2023 Q4 Carrier Earnings: Saia

2024 is shaping up to be the year of investment for LTL carriers.?

Following Yellow Corp’s closure last year, former terminals started being scooped up by carriers who are now investing EVEN MORE into those terminals to bring them back online.??

The result: carriers in 2024 are investing heavily in rolling stock and technology, and our next carrier in the series, Saia, is right in the mix.??

In fact, they appear to be right at the top in terms of projected capital expenditures of $1.0B for 2024.

You read that right.?

One Billion dollars.

A few times a year in our newsletter, we feature a Carrier Earnings series where we evaluate the financial performance of leading carriers in the industry by analyzing the results they release after each quarter.?

In our previous Earnings article, we broke down reports from ODFL and discussed what we saw. Now, let’s get into the reports from Saia to determine what influenced the achievements or difficulties within their operations!

For more information about carrier performance reporting as it relates to your LTL, click here to connect with someone on our team today.

Strategic expansion has been a top priority for Saia; catch up on their Earnings report from Q3 in our most recent analysis on their performance here from our Q3 Earnings series.

Otherwise, let's look closer at what Saia’s leadership team said on Friday about 4Q in 2023 and, more importantly, about 2024 and beyond!

Carrier #4: Saia?

• They reported an OR of 85.0, which is 0.9 points better than their 85.9 OR last year and 1.6 points worse than their 83.4 last quarter.??

• Revenue in Q4 was up a healthy 14.5% over last year, tonnage was up 8.2%, and shipments grew a stunning 18.1% over last year.

On a sequential basis, revenue was down -3.1%, tonnage was down -8.3%, and shipments were down -5.1%.

• Saia's moderate change in OR on a year-over-year and sequential basis was in line with peers, suggesting good cost control.

But it’s notable given their very significant growth in business following Yellow’s closure.

• Their weight/shipment continues to drop faster than their peers, down -8.3% from last year and -3.4 sequentially.??

Yellow has (or…had) a lower shipment size, so it makes sense with Saia having picked up such a large chunk of this business.

?? Flexing the Pricing muscle

• They seem to have done a decent job of pricing the business they acquired from Yellow…this has obviously shifted their profile (given that large drop in shipment size we mentioned earlier).

Saia maintained their OR in pretty decent fashion, as they A) brought on this large amount of new business and B) added staff to handle it all while C) maintaining service.

Make sure to check out our Q3 Earnings analysis for Saia (Linked HERE) to get yourself fully up to speed on Saia's journey over the past year since the Yellow shakeup.

• All of the reporting carriers have shown softness from Q3 to Q4, suggesting some LTL business may have shifted modes.??

Saia's sequential shift was on the higher end of the scale.

• Revenue per cwt was up a healthy 7.5% year over year, supported somewhat by a still-declining weight per shipment, down -3.5% over last year.

Revenue per cwt without fuel was up an impressive 11.7% over last year, but this was also heavily influenced by the large drop in shipment size.??

• Claims ratio in 2023 was 0.63%.

That network growth though…?

• Saia has purchased 28 terminals from Yellow and plans to open 15-20 new terminals in 2024.??

This…is on top of the 20 new terminals added in the last 2 years and 48 terminals added since 2017…is a lot of terminals.

Also…Saia is celebrating their 100th anniversary in 2024!

Big congrats on this, that is a major milestone.??

?? Gliding into 2024 with MOMENTUM

• As mentioned in their Q3 report, Saia's goal for 2024 includes a focus on operational excellence to meet customer expectations.

This would allow Saia to set prices for that high service level to achieve their profit targets.

• Saia's target of $1.0B in capital expenditures for 2024 compares to $437.2M in 2023 and $365.5M in 2022.??

Quite the step up for 2024, representing roughly 33% of? total 2023 revenue. Over half of that 2024 CAPEX spend will be for buying and improving terminals.??

Saying Saia is betting big in 2024 is quite the understatement.?

• Saia pulled forward many of their annual renewals in Q4 - so many, that the number of renewals closed was up 50% and the renewal (increase) rate was 8.7%.?

Coupled with the large 7.5% General Rate Increase in December, Saia is flexing some pricing muscles while growing rapidly, focused on ensuring they generate the revenue needed to support the investments they’re making.

• Saia ended 2023 with 8,700 doors, and total door count could grow upwards of 12 to 15% in 2024 with new terminals and terminal relocations to bigger facilities.

Part of Saia's terminal expansion involves opening up terminals and serving customers directly in markets such as the Great Plains - Saia has historically used partner carriers to handle pickups and deliveries, so this should be an exciting opportunity for advancements in servicing those customers.

• They feel that today, they’re sitting on about 20% excess capacity across their terminal network.?

?? Confidence is key…and they’ve got it

Saia is one of several remaining LTL carriers who are betting big on themselves and investing heavily to expand their network to handle more business.??

That $1.0B in CAPEX for 2024 (more than DOUBLE from 2023) will represent a healthy increase in depreciation expense going forward.??

This will put pressure on earning and their OR, and Saia will need pricing to help support this investment.? That pricing needed could be a headwind to growth, but Saia is bullish on the LTL sector and foresees tightening capacity coupled with remaining players also being focused on higher service levels.

As Saia and other carriers open up their new terminals, they will want to fill these terminals with business.??

How the economy and industry business levels play out in 2024…will be fascinating indeed.?

If the economy kicks up a notch, that will certainly help; but if the industry stays flat or stagnates further, it could begin testing some of the resolve as new capacity sits idle.

?? Coming Up Next: XPO Logistics

Next up on the list in our Q4 Earnings series is XPO Logistics, which released reports on their Q4 performance at the beginning of February this year.

As more carriers come forward with the results of their Earnings from the rest of 2023, this series will dissect what they present and make the information useable (and entertaining, of course)!

Looking to diversify your LTL carrier portfolio? Rising LTL carrier profits like we see here mean it's time to test the field to ensure you're getting a fair rate. Click here to connect with someone on our team today.

This article was collaboratively written by “LTL Observers” - a collective of industry veterans spanning the carrier, shipper, 3PL, and tech provider spaces who are willing to share their opinions.

Disagree with these opinions? We'd love to add you to the line-up to make sure we're including a diverse set of LTL observers. Contact us today.