Old Dominion Freight Line Q3 2024 Earnings Call Transcript

Participants

Corporate Executives

• Jack Atkins, Director, Investor Relations
• Kevin Freeman, President and Chief Executive Officer
• Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary

Analysts

• Eric Morgan, Barclays PLC
• Jason Seidl, TD Cowen
• Daniel Imbro, Stephens
• Scott Group, Wolfe Research
• Jordan Alliger, The Goldman Sachs Group, Inc.
• Jonathan Chappell, Evercore ISI
• Ken Hoexter, Bank of America Co.
• Ravi Shankar, Morgan Stanley
• Chris Wetherbee, Wells Fargo & Company
• Brian Ossenbeck, JP Morgan Cazenove
• Ari Rosa, Smith Barney Citigroup
• Stephanie Moore, Jefferies Financial Group Inc.
• Bascome Majors, Susquehanna Bancshares, Inc.
• Tom Wadewitz, UBS Securities
• Bruce Chan, Stifel Nicolaus
• Jeff Kauffman, Vertical Research Partners

Presentation

[Operator]

Good day, and welcome to the Old Dominion Freight Line Third Quarter 2024 Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Jack Atkins, Director of Finance, Investor Relations. Please go ahead.

[Jack Atkins, Director, Investor Relations at Old Dominion Freight Line]

Thank you, operator, and good morning, everyone. Welcome to the third quarter 2024 conference call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through October 30, 2024, by dialing 1-877-344-7529, access code 4016991. The replay of the webcast may also be accessed for 30 days at the company's website.

This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements.

You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's news release. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

As a final note before we begin, we welcome your questions today, but ask that you limit yourself to just one question at a time before returning to the queue.

At this time for opening remarks, I would like to turn the conference over to Marty Freeman, the company's President and Chief Executive Officer. Marty, please go ahead, sir.

[Kevin Freeman, President and Chief Executive Officer at Old Dominion Freight Line]

Good morning, and welcome to our third quarter conference call. With me on the call today is Adam Satterfield, our CFO. After some brief remarks, we will be glad to take your questions. I am joining the call today from a separate location. Therefore, please bear with us when we are taking questions if there are any connectivity issues.

Old Dominion's financial results in the third quarter reflect continued softness in the domestic economy. Our revenue and earnings per diluted share both declined on a year-over-year basis during the quarter, although our market share and volume trends remained relatively consistent with the first half of the year. While the operating environment continued to be challenging, our team did a good job of managing our variable cost and we also continue to control our discretionary spending.

The deleveraging effect from the decrease in revenue, however, caused many of our cost categories to increase as a percent of revenue. This was the primary driver for the increase in our operating ratio to a 72.7% in the third quarter. We have been pleased with the consistency in our market share this year, which is consistent with our historical experience during slower parts of the economic cycle. We continue to have strong customer retention trends and we are also winning new business.

Our customers simply have had fewer shipments that they contender to us. And our average weight per shipment has also remained at historical lows. The stability of our market share continues to be supported by the quality of our service and overall value that we offer to our customers. These are a few of the foundational elements of our long-term strategic plan. The OD Family of employees continued to execute on these core principles during the third quarter as our on-time service was 99% and our cargo claims ratio was a 0.1%.

While we are incredibly proud of these service statistics, we would also like to remind you that superior service means much more than simply picking-up and delivering our customers freight on-time and claims free. There are plenty of other attributes that shippers consider when selecting a carrier, such as carrier's trustworthiness, ease of doing business and the quality and responsiveness of customer service representatives.

In fact, Mastio and Company measured 28 different service and value-related attributes as part of its recent annual survey of shipper and logistic professionals. Mastio published the results of its 2024 study last week, and we were honored to be named the number-one national LTL provider for the 15th consecutive year. OD finished number-one in 23 of the 28 evaluated categories measured by Mastio and maintained a sizable lead against our competition when it comes to the overall quality of service.

I would like to congratulate the entire OD Family of employees on this remarkable achievement. And I would also like to thank this outstanding team for their commitment to our company and our customers. We continue to believe that consistency and quality of our service over the long-term has differentiated Old Dominion in the marketplace and driven our long-term profitable growth.

While becoming the best carrier in the business was hard, remaining the best carrier for 15 straight years is an incredible accomplishment and that is hard to put in perspective. Every member of the OD team has played a part in our success and I can assure you that each of us is incredibly motivated to keep delivering our promises to provide our customers with the high standard of service.

By continuing to provide best-in-class service to our customers day-after-day and year-after year, we are also able to maintain our long-term and disciplined approach to pricing. We continue to focus on consistently improving our yields to sufficiently offset our cost inflation and support additional investments in capacity and technology. These ongoing investments have created incremental value for our customers in many ways, which has further enhanced our industry-leading value proposition.

Our customers have recognized our value proposition over time, which has allowed us to be able to earn more and more of their business. As a result, we have won more market share over the past 10 years than any carrier in our industry. While the economic environment has remained sluggish for much longer than we ever anticipated, we believe we are better positioned than ever to respond to the eventual inflection in-demand that will occur as the economy improves. We have the capacity, the fleet and most importantly, the committed team of people to take advantage of an improving economic environment.

Our unique company culture and each employee's commitment to excellence gives me tremendous confidence that we can also be the biggest market share winner over the next 10 years. This confidence is bolstered by the results of the most recent Mastio study as well as the ongoing conversations we have with our customers. By staying focused on long-term opportunities for additional profitable growth, we remain confident in our ability to create additional value for our shareholders.

Thank you for joining us on the call this morning, and now Adam will discuss our third quarter in greater detail.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Thank you, Marty, and good morning. Old Dominion's revenue totaled $1.47 billion for the third quarter 2024, which was a 3.0% decrease from the prior year. We had one extra workday in the third quarter of this year, so the decrease on a per day basis was 4.5%. These revenue results reflect the 4.8% decrease in LTL tons per day that was partially offset by the 1.5% increase in LTL revenue per hundredweight.

On a sequential basis, our revenue per day for the third quarter decreased 1.9%, when compared to the second quarter of 2024, with LTL tons per day decreasing 3.2% and LTL shipments per day decreasing 1.0%. For comparison, the 10-year average sequential change for these metrics includes an increase of 3.6% in revenue per day, an increase of 0.9% in LTL tons per day and an increase of 2.3% in LTL shipments per day.

