Saia's August tonnage growth accelerates to 8.7%

Less-than-truckload carrier Saia saw its tonnage growth accelerate in August. The Georgia-based company reported an 8.7% year-over-year increase for the month, according to a Thursday update.

Daily shipments rose 1.1% while the average weight per shipment jumped 7.5%. The metrics showed a slight improvement from July's growth rates. FreightWaves reported that this acceleration was partly due to facing an easier comparison to August of the prior year.

However, on a two-year-stacked comparison, which smooths out volatile year-ago periods, the tonnage growth has slowed for two consecutive months. It was 6.5% in August, down from 8.7% in July.

Rate increases and revenue trends

The carrier implemented a general rate increase of 7.1% on July 6. Saia noted such increases can create near-term volatility in volumes. This year's rate hike was 120 basis points higher and occurred three months earlier than the increase implemented in 2024.

Saia does not provide revenue figures in its interim updates. The company previously stated that revenue per shipment increased 4% from the beginning to the end of the second quarter. Contractual rate renewals during that quarter averaged 10.7%.

Financial and operational outlook

Saia reported year-over-year margin improvement in the second quarter, a first since the start of 2024. Its guidance for the third quarter, however, anticipates a slight deterioration compared to the same period last year.

The company normally sees a 150 to 200 basis point margin decline from the second to third quarter. This year, it expects only a 100 basis point erosion. This outlook implies an operating ratio of 87.9%, which would be 30 basis points worse year-over-year.

A key operational drag comes from its network expansion. Since 2022, Saia has opened, expanded, or relocated roughly 60 terminals, increasing its door count by 25%. These new locations are operating at a low-90s operating ratio, while the rest of its network operates in the low-80s.

Industry context and headwinds

Wage increases present another challenge. Saia delayed a pay hike from July to October last year but implemented a new increase this July. This creates an overlapping headwind where both increases will impact the third quarter.

The broader LTL sector faced pressure earlier in the week. This followed a manufacturing report that slightly missed expectations. The Institute for Supply Management's Manufacturing PMI registered 54.6 in August, 60 basis points below consensus. Its new orders subindex fell 3 points to 53.7. Carrier tonnage typically lags this index by about three months.

Publicly traded LTL stocks fell between 4% and 7% after the data was released on Tuesday. In contrast, Saia's shares were up 2.9% on Thursday afternoon following its tonnage update. Rival Old Dominion, which also reported Thursday, saw its shares decline 2.4%.