First look: ArcBest reports tough Q1

Transportation and logistics provider ArcBest reported a modest earnings miss for the first quarter on Tuesday before the market opened.

ArcBest (NASDAQ: ARCB) reported adjusted earnings per share of 51 cents, 1 cent light of the consensus estimate but 83 cents lower year over year. The consensus EPS number came down 30 cents in the 90 days leading up to the Tuesday report as analysts cut forecasts due to soft demand trends in March.

The adjusted result excluded 38 cents in one-offs like costs from technology pilot programs and acquisition-related expenses.

ArcBest’s asset-based unit, which includes results from less-than-truckload subsidiary ABF Freight, reported a 3.7% y/y revenue decline to $646 million. Tonnage per day was off 4.3% as daily shipments fell 0.4% and weight per shipment was down 3.9%.

Revenue per hundredweight, or yield, increased 1.7% y/y and was up by a low- to mid-single-digit percentage excluding fuel surcharges. The lower shipment weights were a tailwind to the yield metrics in the quarter. Contractual agreements saw a 4.9% average price increase as “LTL industry pricing remains rational,” according to a news release.

The y/y tonnage declines lessened as the quarter progressed from down 9.2% in January to just 1.6% lower by March. April tonnage inflected positively, up 1% y/y. However, the prior-year comps were much easier (mid- to high-teen declines) and the company began taking on more truckload freight in February to improve throughput at its service centers. That has had a negative impact on yields, which were 7% higher y/y in January but off by 1.8% by March. (April was down 2% y/y and slightly negative excluding fuel.)

ArcBest also said a mix shift to “easier-to-handle freight” from some of its core customers, which likely garner fewer accessorial charges, has been a drag on yields. Fewer shipments from the manufacturing sector was cited as a headwind as well.

The LTL unit reported a 95.9% adjusted operating ratio (inverse of operating margin), 390 basis points worse y/y and sequentially, but within the normal sequential range of 350 to 400 bps of deterioration.

Salaries, wages and benefits expenses (as a percentage of revenue) were up 190 bps y/y.

The company normally sees 300 to 400 bps of OR improvement from the first to the second quarter and said it expects to perform within that range this year. That implies a 92.4% OR at the midpoint of the range, which would be 260 bps worse y/y.

The asset-light unit, which includes truck brokerage, reported a $1.2 million adjusted operating loss, the seventh consecutive loss in the segment. ArcBest forecast a similar loss in the second quarter.  

Shares of ARCB were down 3.1% in premarket trading on Tuesday.

The company will host a conference call at 9:30 a.m. EDT on Tuesday to discuss first-quarter results.

More FreightWaves articles by Todd Maiden:

• Landstar quantifies suspected fraud event, delays Q1 report
• Saia’s shares sag 30% as tariffs tank demand, exacerbate growing pains
• TL carrier Pamt books another loss in Q1

The post First look: ArcBest reports tough Q1 appeared first on FreightWaves.

Read More

BNSF and UP say possible container glut doesn’t scare them

Since late last year, BNSF Railway and Union Pacific have been busy handling a surge of containers from West Coast ports as U.S. companies pulled forward imports to beat potential tariffs.

But now with a trade war underway — and tariffs as high as 145% on goods made in China — the number of containers bound to the U.S. from China has dropped precipitously. Container shipping line Hapag-Lloyd, for example, has seen its China-U.S. bookings drop by a third since tariffs were imposed on April 2. And so shipping lines are canceling sailings from Chinese ports.

“It’s my prediction that in two weeks’ time, arrivals will drop by 35% as essentially all shipments out of China for major retailers and manufacturers have ceased, and cargo coming out of Southeast Asia locations is much softer than normal,” Port of Los Angeles Executive Director Gene Seroka said Thursday.

The trade disruption is setting up the potential for kinks in the supply chain that could lead to congestion in the U.S. and a shortage of containers in Asia, intermodal analyst Larry Gross says.

The containers that came to the U.S. during the import surge need to make their way back to West Coast ports. But with far fewer ships now scheduled to call at U.S. ports, there won’t be as much capacity available for the containers to hitch a ride back to Asia.

So the fear is that the glut of empty containers will begin to stack up. “There’s a storm brewing,” Gross said.

UP (NYSE: UNP) and BNSF say they’re ready and able to handle any disruption that may arise.

Both railroads experienced congestion that accompanied strong demand for consumer goods after the pandemic hit in 2020. As inland warehouses filled up, customers were slow to remove their containers from terminals in Chicago and Texas. That created a logjam at BNSF and UP terminals, which spread across their networks and all the way back to the ports of Los Angeles and Long Beach.

The supply and demand dynamic is much different now, but huge volume swings can still create trouble. “The flow of empties westbound continues, and the ports will soon be clogged with empties and no ships to load them on to,” Gross said.

Union Pacific CEO Jim Vena says his railroad is closely monitoring terminal capacity and container flows and is nowhere near capacity. “Overall in our network, we’re very, very cognizant of what we have and what we can hold on to in our terminals,” he said in an interview Wednesday.

Meanwhile, West Coast ports now can handle more volume. “​​LA and Long Beach have done a good job of working on their capacity, so I think that they’re in better shape,” Vena said. It’s the same story in the Pacific Northwest, where Seattle and Tacoma have handled a surge in container traffic partly driven by regaining share from Vancouver and Prince Rupert, British Columbia, following labor unrest in Canada.

UP will be proactive to prevent congestion, a lesson learned during the pandemic-related disruptions.