The monthly sequential changes in LTL tons per day during the third quarter were as follows: July decreased 4.4% as compared to June. August decreased 0.8% as compared to July and September increased 1.7% as compared to August. The 10-year average change for these respective months is a decrease of 2.9% in July, an increase of 0.6% in August and an increase of 3.5% in September. For October, we expect our revenue per day will decrease by approximately 11.2% to 11.8%, when compared to October 2023 with a decrease of approximately 9.2% to 9.8% in our LTL tons per day. As usual, we will provide the actual revenue-related details for October in our third quarter Form 10-Q.

Our operating ratio increased 210 basis points to 72.7% for the third quarter of 2024. As Marty mentioned, the decrease in our revenue had a deleveraging effect on many of our operating expenses during the quarter. This contributed to the 110 basis point increase in our overhead costs as a percent of revenue. In addition, and for the first time this year, our direct operating cost also increased as a percent of revenue when compared to the same quarter of the prior year. The increase in our direct operating cost as a percent of revenue was primarily due to an increase in cost associated with our group health and dental plans. As a result, our employee benefit cost increased to 38.6% of salaries and wages during the third quarter of 2024 from 37.3% in the same period of the prior year.

Old Dominion's cash flow from operations totaled $446.5 million for the third quarter and $1.3 billion for the first nine months of 2024, respectively, while capital expenditures were $242.8 million and $600.4 million for the same periods. We utilized $187.7 million and $824.8 million of cash for our share repurchase program during the third quarter and first nine months of 2024, respectively, while our cash dividends totaled $55.6 million and $168.2 million for the same periods. Our effective tax rate for the third quarter of 2024 was 23.4% as compared to 24.0% in the third quarter of 2023. We currently expect our effective tax rate to be 24.5% for the fourth quarter.

This concludes our prepared remarks this morning. Operator, we'll be happy to open the floor for questions at this time.

Questions and Answers

[Operator]

We will now begin the question-and-answer session. [Operator Instructions]. And our first question today comes from Eric Morgan of Barclays. Please go ahead.

[Eric Morgan, Analyst at Barclays]

Hey, good morning. Thanks for, thanks for the question. I guess I just wanted to start on the near-term. It sounds like October tonnage decline is getting a little bit worse relative to September. Is that being driven by shipment weights coming lower is kind of has been the trend here recently? And then how you're thinking about operating ratio into your end here? That would be helpful. Thank you.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. The, from a volume standpoint, the year-over-year, our tonnages in October, take the mid-point of that, that range that we gave would be down about 9.5%. And obviously, we've got many days left to finish out this month. And so we'll see how the rest of the month finishes is why we, we gave a little bit more of a range than we normally do. But if you take the mid-point of that in October, that's, that's got our sequential change down, just call it about 3.5%, the 10-year average sequential is a decrease of 3.1%, and that's October versus September.

So, it's actually encouraging to see what our volume trends so far this month have been. This is the first time that, that we've been, I would say, relatively close to what our normal sequential changes have been in the first month of a quarter. So we feel pretty good about how volumes are trending and continued strength in our yield performance that, that we've seen as well. So we'll continue to watch that. But the year-over-year, I think is just skewed a bit by, if you recall, last year, we had a competitor that, that had some cybersecurity issue and we had some temporary freight coming into the system, if you will.

So we picked up some incremental freight there that was a bit unusual and caused outperformance from a seasonality standpoint that obviously is not there right now, but, but feeling good thus far about the October trend.

[Eric Morgan, Analyst at Barclays]

Thanks. And just the operating ratio side of that, if you wouldn't mind. Appreciate it.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah, I was going to try to leave that maybe for someone else. Those are two big questions packed into one. So just try to keep questions to one, but, but just to go ahead and address that because we know it's going to be a question anyways. The normal 3Q to 4Q regression is about a 200 basis point to 250 basis point deterioration and that's excluding any insurance adjustments. We do an actuarial assessment in the fourth quarter every year. Sometimes those are good guys. Sometimes like last year, I think we had about a 70 basis point headwind when it came to the actuarial adjustment. It was an unfavorable adjustment last year.

So I think when thinking about this fourth quarter, conservatively, I think we probably ought to slide that scale up about 100 basis points. And the reason for that would just be the continued risk from a revenue standpoint and the impact that would have on overhead expenses. We just saw that headwind play-out in the third quarter, kind of going back to the guidance that we gave at the end of the second quarter call going into 2Q, revenue came in softer. And as a result, our overhead expenses were about 40 basis points higher than kind of what we had anticipated at the end of the second quarter call.

And then I think we also have a continued risk with respect to our fringe benefit cost and those were higher than what the trend has been this year and higher than, than what they had been for the same period last year in the third quarter. And so I think there's a continued risk those may stay a little bit higher in the fourth quarter. But both of those things are something that, that could trend better. I think if, if we have like I mentioned earlier, the October trend is starting out pretty good from a volume standpoint. So, if we can get our revenues back closer to seasonality, if you will. And obviously, we'll give our mid-quarter updates, then there can be some favorability there, but, but just some, some pluses and minuses. And I think from a conservative standpoint, probably better to just slide that scale up in terms of where, where things stand right now.

[Eric Morgan, Analyst at Barclays]

Thanks a lot.

[Operator]

And our next question today comes from Jason Seidl with TD Cowen. Please go ahead.

[Jason Seidl, Analyst at TD Cowen]

Yeah. Thank you, Robert [Phonetic]. Hey, gentlemen, good morning. Appreciate the time. You brought up SD's issues that they had last year that sort of grow sort of beyond normal tonnage numbers for you in October of '23. Should we expect then that by November and December, the tonnage comps get easier. So we're not probably really looking at sort of down as much as we're seeing in October.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. I think that's fair. I think the October is definitely the toughest comp. When I go back and look at last year's sequential performance in November versus October, our tonnage was down 0.6% [Phonetic] and our 10-year average there is a 3.1% increase. And then December outperformed, we were down 4.8% in December of '23 versus November of '23. The 10-year average there is 7%. So, I think that this is probably the toughest comp, if you will, of the quarter in October. But depending on how November trends, if we get some acceleration back in the business and then obviously, December is always a tough month for everyone given the holidays and whatnot. But if we can kind of hang on, we had a little bit of outperformance there. So that'll, December will be a little bit tougher versus the November.

