Susquehanna Financial Group has revised its earnings estimates for less-than-truckload (LTL) carriers following disappointing volume updates for August. The investment firm has delayed its forecast for a “gradual recovery” in demand to 2025, now projecting that a significant performance rebound will occur in 2026. Analyst Bascome Majors highlighted weaker-than-expected LTL volumes and a slower recovery trajectory.
Earnings Estimate Reductions
Susquehanna Financial Group has adjusted its earnings projections, reducing third-quarter and fourth-quarter estimates by an average of 10% and 14%, respectively, for major LTL carriers including Old Dominion Freight Line (NASDAQ: ODFL), Saia (NASDAQ: SAIA), and XPO (NYSE: XPO). Canadian conglomerate TFI International (NYSE: TFII), which has LTL exposure through its TForce Freight subsidiary, saw a more modest adjustment with a 4% reduction for the third quarter and a 1% increase for the fourth quarter.
Revised Long-Term Outlook
Full-year 2025 estimates for the three U.S. LTL carriers were cut by an average of 18%, while TFI International’s estimate was reduced by 5%. For 2026, Majors projects a more optimistic outlook, assuming an average year-over-year growth rate of over 30% for LTL carriers and 25% growth for TFI. The revised forecasts are based on the expectation of continued rate discipline among carriers, with mid-to-high-single-digit year-over-year contractual rate increases anticipated in the latter half of the year.
Factors Influencing the Revised Forecast
The revision to the 2025 forecast reflects ongoing softness in the industrial economy, with a gradual improvement expected throughout the year. Majors anticipates a full recovery by 2026, driven by factors such as cooling inflation, potential interest rate cuts, and an eventual end to a prolonged freight recession. Early signs of price stability in the truckload market are also contributing to a more positive outlook.
Disappointment in Q3 Intraquarter Updates
Mid-quarter updates from public LTL carriers revealed worse-than-expected year-over-year tonnage declines for August. The average decline was 3%, compared to a 2% decline in July. Saia was an exception, showing an 8% increase in tonnage for August, following a 5% increase in July. Saia’s growth was attributed to its acquisition of abandoned shipments and terminals from Yellow Corp., though recent gains have been in lower-margin retail shipments and large national accounts.
Impact on Other LTL Carriers
Excluding Saia’s results, tonnage for other public LTL carriers was down 7% year-over-year in August, following a 4% decline in July. August 2023 presented tougher comparisons due to the first full month benefiting from Yellow’s exit. Lower shipment weights, which typically negatively impact margins, were also a factor in the disappointing performance. Despite positive yield growth, only two carriers report this metric intraquarterly.
Market Reactions
Shares of Old Dominion Freight Line (up 1.8%), Saia (up 2.5%), and XPO (up 0.6%) saw gains at 2:14 p.m. EDT on Wednesday, outperforming the S&P 500, which was up 0.3%. TFI International’s shares remained flat for the day.
Conclusion
Susquehanna Financial Group’s downgrade of LTL carrier earnings estimates reflects a more challenging near-term outlook due to softer demand and disappointing volume updates. However, the firm remains optimistic about a significant recovery in 2026, supported by rate discipline among carriers and improving economic conditions. As the market adjusts to these changes, investors will closely monitor developments in the LTL sector and the broader economic environment.
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