FedEx Freight says tightening truckload capacity is beginning to push heavier shipments back into the less-than-truckload (LTL) network, offering another clear sign that freight demand is stabilizing after a prolonged downturn. “We are seeing some pretty good encouraging signs…
at demand conditions are beginning to stabilize and even increase across the industry,” said FedEx Freight CEO John Smith in the recently spun off trucking company’s first ever earnings call held Thursday. More from WWD Smith cited ISM manufacturing activity, which notched its highest reading since May 2022 and had its fifth straight month of expansion, as well as truckload spot rates and fleet capacity attrition as leading indicators of the steadied freight market
The LTL ultimately grew revenue 4.8 percent to $2.4 billion in the quarter ending May 31, largely in part to an 11.5 percent spike in revenue per shipment propelled by a 3 percent increase in average shipment weight. The revenue jump overcame a 5.9 percent year-over-year volume decline to 86,700 average daily shipments. Smith attributed the climb in weight to the tighter capacity, stressing, “we’re ready [for a market upturn] both from a driver perspective as well as equipment.
Right now, we could add another 10,000 shipments and not have to buy a piece of new equipment.” The cut in capacity has been accelerated by a nationwide crackdown on trucking compliance that has taken thousands of truck drivers out of service. The Department of Transportation’s policies have been focused primarily on enforcing English language proficiency among truck drivers and closing commercial driver’s license (CDL) schools if their training and safety standards aren’t up to speed. The new CEO said these policies have largely hit truckload companies, freeing up more volumes to transition to LTL providers.