But I think on the whole, as we go through this, this fourth quarter, I mean, this, this feels like we're finally getting to what we hope is a floor. We're encouraged about how things are trending. It's good to see the sequential performance thus far in October. And obviously, it got many days to get through this quarter and 1Q is also tough, but to think about from a big picture standpoint, we've been underperforming normal sequential trends for about two-and-a-half years now. So, it certainly feels like we're finally coming to the end of a cycle. We've got to go through these, these tough quarters, but we finally have seen, I think, traction with respect to interest rates are declining. We'll have the uncertainty of the election behind us pretty soon.

And so hopefully, we get back to seeing some, some growth for our industry for which typically when the industry starts to inflect to the positives, that's when our model shines the brightest and we win the most shares. So we're looking forward to getting through this, this final quarter here of the year and starting out next year with hopefully some good strength.

[Jason Seidl, Analyst at TD Cowen]

No, I hope so too, Adam. And with the with the year-over-year comp in October for SD's, did that impact the weight per shipment at all? Could you remind us?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

The weight per shipment, last year, it was pretty much right in line with, with what our normal 10-year average would be. So we were, in October last year, we were down 0.3% [Phonetic] and then pretty much performed about in alignment with what normal weight per shipment would trend. Typically, you'll get a little bit of an increase in weight per shipment from the third quarter to the fourth quarter. And that's something that, that actually was a little bit of a surprise for us in the third quarter, our weight per shipment ticked down a bit and July was, was somewhat consistent and I'm speaking of this year now, July was pretty consistent with our 10-year average, but then it dropped further in August, came back a little bit in September, but overall kind of underperformed what the weight would be.

But at this point, we've actually in October are seeing a bit of an increase. So typically, the 10-year average in October, like I just said, is down 0.3% [Phonetic]. So, if we're seeing a little bit of an increase, that's obviously a good thing for business as well. We're getting more weight per shipment. We're going to have a little bit higher revenue per shipment as well and that generally drives improved productivity also. So, and hopefully that's, that generally has been a sign of hope with respect to the economy as well. So that will be another metric to continue to watch to see if we see things start to pick-up for us.

[Jason Seidl, Analyst at TD Cowen]

Right. Well, listen, I really appreciate the time and color guys.

[Operator]

Our next question today comes from Daniel Imbro with Stephens Inc. Please go ahead.

[Daniel Imbro, Analyst at Stephens]

Yeah. Hey, good morning, guys. Thanks for taking our questions. I want to follow-up, maybe on the near term trend. So it seems like LTL yield growth has moderated a bit across the industry. I appreciate the tonnage update for October. I guess, Adam, could you share some color on how you see yields shaping up here to the fourth quarter? And then more broadly, if the macro remains this week, I guess, do you expect to see any irrationality in the market that would make it harder for you guys to keep realizing price increases above inflation, or how is your price realization going as you talk to customers? Thanks.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah, I was pleased with our yield performance through the third quarter, and it takes having superior service to support what we're able to achieve consistently year in and year out from a yield performance. And so we're really, really proud of the service metrics we've been able to deliver. And just to repeat, winning that Mastio award for the 15th straight year, hopefully has put to bed some of the faults that, that gap between us and our competitors has closed. And so really pleased to, to see that performance with this year's results.

But I think at the end of the last call, we talked about normal seasonality with respect to our revenue per hundredweight excluding fuel surcharges and that would have put us in the 4% to 4.5% range for the third quarter, and we came in at the top-end of that range. And granted, we had a little bit lower weight per shipment as I just was referencing with Jason. But yeah, so that certainly helped the revenue per hundredweight, but, but to me, it just seemed like consistent performance through the quarter and that's what we would continue to expect.

Our yield management process is, we take a long-term and consistent approach that tries to offset our cost inflation and support continued investments in our network and in our technologies and so forth. So, if normal seasonality plays out for the fourth quarter, that would put that revenue per hundredweight excluding fuel up in the 3.8% to 4.2% type of range. And yeah, we'll continue to watch that as we go through, but we expect to continue to get increases. We're seeing it. We've seen it throughout this year and really throughout the last two-and-a-half years that we've been in this, this weak economic period. And so just continue to execute on that consistent philosophy and we're getting increases as we go through bid renewals and that would be the same expectation as we go through this year and would be the same as we go through next year as well.

[Daniel Imbro, Analyst at Stephens]

Appreciate all the color. Best of luck guys.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Thanks.

[Operator]

And our next question today comes from Scott Group with Wolfe Research. Please go ahead.

[Scott Group, Analyst at Wolfe Research]

Hey, thanks. I just want to follow-up on that last question. So, I think, Adam, your October update is that total yields were negative. And I guess you're talking about yield ex-fuel up, call it, 4%. So, is that, this is entire, this drop-off in yield is entirely fuel is, I know fuel is down, but I just want to make sure that that's right. And then just to like ask it sort of directly, like are you seeing more pricing competition or rational pricing? There's certainly more concern about that in the market right now. I just, are you guys seeing it or not?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. Just to address October, and we didn't give the exact number, but you can kind of back into it, the revenue per hundredweight with fuel right now is trending down, but a lot of that is fuel-related. Fuel at this point is down about 20% compared to October of last year. So a bigger drop, if you will, compared to what we just saw in the third quarter. And that should moderate as we progress through the fourth quarter. It was about 4.50 [Phonetic] a gallon last year in October, but ended up averaging about 4.25 [Phonetic] for the full fourth quarter of last year. So that's something that will moderate a bit.

And anytime looking at one-month trends as well, given some of that disruption that we had last year, you had some mix issues going on and so forth. So we would still expect to see that sequential trend play-out like I just mentioned and overall yields ex-fuel being up in that, that 3.8% to 4.2%. Assuming mix stays constant. If we see a continued increase in weight per shipment, that could put some pressure on the reported yields, that revenue per hundredweight, but that would be a good thing. So yeah, that's what we'll continue to watch.

