Transportation and logistics provider ArcBest has reaffirmed its third-quarter margin outlook for its asset-based operations while raising expectations for its asset-light segment, following an update released Monday after the market closed.
ArcBest’s asset-based division, which includes its less-than-truckload subsidiary ABF Freight, recorded a 9% year-over-year increase in daily revenue in August. The performance marked a modest acceleration from the 7.7% growth reported in July.
Fuel prices, however, played a significant role in the comparison. Diesel prices were 46% higher year over year in August, compared with a 31% increase in July. On a sequential basis, diesel prices rose 10% between July and August.
The August revenue increase was primarily supported by a 9% year-over-year rise in tonnage, while yield remained unchanged when fuel surcharges were included. Excluding fuel, yield declined by a low-single-digit percentage during the month.
ArcBest is also handling heavier shipments, with weight per shipment increasing 14% year over year in August. Although heavier freight can put pressure on yields, it generally contributes positively to margins. The company is benefiting from stronger demand across the industrial sector as well as tight capacity conditions in the truckload market, both of which are contributing to higher shipment weights.
Company reports
| Revenue | Shipments | Weight/Shipment | Tonnage | Revenue/cwt | Revenue/Shipment | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Jul | Aug | Jul | Aug | Jul | Aug | Jul | Aug | Jul | Aug | Jul | Aug | |
| ArcBest | 7.7% | 9.0% | -3.3% | -4.0% | 11.8% | 14.0% | 8.1% | 9.0% | -0.4% | 0.0% | 11.4% | 14.0% |
| Old Dominion | 8.2% | 12.4% | -3.0% | -2.4% | 2.0% | 1.7% | -1.0% | -0.9% | 9.3% | ~+13% | ~+11% | ~+15% |
| Saia | N/A | N/A | 0.8% | 1.1% | 7.0% | 7.5% | 7.8% | 8.7% | N/A | N/A | N/A | N/A |
| XPO | N/A | N/A | 5.9% | 5.7% | -0.2% | -1.8% | 5.8% | 3.7% | N/A | N/A | N/A | N/A |
The broader manufacturing environment also continues to provide an important backdrop for freight demand. The Institute for Supply Management’s Manufacturing PMI remained in expansion territory for the eighth consecutive month in August, although its reading of 54.6 was 100 basis points below the four-year high reached in July. A reading above 50 indicates expansion, while a figure below 50 signals contraction.
The new orders subindex, often viewed as an indicator of future activity, declined by three points but remained in growth territory at 53.7. Carrier tonnage typically follows movements in this index with a lag of around three months.
ArcBest’s shipment count declined 4% year over year in August, but revenue per shipment climbed 14%, supported by heavier freight and higher fuel surcharges. The increase in weight per shipment also pushed the company’s two-year stacked tonnage comparison to a cycle high of 11.4% in August, following a 9.4% increase in July.
On a two-year comparison basis, all of the reported metrics posted stronger growth rates in August than they had in July.
The company had previously reported that contractual rate increases averaged 5.8% during the second quarter, representing a 9.8% increase on a two-year stacked comparison. ArcBest also implemented a 5.9% general rate increase for LTL services across both of its business units on June 22.
ABF Freight typically experiences no significant sequential change in its adjusted operating ratio—the inverse of operating margin—between the second and third quarters. ArcBest’s August update maintained management’s expectation for a largely flat sequential performance, implying a 170-basis-point year-over-year improvement.
Asset-light outlook moves higher
ArcBest also improved its outlook for the asset-light business, which includes truck brokerage operations.
The company now expects the segment to generate adjusted operating income of between $10 million and $12 million in the third quarter. This represents an increase from management’s previous guidance of $6 million to $8 million.
“This outlook reflects continued yield discipline and ongoing productivity improvements across the business,” the filing said.
These productivity initiatives helped drive a 35% year-over-year increase in total shipments per person per day during the second quarter.
In August, the asset-light segment recorded a 26% year-over-year increase in daily revenue, compared with 27% growth in July. Shipments were flat year over year in August after rising 7% in July, while revenue per shipment jumped 26%, accelerating from a 19% increase in July.
The faster growth in revenue per shipment was driven largely by higher fuel prices. At the same time, purchased transportation costs improved by 60 basis points compared with July, reaching 85% of revenue in August.
Why it matters
ArcBest is one of only a limited number of publicly traded LTL companies. Its mid-quarter performance updates therefore offer valuable insight into a trucking subsegment where publicly available data remains relatively limited. The company’s August figures point to accelerating tonnage growth, heavier shipments and continued pricing discipline, while the stronger outlook for the asset-light business signals improving expectations for the third quarter.