“At UP we should have been way faster to say, ‘We’re not your storage on the inland terminals, we’re not going to sit on your containers, and we’re not going to load ’em at LA-Long Beach,’” said Vena, who rejoined UP as chief executive in 2023. “UP had 25 trains parked headed towards the city of Chicago — 25 trains, every one of those trains close to 2 miles long. So we had 50 miles of locomotives and trains parked. It will not happen under Jim Vena’s watch.”

A BNSF spokesman says the railroad doesn’t currently anticipate supply chain issues.

“But we’re confident in our ability to mitigate any issues as they arise,” said Zak Andersen, BNSF’s chief of staff and vice president of communications. “Since the supply chain challenges during the pandemic, we’ve added significant capacity, including nearly 93 miles of double-track and additional production tracks and parking at our intermodal facilities on the West Coast and across our network. We’re a bigger railroad with more capacity and capability than just a few years ago.”

Plus, there’s excess capacity in other parts of the supply chain, including trucking, drayage, containers and warehousing.

“The potential of a recurrence of supply chain challenges, however, underscores the need for our Barstow International Gateway,” Andersen said of the $1.5 billion terminal and transload center planned for Barstow, California. “Clearing containers from the ports as they arrive, the reduction in cycle time and our ability to pre-stage railcar supply at BIG will prevent the port congestion the supply chain experienced in 2021.”

Gross says eastbound trans-Pacific container volume won’t rebound until there’s clarity on the tariff situation. Meanwhile, he contends that disruptions in container supply and demand will create inefficiencies that will contribute to inflation. “There’s cost associated with all this — cost with no value generated,” he said.

Related:

Railroads take steps to ease intermodal congestion

The post BNSF and UP say possible container glut doesn’t scare them appeared first on FreightWaves.

Read More

Drewry: Global container volumes to drop 1% on Trump tariffs

President Donald Trump’s tariff war is expected to cut global container volume by 1% in 2025, Drewry said, only the third such forecast in its history.

That would amount to approximately 1.8 million twenty-foot equivalent units based on worldwide container traffic of 183.2 million TEUs in 2024, and approximately 10% of the more than 10 million-TEU increase in global traffic from 2023. 

Volume fell 8.4% during the financial crisis of 2009 and 0.9% during the COVID pandemic of 2020, said Drewry, which began tracking container data in 1979.

Drewry in a slide presentation said contracting demand by shippers will increase capacity in the market, likely putting downward pressure on rates and leading to “much more” scrapping of tonnage and idling of ships as carriers rebalance supply and demand.

While there is a 90-day pause on most tariffs, Trump this week said the U.S. levies on China are likely to be reduced. Drewry said that if two-thirds of the current tariffs stay in place, imports from China could decline by 40%.

The analyst also warned that more frontloading by importers during the tariff pause could put container shipping in an operational bind by July due to port congestion, disruptions from canceled sailings, and a shortage of empty containers last seen during COVID.

The tariff battle between the United States and China has amounted to a goods embargo between the trading partners, with follow-on effects that are already whipsawing through the supply chain.

For the week ending April 14, global container booking volumes slipped 1.57% week over week and 9.94% year over year, according to Vizion. U.S. import bookings declined 12.15% w/w and 22.37% y/y, while China-to-U.S. bookings dropped 22.15% w/w and 44% y/y.

In published reports, liner operator Hapag-Lloyd (HLAG.DE) said it had seen trans-Pacific bookings drop by 30%, while Evergreen Marine (2603.TW) noted trans-Pacific capacity has tumbled by 30%-40% on China export-import volumes that have declined 60%-70%. 

Since nothing in the supply chain happens in a vacuum, while the China-U.S. business dries up, shippers are shifting sourcing, and ocean carriers have been quick to blank sailings, reconfigure rotations and redeploy capacity to more profitable lanes, such as Asia-Europe.

The result, some observers say, is that even if Beijing and Washington agreed to a tariff ceasefire by, say, the end of May, and Chinese factories ramped back up, it would likely take 30 days until economic activity returned to the Port of Los Angeles, the busiest U.S. import hub; 45 days for the Midwest and Houston; and 50 days for the Port of New York-New Jersey. Recovery in ocean shipping almost always takes longer than disruptions; it took several weeks to months for ports in Canada and the U.S. to recover from intermittent labor work stoppages in 2024.

It’s also unclear if logistics providers such as warehouse and trucking will be similarly prepared to resume operations. To that end, anecdotal information has at least one major East Coast port scrambling for any type of export cargo, to keep longshore labor and trucks busy.

“Anytime you are handling cargoes outside of the normal commodities, that increases risk,” said Andrew Kinsey, director of marine consulting for Integrated Specialty Coverages. “A key factor is the secondary infrastructure to support the demands of the new cargo. For refrigerated cargoes, do you have sufficient plugs to maintain temperature? For heavy-lift and project cargoes, do you have sufficient storage, and can the aprons and access roads support the weights?

“There is always the question of longshore labor as well – are we looking to secure out-of-gauge cargoes on flat racks, and are they up to the task at hand?”

Kinsey said it’s not just container shipping that is being impacted by market uncertainties.

“Project cargo investment also appears to be pulling back in the short term given the questions surrounding what will be subject to tariffs, as well as market conditions and interest rates,” he said. “We are waiting on several final investment decisions for infrastructure projects that have been delayed.”

Find more articles by Stuart Chirls here.

Related coverage:

Chief negotiator on union longshore pact to lead USMX

Trans-Pacific container rates stable as trade war rages

Shares of largest US-flag container carrier plunge under Trump tariffs
Trans-Pacific blank sailings soar as ocean shipments plunge

The post Drewry: Global container volumes to drop 1% on Trump tariffs appeared first on FreightWaves.

Read More