But you know, I think that with respect to the overall environment, we'll have to wait-and-see what the other carriers report and what their commentary is like. I can only speak for us, but the environment has, has been pretty stable, all things considered this whole year. And we've been able to continue to get our increases. And I think that, that proves the value proposition that, that we have and what we can offer shippers and being consistent with our approach. So, it hasn't impacted us. It hasn't impacted our market share. Our market share has been flattish, which as Marty mentioned earlier, it's typically what we see and through a slower economic period.

And so I feel like we're well-positioned with what we've done, how we've executed, managed our cost, managed our operating ratio through this last couple of years and feel good about our positioning whenever we can turn the page back to having a little bit of economic tailwinds for a change. It feels like we've been running against the wind for, for a long-time now and we're ready to see things start to turnaround and give us a little bit of help from an economic standpoint.

[Scott Group, Analyst at Wolfe Research]

Makes sense. Thank you, guys.

[Operator]

And our next question today comes from Jordan Alliger with Goldman Sachs. Please go ahead.

[Jordan Alliger, Analyst at The Goldman Sachs Group]

Yeah. Hi, good morning. Yeah, I know from a, from a high level standpoint, hopefully, we are bottoming from a trend perspective. I'm just curious, are there any pockets of your customer base, whether it be retail, manufacturing, wholesale or distributor where maybe you could point to even being some favorable volume, or is it pretty much not the case?

And then secondly, if we have normal seasonality from October, I think we're kind of running normal September to October, if we run normal seasonality through the balance of this quarter, is there a way to think about where tonnage could shake out in aggregate year-over-year for the quarter? Thanks.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. The, from a breakdown of the revenue base, I mean, as you can imagine, we're seeing better performance with our retail-related customers and continued weakness with our industrial-related customers, which industrial for us is 55% to 60% of our revenue. So, that's certainly showing in our numbers and the decrease that we've seen. But I think ISM has been down for 22, 23 months now and that's, that's been the challenge that we faced over this last couple of year period. But the retail has performed a little bit better. Really the one thing that if you look for a bright spot would be our third-party logistics customers.

3PL represents probably a third of our revenue and we actually saw some revenue growth with our 3PL customers in the third quarter. So to me, that's a good trend because we've talked in recent quarters that we feel like there's been some modal shift that, that has been happening over the, I would say, especially last year when, when that large competitor closed their doors. I think people were just trying to find a home for freight and in many cases, many LTL shipments might have ended up in the truckload world. And a lot of times we'll see that movement back-and-forth between modes, especially with the 3PLs. And so now that we're seeing an influx of business coming back-in, I think whatever outflow was going, the tide is finally coming back in. And so if we can see a continuation there, that should mean a good thing as we project out and start thinking about 2025. So, that's probably the brightest spot to pick through the different customer base.

[Jordan Alliger, Analyst at The Goldman Sachs Group]

Thanks. And then again, just if you have any thoughts on normal volume seasonality from here for the balance of the quarter, where that could kind of maybe shake-out for the whole quarter?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. I mean it's, we're a long ways from there. So, but if, if we were to hit normal seasonality, that would put tonnage per day down like 6.5% to 7% for the full-quarter. And if you just look at kind of bigger picture revenue, revenue per day at seasonality would be at about $1.4 billion and we've been underperforming seasonality like I mentioned for the last couple of years. So if you kind of take that, that normal rate of underperformance, at least, where we were in the third quarter, it'd be down like $1.35 billion. So it's something to just keep in mind as we progress through the quarter and give our full updates. Obviously, the revenue per day in October is should look the worst and then hopefully things from a comp standpoint just start looking better overall as we get into November, and we'll give our mid quarter update that will help you all clean up your models from there.

[Jordan Alliger, Analyst at The Goldman Sachs Group]

Thank you.

[Operator]

[Operator Instructions]. And our next question today comes from Jon Chappell with Evercore ISI. Please go ahead.

[Jonathan Chappell, Analyst at Evercore ISI]

Thank you. Good morning. Adam, you kind of mentioned at the end of one of your answers the uncertainty around the election. And this is a narrative that we've heard just a little bit recently about shippers maybe kind of pausing until there's a little bit more certainty. I know you have a very diverse end market of customers, but is there any way to kind of frame out what may be a temporary pause versus just the ongoing kind of industrial macro headwinds that you've been facing for the last several quarters?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. I think that, obviously, in time you have uncertainty and typically when you look in election years, they haven't been the, the best freight years, at least in recent history. And so I think that there have been plenty of headlines and we've had customer conversations as well where people are being a bit conservative right now and until they know what things may look like and what impact to their business new policy directions may take. So I think that's something that is temporary, especially right now, but at some point, people have got to get back to, to looking at their business and how ultimately they want to figure out, how to grow and expand and do the things that, that creates freight that, that will create opportunities for us.

So, I think that's something that once we can get just this level of uncertainty, that's one more thing that has kind of been potentially holding the economy back at least for the last quarter or so. So we get past that and start taking interest rate cuts taking effect. I think people will get back as long as we have a healthy consumer and we're a consumer-driven economy and people are buying things, inventory balances get drawn down and there's got to be replenishment at some point. And so we feel like that, that inventory scale has been drawn down. And once we sort of renormalize, if you will, we'd expect that we'll be able to pick-up quite a bit of freight.

[Jonathan Chappell, Analyst at Evercore ISI]

Thanks, Adam.

[Operator]

And our next question today comes from Ken Hoexter with Bank of America. Please go ahead.

[Ken Hoexter, Analyst at Bank of America]

Hey, good morning. So Adam and Marty, it sounds like a consistent top line, but, but fixed costs are starting to run. Is there anything you can or want to do at this point to cut those costs, maybe shed some excess capacity? Seems like that's bearing down on the industry. And just to clarify your OR comment, was that 300 basis point to 350 basis point sequential deterioration. So you're talking about a 75.5-to-low 76 [Phonetic] type of number for the fourth quarter?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. That's, that's correct, Ken. That was the sequential guidance from the quarter that range. But yeah, look, we're, we're taking action every day. And we keep our belts tight year in and year out in good times and bad. And I think that if you don't know how to manage cost, if you don't manage cost in good times, you probably don't know where to start when times are tough and I think that's a lesson I learned years ago. So that's an ongoing focus for us and our team. And we stay on top and have metrics from a productivity standpoint that we're always being on top of.

