ArcBest notes slower economy in quarterly update

A “slowdown” in the U.S. economy is reducing revenue and squeezing margins in the freight shipping business, according to Friday’s (June 9) federal filing by Fort Smith-based ArcBest.

According to the 8K filing with the U.S. Securities and Exchange Commission, ArcBest reported that its billed revenue per hundredweight – a closely watched metric in the less-than-truckload sector – was down 12% in May compared with May 2022. However, the company noted that the May 2022 revenue per hundredweight was up 16% compared with May 2021.

ArcBest, a shipping and logistics company with ABF Freight as its largest subsidiary, also reported that tons per day and shipments per day were up 2% in May.

“The May 2023 Asset-Based tonnage and shipment trends, including the year-over-year decrease in weight per shipment, have been impacted by changes in freight profile and business mix. The slowdown in the general economy has impacted customer order quantities and resulting shipment sizes compared to May 2022,” the company noted in the filing.

Reduced business from “core accounts” offset gains produced by the company’s “tech-enabled” ability to more efficiently manage freight.

ArcBest’s quarterly update is consistent with a 3.4% decline in the April freight index reported by the American Trucking Associations.

“While the broader economy continues to surprise and thus far stave off an expected recession, the freight economy is starkly different,” ATA Chief Economist Bob Costello said in the recent report. “The goods-portion of the economy is soft and as a result, even contract truck freight is now falling, albeit not nearly as much as the spot market. The tonnage index hit the lowest level since September 2021 in April and has now fallen on a year-over-year basis for two straight months.”

ArcBest reported first quarter revenue of $1.106 billion, down 12.7% compared with $1.268 billion in the same quarter of 2022. Net income – adjusted, non-GAAP – was $39.5 million, well below the comparable $78.2 million in the same quarter of 2022. The first quarter followed a record 2022 in which full-year revenue was $5.324 billion, up 33.7% compared with 2021 revenue of $3.98 billion. Full-year net income was $298.209 million, up 39.6% compared with the $213.521 million in 2021.

ArcBest shares (NASDAQ: ARCB) closed Friday at $85.20, down $2.73. During the past 52 weeks, the share price has ranged between $104.87 and $66.35.