positioning relative to East and West Coast import shifts.

Answer

CEO Shawn Stewart confirmed that the shedding of unprofitable freight is mostly complete and expressed confidence that customers often return due to Forward's superior service. He affirmed the network has ample capacity to scale with a volume rebound. Regarding Intermodal, Stewart explained the business is primarily focused on the East Coast and Gulf, positioning it well to benefit from any freight shift away from the West Coast.

Christopher Kuhn from The Benchmark Company asked about the performance drivers for the Omni business and the expected trade-off between pricing and volume in the Expedited Freight segment.

Answer

CFO Jamie Pierson stated that Omni's performance was driven by increased air and ocean volumes, which were supported by a very strong warehousing and VAS operation, offsetting a soft pricing environment. Regarding Expedited Freight, Pierson and CEO Shawn Stewart explained that the focus is on improving yield, which may lead to shedding some unprofitable volume in the short term. However, the ultimate goal is to replace that volume and drive profitable growth.

Christopher Kuhn of The Benchmark Company asked about customer retention trends with legacy freight forwarders and how the change in LTL pricing strategy might affect weight and revenue per shipment metrics going forward.

Answer

CEO Shawn Stewart reported that the company has rebuilt trust with its legacy freight forwarder customers, and the remaining volume deficit is now more reflective of the soft macro environment than customer attrition. He also stated that he expects the trend of rising weight per shipment to continue and does not foresee the new pricing strategy having a negative impact on that metric.

Christopher Kuhn of The Benchmark Company asked about the pricing progression on freight originating from Saia's new markets and with newer customers the company has onboarded.

Answer

EVP & CFO Matthew Batteh explained that the initial goal in new markets is to find the market rate, often by expanding service with existing customers. While rates aren't raised immediately due to initial inefficiencies, doing more for a customer makes Saia a stickier partner, which leads to better pricing over time. He reiterated that publicly available data shows Saia is priced below its national peers, indicating a clear opportunity for improvement as service levels are proven.

Christopher Kuhn of The Benchmark Company asked about the long-term profitability of the new facilities and whether there are structural limitations to their potential operating ratio (OR). He also inquired about the expected trend for headcount going forward.

Answer

President and CEO Fritz Holzgrefe expressed strong confidence in the long-term potential of the new facilities, stating he has seen nothing to suggest they won't contribute to the company's goal of a 70s OR. He noted that while some smaller terminals may not reach the company average, they enable larger, leading facilities to perform even better. Regarding headcount, he said it would be expected to trend down from Q1 levels, as the company will closely manage staffing to match volume trends.

Christopher Kuhn of The Benchmark Company asked how Saia maintains its culture and service quality after adding nearly 10% to its workforce and the time it takes for new employees to reach full productivity.

Answer

CEO Fritz Holzgrefe detailed a disciplined approach involving training, onboarding, and placing existing Saia leaders in new locations to instill the company culture. He acknowledged it can take several months to a year for a new facility to reach peak efficiency. He explained that an experienced workforce improves service, productivity, and safety while lowering claims, creating a virtuous cycle that ultimately benefits the operating ratio.

Christopher Kuhn from The Benchmark Company inquired about the scale and cost impact of the terminal relocations and potential new openings planned for next year, comparing them to the larger openings in 2024.

Answer

CEO Fritz Holzgrefe explained that relocations are operationally straightforward and typically have a negligible cost impact, often providing immediate efficiencies. He stated that any new openings next year would be on a much smaller scale and have a 'de minimis' financial impact on the now significantly larger company, unlike the material impact from the 11 openings in Q3.

Christopher Kuhn questioned the drivers of the 70 basis point improvement in Logistics margins, asking if it was solely due to past actions or if underlying businesses were improving despite a drag from brokerage. He also asked if customers were using containers for storage.

Answer

Executive Phillip Yeager confirmed the brokerage business was a drag but highlighted significant margin improvements in the consolidation business from better labor management and utilization. He also noted improvements in managed transportation and final mile. Yeager added that the company has reduced negative margin loads in brokerage by over 200 basis points. He stated they have not yet seen customers using containers for storage.