And our team has been very effective this year in that regard, especially when you've got a lack of density in the system and we've expanded the system a little bit opening five or six terminals this year. So, in the third quarter, especially, we had an improvement in our platform shipments per hour. We had an improvement in our pick-up delivery shipments per hour. So some improvements there in the third quarter, despite the volume weakness.

Our load factor from a linehaul standpoint is continued to face some pressure, but again, that's, that's volume weakness and it's pretty much was down in alignment with the decrease in weight per shipment was. So it's not atypical to see that type of performance. But you know, to us, the most important thing is to keep giving service and run in our schedules and that's why in slower periods, it can create a little bit of a cost headwind for us, but we think it's more important to keep giving service now than, than ever. And so that certainly has supported the value proposition over time.

With respect to our overhead cost, yeah, those, those have been about $300 million to $305 million each quarter this year and we look at ways and control discretionary spending. I think that in regards to cutting back on capacity, we want to keep our eye out for the long-term and we still believe in the fact that we've got a long runway for growth ahead and that was why we expanded and executed on a capex plan like we did this year. Probably we'll cut back, we'd expect, cut back our capital expenditures into next year and growing into some of this capacity that we have, but we will look to continue to add to the network over time just due to the confidence that we have and what our market share potential can be, but probably tighten up our fleet and do some other things like that, that will help with cost as we go forward. But the biggest thing will just be getting back to revenue growth.

And when we think about and you look at historical performance, whenever we do get into an upswing, and we've had some significant revenue growth years and it's usually two years coming out of a down cycle. And whether you look at 2010, 2011, 2017, 2018, '21, '22, yeah, that's going to be where this investment through-the-cycle pays the biggest dividends for us. So, if we get back to having a stronger economy and get back to the market share outperformance like we've seen in the past, I feel really good about where our operating ratio is today and where it can get to with respect to those overhead charges scaling back-down to where they've been as a percent of revenue. We're about five operating points. Overhead cost as a percent of revenue higher than where we were say back in 2022. So there's a lot of opportunity to get us right back on path to achieve that sub-70 [Phonetic] annual operating ratio goal that we still have.

[Ken Hoexter, Analyst at Bank of America]

Great. Thanks, Adam. Appreciate the thought.

[Operator]

And our next question today comes from Ravi Shanker with Morgan Stanley. Please go ahead.

[Ravi Shankar, Analyst at Morgan Stanley]

Thanks. Good morning, everyone. Can you share a few more details on your thoughts on this Mastio survey. I mean, you've long said that you're not hearing from your customers that the others are closing the gap as much to you guys as much as maybe the narrative is out there and can we see some of that in the results as well. But is there a risk that if they're not closing up on service, they can maybe get more competitive on price and kind of, or does it just take time for that service gap to close. So what do you think happens from here?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

I think that's a question for the other carriers. And I don't know what their strategies are, not what we've heard they were. And that's why we are pleased with the results this year and that sizable gap between our performance and the others was maintained. And so yeah, we're not going to sit around and rest on our laurels, though. We're going to continue to look for ways that, that we can get better. And like Marty said earlier, there's more than just to service than just picking-up and delivering freight on time. And so there's 28 different attributes that Mastio measures and we want to be the best in each of those. And so we'll keep working hard to deliver solutions for our customers.

And so we've had a, have had a proven strategy that has worked for many, many years. And we want to keep that, that model going and keep producing the same type of profitable growth and shareholder value that, that executing on the same long-term strategic plan has produced for us over time. I think it continues to work in the future. And whatever temporary decisions we other carriers make, we've, we've dealt with it for years. And I think it's something we'll continue to be able to work against as we go forward.

[Operator]

And our next question comes from Chris Wetherbee with Wells Fargo. Please go ahead.

[Chris Wetherbee, Analyst at Wells Fargo & Company]

Hey, thanks. Good morning. Adam, I wanted to ask about the relationship between truckload and LTL, but your comments about 3PLs was pretty interesting. We've historically seen your share move back-and-forth, but I guess through this cycle, it seems like maybe more share than normal has moved back to truckload. And obviously, the pricing dynamic between LTL and TL is maybe as wide as it's been in terms of the relative price. I guess, does that change anything through the next up-cycle? Or do you think it doesn't really take a significant upturn in truckload to be able to push volume back into LTL? Obviously, you mentioned that you saw a little bit of that happening in the third quarter. Just kind of curious how you think about that relationship these days?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. I think that, obviously last year was very unusual with what happened and help support the truckload world gets pretty volatile with respect to the volumes and the pricing and so forth. And I mean, I think it's because of how fragmented that industry is. And so that created some, some freight opportunity. And on the one-hand, customers just had to get their freight moved as well. And Yellow was hauling 50,000 shipments per day, picking-up and delivering 50,000 shipments per day and that freight had to go somewhere. It pretty, it went to a lot of the remaining LTL carriers, but much of that I felt like went into that truckload world as well.

And we've heard people talking about consolidating shipments if they could and using truckload for zone skipping and doing some different things to try to take advantage of that lower rate environment there. But at the end of the day, if a shipment is less than 10,000 pounds, it makes more sense to be in the LTL world. And I think that, that freight will come back to us in due time that those truckload carriers don't love doing multi-stops they can charge a stop-off fee for it, but that really makes sense when they're designed to really go from A to B with a full trailer.

So I think that freight does probably swing back into the LTL world, maybe a little more aggressively than, than what we've seen through prior economic cycles. When I look at overall the data that we get on the universe, LTL shipments are down, tonnage is down about 15% from the peak in the second quarter of 2021. So some of that was economic loss, but I think some of it is this modal shift that we've seen and heard about as well. So I think that whenever that kind of wave starts coming back in, I think that will be something that will be a good opportunity for us. But directly, but then indirectly as well, it usually is going to other competitors and those competitors end up having service issues with existing customers and many of those customers come to us as well. So I think that whenever we see this, this cycle inflection, I think we've got multiple fronts that, that should help us from a volume standpoint.

[Chris Wetherbee, Analyst at Wells Fargo & Company]

Got it. Thank you.

