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June 22 2020

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34 The Journal of Commerce | June 22 2020 www.joc.com Surface Transportation US INDUSTRIAL FREIGHT demand improved in May as economic activity slowly began to revive following the widespread shutdown of businesses in March and April, according to mid-quarter reports from less-than- truckload (LTL) carriers Old Dominion Freight Line (ODFL) and Saia. However, ODFL's revenue per day dropped 16.2 percent year over year in May as LTL shipments per day decreased 16.7 percent, a mea- sure of the broad and deep damage caused by the COVID-19 pandemic and resulting recession. In April, volume was down nearly 20 percent from April 2019. Multiregional LTL carrier Saia reported a similar trend. The eighth-largest US LTL carrier said its shipment volumes were down 16.2 percent year over year in April but only 9.2 percent in May. That suggests LTL freight vol- umes are getting "less worse" as the US takes its first steps toward eco- nomic recovery and some factories and businesses come back online. A broader picture will emerge as more public companies report on mid- second-quarter conditions. ODFL, the second-largest US LTL carrier with $4 billion in 2019 reve- nue, managed to offset some of the decline in revenue through a combi- nation of operating efficiencies and reduction in discretionary spending, president and CEO Greg C. Gantt said in a statement. "While economic uncertainty continues, we are encouraged by the gradual improvement in our daily revenue trend throughout the month of May," Gantt said. In discussions with investment analysts in April and May, LTL trucking executives described a drop in freight volumes — especially manufacturing-related freight — ranging from 10 to 25 percent as stay-at-home orders and business closures disrupted the industrial economy. In the first quarter, ODFL's ship- ments per day were down 5.1 percent from the same 2019 period. By late April, however, LTL volume and reve- nue were down close to 20 percent. Fuel a factor More than a decline in available freight is affecting LTL revenue, how- ever. Lower fuel prices are translating to lower fuel surcharge revenue com- pared with May 2019. That drop in surcharges will impact total revenue reported by LTL and truckload carriers alike in the second quarter. US retail diesel fuel prices averaged $2.39 per gallon over the four weeks of May, a 24 percent year-over-year decline and nearly 22 percent lower than the $3.05 per gallon average for January, according to data from the US Energy Information Administration. In recent weeks, the slide in aver- age retail diesel prices has slowed, Gradual recuperation US LTL carriers see slight improvement in dismal May By William B. Cassidy LTL freight volumes are getting "less worse" as the US takes its first steps toward economic recovery. Trucking | Rail | Intermodal | Air & Expedited | Distribution

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