ODFL Focuses on Costs to Limit Q3 Profit Hit in Weak Market
LTL Carrier’s Q3 Profit Falls 12.2%, Revenue Dips 4.3%
Key Takeaways:
- Old Dominion Freight Line reported a 12.2% drop in third-quarter profit to $271 million and a 4.3% decline in revenue to $1.41 billion amid weak freight demand.
- Executives said cost controls helped offset a sluggish rate environment as less-than-truckload tons fell 9% year over year and the operating ratio rose to 74.3%.
- The company expects continued softness in October but said excess network capacity positions it for a rebound, with a 4.9% general rate increase taking effect Nov. 3.
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Old Dominion Freight Line profit and revenue fell in the , but executives said it could have been worse in the ongoing weak rate environment without a heightened focus on cost control.
Thomasville, N.C.-based ODFL posted a $271 million profit in the most recent quarter, down 12.2% compared with $308.6 million in Q3 2024.
ODFL posted revenue of $1.41 billion, a 4.3% decrease compared with $1.47 billion in the year-ago period.
But the revenue total beat consensus analyst expectations of $1.39 billion, according to Zacks Equity Research.
The company’s operating ratio was 74.3 in Q3, compared with 72.7 in the year-ago period.
Carriers’ OR provides insight on how well a company is balancing its costs and revenue generation. The lower the ratio, the better a company’s performance. ODFL’s OR is typically the best of all the publicly traded less-than-truckload carriers.
“Our operating ratio increased 160 basis points to 74.3% for the third quarter of 2025 as the decrease in revenue had a deleveraging effect on many of our operating expenses,” CEO Marty Freeman said in comments accompanying the results.
“Our overhead costs as a percent of revenue increased 160 basis points due primarily to this effect. We were pleased with the overall efficiency of our operations during the quarter, which allowed us to maintain our direct operating expenses at the same percentage of revenue compared to the third quarter of 2024,” he added.
ODFL’s LTL tons fell 9% to 2.06 million from 2.27 million in the same period a year earlier.
“[The] results reflect continued softness in the domestic economy,” Freeman said during the company’s quarterly earnings call Oct. 29.
“As we navigate through what continues to be a challenging macroenvironment, we remain focused on what we can control,” he added.
“We have implemented new workforce planning and dockyard management tools as well as [pickup and delivery] and linehaul route optimization software which have helped drive improvements in our productivity even as we have faced headwinds from lower density,” the company’s top executive said.
ODFL’s LTL tons per day fell 9% year over year to 32,231 from 35,408 in Q3 2024.
Chief Financial Officer Adam Satterfield provided further color during the company’s earnings call.
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“The monthly sequential changes in LTL tons per day during [Q3] were as follows: July decreased 1.9% as compared to June, August decreased 1.8% as compared to July, and September increased 1.3% as compared to August. The 10-year average change for these respective months is a decrease of 2.9% in July, an increase of 0.4% in August, and an increase of 3.3% in September,” he told analysts.
That weakness has continued, Satterfield said.
“For October, our current month-to-date revenue per day is down approximately 6.5% to 7% when compared to October 2024, with a decrease of 11.6% in our LTL tons per day,” he said.
That has left ODFL with some excess capacity on its system, Satterfield said, but positioned the carrier positively for when the long-awaited market turnaround comes.
Satterfield said the company is operating well above its typical target of maintaining 20% to 25% excess capacity, estimating current excess capacity is above 30% and possibly exceeding 35%.
“But I think we’re in really good shape with the network where it is. We haven’t opened any service centers this year. If you go back over the past couple of years of this freight recession that we’ve been in, I think we’ve opened six service centers going back to 2022. So, we’ve definitely built up some capacity,” he said.
Satterfield downplayed any chances of ODFL implementing dynamic pricing though, which some industry watchers see as a growing benefit to LTL players. Satterfield told analysts ODFL’s service levels minimized the need for dynamic pricing.
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“That’s not really something that we subscribe to. For us. I just feel like it’s more important to be consistent. Customers know what to expect from us. We look at how our costs are changing each year. And that drives what we try to ask for from a cost-plus standpoint,” he said.
ODFL on Oct. 20 said a general rate increase of 4.9% would be applicable under certain tariffs from Nov. 3.
“This GRI will affect our class tariffs and is intended to partially offset the rising costs of real estate, new equipment, technology investments and competitive employee wage and benefit packages,” Todd Polen, vice president of pricing services, said in a release announcing the GRI.
Freeman said during the call that the rate hike’s impact on ODFL’s earnings would not be massive.
“This only affects 25% of our customer base. This is a general tariff for noncontract. Our contracts are about 75% of our business, and those increases are based on months of the year when they expire,” he told analysts.
ODFL ranks No. 9 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 2 among LTL carriers.