[Operator]

And our next question today comes from Brian Ossenbeck with JP Morgan. Please go ahead.

[Brian Ossenbeck, Analyst at JP Morgan Cazenove]

Hey, good morning. Thanks for taking the question. Just a quick clarification. Did you see any impact from the hurricanes on the network, either yours or some of your customers? And should that start to pick back up here perhaps in the fourth quarter?

And then looking into next year, another way to look at pricing, I guess, the NMFTA is looking at making some changes to the class system. I think it's going more dimensional based. It's related to the effect in the middle of next year. I don't know if you've got any early comments on that in terms of implications for, for yourselves, for the industry and perhaps the shippers as well. Thank you.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. We definitely had some revenue loss related to the hurricane and operationally it presents some challenges as well. We were initially pleased that all of our employees got through everything okay from, from everything we understand from a health standpoint as well as property standpoint. Our network was fine as well. I think we were lucky in the sense of none of our properties really suffered any significant damage. We were down for a bit and which is typical when you have big major storms like that move through, but have recovered since nicely. There will be some ongoing disruption operationally though, some of the interstate systems in Western North Carolina that will continue to be impacted perhaps up to a year before some of those roadways are repaired.

So that's something that, that our operating team though does a phenomenal job, our linehaul management team of looking and figuring out how we need to rework the system to make sure that, that we've got freight that if something is picked-up in Eastern North Carolina going to California and any point in between, we get that, that freight moved seamlessly and within our service standards. So pleased with respect to how the team responded to, to the challenges from, from those storms that came through.

And remind me again what was the second part of the question?

[Brian Ossenbeck, Analyst at JP Morgan Cazenove]

Yes. It's looking at the NMFTA, [Speech Overlap] we're looking at some changes for the class system in mid-2025, just thoughts on that.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

That's, I think a good opportunity for us. We already dimension, we've got dimensioners and most of our major service centers and we're already dimensioning probably 75% of our freight today. And so that's something that we're already set-up to, to be able to effectively accommodate. So we'll continue to work with customers through those changes. That got delayed a little bit into next year, but that's something that, that we'll be able to handle and may provide another strategic advantage for us against some of our competitors.

[Brian Ossenbeck, Analyst at JP Morgan Cazenove]

Thank you.

[Operator]

And our next question today comes from Ari Rosa with Citigroup. Please go ahead.

[Ari Rosa, Analyst at Smith Barney Citigroup]

Hi, Adam, Marty, Jack. Just curious to hear your thoughts on the buyback. It's up quite a bit from last year. You still have a fairly modest dividend at under 1% yield, and it looks like you're obviously directing most of your capital towards the buyback as opposed to the dividend. I'm just curious what the logic is for favoring the buyback over the dividend. And is there any indication that management essentially is saying that they think the share price is undervalued?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. Well, the buyback was the first type of capital return program that we started back in 2014, and that was when our cash flow model was changing and we were generating excess cash and we still look today, for the first use of cash would be for reinvesting in the company with the strong returns on invested capital that we have at 30%, but secondly would be the buybacks and that was, as I just said, what we started with. And then we implemented the dividend program in 2017 to kind of round out all the respective requests, if you will, and preferences of different shareholders. But the buyback is obviously a tax-efficient means and provides a lot of flexibility with respect to returning capital.

When we still feel like we've got quite a bit of investment ahead of us, and we're generally still spending 10% to 15% of our revenues on capital expenditures every year and, but having that flexibility on the buyback would allow us to step that capex number up meaningfully if we needed to based on what volume demands were and market share trends continue to be. But, but yeah, we, in the second quarter was really when we spent the most on the buyback this year and some of that was just due to the stock weakness. We generally are pretty consistent quarter in and quarter out, but you sort of take a grid-based approach with the consistent investment that we make and buy, buy more when the stock is lower and less when it's higher, but consistently returning capital, but then we'll step-in as need be when we see some, some big weakness like we did in the second quarter and we ended up spending over $500 million in that period and that was consistent with what we did back in 2022 as well where the stock was under pressure and we spent $1.3 billion [Phonetic] that year on the buyback program.

So that would be what our strategy going forward. We'll always be looking at, we forecast outward cash flow from operations and what we think the capital needs for capex would look like and look at what the fixed dividend is, and then that, that balance becomes somewhat of a target to spend on the buyback program each year, but some years may be less and some years more like what we're seeing this year.

[Operator]

Our next question comes from Stephanie Moore with Jefferies. Please go ahead.

[Stephanie Moore, Analyst at Jefferies Financial Group]

Hi, good morning. Thank you.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Good morning.

[Stephanie Moore, Analyst at Jefferies Financial Group]

I was hoping you could maybe shed some light on the potential cyclical freight upside. So just kind of thinking through the dynamics. Obviously with truckload, we've talked about and seeing pricing is really soft, but I think that's largely capacity-driven, not so much demand on the LTL front. Obviously, where you guys are playing, it's down, but it also seems to be down from pretty high COVID comps that you throw and obviously the bankruptcy of Yellow. So, as we kind of think about this eventual upcycle, what evidence or kind of are you seeing or you think you could see that would suggest that we actually see kind of an inflection or above average volume growth? Or are we simply just kind of returning to a kind of a normal trend line in demand? Thanks.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. I think that weight per shipment is generally one of the first things that we would start seeing. And that's something that we've been down at historical lows, with our weight per shipment down below 1,500 pounds now. We've been as high as 1,600 pounds in our past. And so when we start seeing an increase in weight per shipment, generally that's orders for our customers' product are picking-up. And so there's, there's more widgets on, on every shipment, if you will. And then eventually there will be sufficient quantities to where that turns into the multiple shipments. And so you start seeing it go from there. But that, that's usually the first indicator is on the weight side.

[Stephanie Moore, Analyst at Jefferies Financial Group]

Got it. So, I guess what you're saying is, you do believe that you should see some reacceleration here and this isn't just a multi-year normalization pattern?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Well, I think that, yeah, for sure, we've been in a longer slow cycle than any of us ever anticipated. Typically, when we go through a down period, it's three quarters to four quarters and to, to be into this now for so long, it's probably somewhat skewed, as you mentioned by COVID, creating a lot of acceleration. I mean, we grew $1 billion of revenue in 2021 and another $1 billion of revenue in 2022. So you know, maybe now things, we've gone through a longer slow cycle after seeing a big upcycle there. But like I mentioned, I think that we're down. The industry is down about 15% from second quarter of 2021.

