Old Dominion Freight Line reported 1st quarter earnings on April 24, 2014. The company reported 1st quarter revenue of $620.3 million an increase of 15% from last year and net income of $45.9 million an increase of 13.2 %. The operating ratio for the quarter improved to 87.1% from 87.8%. Given the weather conditions in the 1st quarter the numbers reported by Old Dominion are extremely impressive. Other transportation firms are blaming the weather for poor quarterly results.
The company is executing and delivering to both its shareholders and customers. Old Dominion is the best LTL carrier in the business. Having spent ten years in the LTL industry, it is refreshing to see a LTL carrier fire on all cylinders. So what are some of the reasons why Old Dominion is leading the pack? The company has great customer service that is built upon serving 96% of the domestic US. The company delivered 99% of its freight on-time during the first quarter. Rates are very competitive to securing and maintaining a diverse customer base. Old Dominion recently announced a rate increase of 4.3% effective May 1st, 2014 which is lower than the competition. Insurance and cargo claims are low at 1.3% of revenue which is one of the best in the industry. The company has automated the claims process so that 99% of claims are handled on the 1st call.
People, processes and technology are three other reasons why Old Dominion is dominating the LTL industry. The company employees 15,000 employees through a network of 220 service centers and 10 break-bulk facilities. The employee’s know what is expected of them and follow the processes and procedures. The workforce is non-union which allows for flexibility.
Technology is used as an enabler to move the business forward. The company has recently redesigned and revamped its website. Mobile computers are utilized by the drivers to provide accurate information to the company when freight is picked up or delivered. In addition, the company utilizes RFID technology to track it’s equipment. Descartes software is utilized by Old Dominion to manage it’s operations and increase productivity. Deck trailers are utilized with multiple load bars to create multiple levels in the trailer. By utilizing load bars, trailers can carry more weight and be more efficiently loaded resulting in less damage. Air bags are also utilized to minimize damage.
Overall, the fleet is in great shape. The company has 6,296 tractors with an average age of 4.8 years, 18,077 Line Haul Trailers with an average age of 5.7 years and P&D trailers with an average age of 12.9 years. The fleet is well maintained.
The company is planning to spend $367 million in capital expenditures in 2014 with $132 million in facilities, $188 million in tractors, trailers and other equipment and $47 million for technology related items. Most of the capital expenditures will be funded by the cash flow from operations.
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