The industry, if you go back to '09, was on a pretty consistent growth path from '09 to '21 and ATA continues to suggest that there's growth opportunities for LTL. And we believe that as well. And we've seen the trends developing over time with e-commerce, that effect on supply chains. If we continue to see nearshoring and reshoring activities, that creates a lot of freight demand and opportunity for LTL. And so we've benefited from that over time and would expect that both the industry and ourselves will benefit from those trends.

So I think we've got to come out of, of the ditch and we will, and based on all the feedback that we have from customers and continuing those conversations, I think we get right back to some normalization. And then we'll see the industry continue to grow from there. And we'd expect that, that our market share will continue to grow as well. And we've increased our market share. We were at about 6% share back in 2012 and we're at 12% to 13% today. So we've been able to significantly increase share and have been the biggest market share winner really over the last 10 years and service is what wins share.

You got to have capacity and there's been a lot of talk about the shift in, in capacity of, from the Yellow service centers that have been reallocated, but only about half of those facilities have been reallocated thus far. But once demand recovers, I think that you're going to see a more capacity-constrained industry and our service winning share again for us into the future. So that's why we're committed to executing on our capex programs and trying to invest ahead of that curve.

And we're there right now. We've got about 30% excess capacity. That's more than we typically would have in our service center network. But, but that's what gives us confidence that once we start growing again, we can see those really strong incremental margins that we've been able to produce in the past and produce a lot of profitable growth, but it's going to take that, that inflection in the economy before we can get back to seeing those strong revenue growth trends and operating ratio improvement.

[Stephanie Moore, Analyst at Jefferies Financial Group]

I'm sorry, just Adam, real quick, operating days in 4Q, if you don't mind?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah, we have 62 days this year versus 61 in 4Q of '23.

[Operator]

And our next question today comes from Bascome Majors with Susquehanna. Please go ahead.

[Bascome Majors, Analyst at Susquehanna Bancshares]

Adam, as we think about the profitability of the business as we get into next year in a world that's been at best seasonal and a lot of times sub-seasonal from a demand standpoint for quite some time now, as you noted earlier. Can you level-set what your view of a seasonal margin performance would be in the first quarter and even the second quarter, just so we can gut check our models? Thank you.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah. The first quarter is typically 100 basis points increase. And again, that's, if there's no real major adjustment from an insurance standpoint, the actual adjustments that we go through in 4Q. So kind of normalizing for that. And then the second quarter is where we get the improvement. And that's where revenue is accelerating generally and our operating ratio typically improves 400 basis points to 450 basis points in the second quarter versus the first.

And obviously, when we get into a period where you have, not that I'm calling this now, but if we, we get into an environment, if you go back into a few years like 2017, for example, where if you can get above sequential revenue growth and it gives more opportunity to put it to the bottom line. The way our cost structure is split out now in the most recent quarter, in the third quarter, our direct cost as a percent of revenue were about 52% and our overhead costs were between 20% and 21%. So, it's all that leverage that we have on those fixed costs when you get into, to that revenue growth environment that, that allows that operating ratio to swing generally and outperforming normal seasonality, if you will, when you're in those first year or two of the upcycle.

[Bascome Majors, Analyst at Susquehanna Bancshares]

Thank you.

[Operator]

And our next question today comes from Tom Wadewitz with UBS. Please go ahead.

[Tom Wadewitz, Analyst at UBS Securities]

Yeah, great. Thank you. So I wanted to see if you could offer some thoughts on kind of where you think pricing bottoms, and then if inflation is maybe act, acting differently this cycle? It seems like that's been a source of some pressure on margin. So, if you see shipments stabilize and you go into next year, do you think about we need 4%, we just need to keep getting that 4%, in order to stay flat on margin. You know, if, again, if backdrop is a stability in shipments, do you get any help on inflation easing? Or is it like you know, just how you think about maybe it's like a price cost spread question or you know what you, what you think about price relative to maybe what you got in prior down, down cycles? Thank you.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah, that's, that's a good observation, Tom. I mean, that, that variance in revenue per shipment and cost per shipment over time, we've targeted trying to achieve 100 basis points to 150 basis points of spread of price over cost to support the investment in capacity and technology and so forth. And that's effectively reconciled with what our long-term annual operating ratio improvement has been as well. And kind of what I was just saying earlier was in that first year of a recovery, you get the benefit of the volumes coming in. And so it helps you from a cost per shipment standpoint on the, from an overhead side, you start getting all that leverage. But this year, we had started out after seeing some inflation on cost per shipment, our target for this year was to see cost per shipment core, cost per shipment inflation in the 4% to 4.5% range. And I think that's where we'll end up averaging for the year.

And so we're kind of back to normal, if you will. Our longer-term average has been 3.5% to 4%. And so the volume weakness has kept us a tad north of what that longer-term trend has been. But we'll continue to execute on a bid-by-bid basis. I mean, our philosophy is to, to look at each customer as their bids come due, and look at what the opportunities are and the profitability of the account and try to ask for increases that will offset our cost inflation. And so that those are the conversations that we have and that's what we'd expect to continue to have whatever year the upcycle starts. The benefit and how we usually have really strong performance is all the new customers that are coming on-board and usually that drives that revenue and yield trend a little bit stronger as well.

And so those will be things that, that we'll look for whenever we do eventually get into that, that next part of the cycle where we're actually seeing some increases. But I don't think to your question about the floor, we, we look at every quarter, just like we've done this year as we progress through the year, mix is constant, we're looking for increases and because our costs aren't going down. And so we're looking to get increases. And that's what we'd expect to see sequentially quarter-after-quarter.

[Tom Wadewitz, Analyst at UBS Securities]

And you don't see a reason to think inflation is different kind of next year versus what you saw this year?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

No, I think that we've got the opportunity. Again, just looking at it on a per shipment basis, if we can get into some volume recovery, that's going to be the best thing that, that will happen. I mean, long-term operating ratio improvement is produced by two main ingredients, density and yield. So we've lacked on the density side. We've been consistent with our yield performance the last couple of years and that is what has supported our margins. But once we can get the contribution from density coming through the network, that should keep some of those costs low.

It comes through, as I was referencing earlier, our team has done a phenomenal job of managing through in a lower density environment, keeping our service metrics high and keeping those direct costs. I mean, in the first quarter and second quarter, we had improvement in our direct cost as a percent of revenue. So we've done a great job managing through in this down part of the cycle, but that's going to create a lot of opportunity. If you got higher weight per shipment, that's going to be more revenue per shipment performance when the cost to pickup is probably the same. The cost to move across the dock is consistent as well.

So those are all those factors that will go in and why we generally see the cost per shipment kind of outperforming the longer-term average, if you will, when we get into those up parts of the of the cycle. And they offset, we've had tremendous inflation over the last couple of years, 65% of our costs are salaries, wages and benefits. So that's the biggest driver. But as we run an efficient network and can eliminate miles from our system, that's time and that's fuel. But we've had tremendous inflation with the cost of new equipment, our maintenance and repair costs on a per mile basis, they've been up significantly. We've managed that a little bit better this year, but insurance cost in our industry premium costs have been double-digits. I mean, this is something that all carriers are facing and we're not immune to it, but we've been fortunate to have operating efficiencies to offset many of these higher inflationary items that we've seen when you go line-by-line on the income statement.

[Tom Wadewitz, Analyst at UBS Securities]

Right. Okay. Thank you.

[Operator]

And our next question today comes from Bruce Chan with Stifel. Please go ahead.

[Bruce Chan, Analyst at Stifel Nicolaus]

Hey, good morning, guys. Just want to wrap-up the weight per shipment discussion here. Marty, you mentioned that you were getting fewer skids per customer. Is your sense that that's all related to market softness? Are you seeing any pockets of others maybe gunning for customer wallet share, especially as they've been improving service?

And then maybe this is a little bit in the weeds, but any comments on sales force incentives that may be aimed at more business from existing customers versus new accounts that, that you can share with? Thanks.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Sure. Yeah. The reduction in weight per shipment is definitely, our customers are just shipping less boxes on the skid. So you know we see that as Adam said, we're positive that will pick-up in the, maybe the fourth quarter and first quarter as Christmas comes around and you got, you got quite a bit of holiday shipping coming up. So we're cautiously optimistic for that. And as far as our sales incentives, we, we incent our reps on a quarterly basis based on revenue growth, operating ratio and service. So we paid out in the last quarter and we look to pay-out in this quarter. So they're incented pretty well to increase their business and that's their main goal. So I've got confidence in our sales team to go out there and sell our value proposition and gain additional shipments.

[Bruce Chan, Analyst at Stifel Nicolaus]

Okay, great. Thank you.

[Operator]

And our next question today comes from Jeff Kauffman with Vertical Research Partners. Please go ahead.

[Jeff Kauffman, Analyst at Vertical Research Partners]

Thank you very much and congratulations on the Mastio accolades. I think all the good questions have been asked at this point, but I'd like to drill down a little bit on tonnage. We do follow railroads and some other industries where they say, okay, well, this part of the economy was a little weaker this quarter, this part of the economy, a little stronger. I'm assuming that the truckload multi-stop is more of a retail versus an industrial product, but if you look across your customer base, I know your comment was mix is consistent, but some customers ship heavier stuff, some customers ship lighter stuff. Where are you seeing pockets of weaker-than-expected activity in your customer base? Where are you seeing pockets of stronger-than-expected activity?

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Yeah, I don't, I don't know that we get very granular with how we look at our business and slice it, dice and dice it by SIC code. But generally just try to group them generally together with, as industrial and retail. But yeah, I don't know that we've seen anything that has, you know, has varied greatly from what our expectations would be. I think that like I mentioned earlier, the industrial performance has been weaker. Last year, it was probably holding up a little bit better and some of them than what the ISM trend would have indicated. But I think just some of that was due to, we were continuing to win new customers and we were getting some of the new customer activity.

And yeah, we're continuing to get new customers in every month. We look at our reporting and business that we've won or that we've lost and we're continuing to win new accounts. And so maybe some of those have been more on the retail side and that's supported why retail has outperformed. But we've got certain commodities that, that we haul that obviously are going to stay a few are hauling food products, those are going to be consistent through-the-cycle, pharmaceuticals, things of that nature. And so we've seen pretty consistent performance related to what we'd expect.

Probably the, the thing that has been most positive has been the consistency of our market share. And I've been really pleased that we've not lost really any customer accounts. We've not lost lanes from customers. So we've been able to keep those relationships intact and we're primed and ready whenever those customers call, and if they've got two shipments per week, once the orders for their products pick-up, those two turn into three to four to five to 10 and all of a sudden, instead of making a stop, we're dropping a trailer and getting a full trail load of outbound product from the manufacturing account, that's kind of how this thing will take-back off-again when we start seeing increased order activity.

But it's going to take some time, I think to get there and but we're primed in position. We've had continued to stay engaged, our sales team does with, with our customers and to understand what their needs are. We're in the midst right now of going through we, this is the time of year where we build a very detailed bottoms-up forecast to help develop what our strategic planning process to prepare for next year and what that will look like. And so yeah, so we're very engaged with our customers right now to understand what their needs from us will look like as we go into 2025.

But, but like I've said kind of in response to multiple questions, there's, we're not out-of-the woods yet, so to speak, but, but there are some reasons to be optimistic based on what our trends have looked like thus far into October, being closer to the seasonality with respect to tonnage for October versus September, that's the first time that we've been able to say that for some time and to see an increase in weight per shipment. Those are all positive indicators and for what may come for the rest of this fourth quarter and then we'll see what next year holds.

[Jeff Kauffman, Analyst at Vertical Research Partners]

Okay. Thank you for that answer, and that's my one.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Adam Satterfield for any closing remarks.

[Adam N. Satterfield, Executive Vice President, Chief Financial Officer and Assistant Secretary at Old Dominion Freight Line]

Well, thank you all for your participation today. We appreciate your questions and feel free to give us a call, if you have anything further. Thanks, and have a great day.

[Operator]

[Operator Closing Remarks]