What are ODFL’s most significant strengths and weaknesses?

Old Dominion Freight Line (ODFL) has a strong pricing discipline and best-in-class service capabilities.

Ally Schmidt - Author

Feb. 13 2015, Updated 1:05 p.m. ET

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ODFL’s strengths

• Old Dominion Freight Line (ODFL) has a strong pricing discipline and best-in-class service capabilities.
• It has been consistent in investing in network capacity.
• It has an industry-wide record of 99% on-time delivery and an impressive 4% cargo claims record.
• It uses state-of-the-art technologies to provide more efficiency.
• It focuses on employees and customers.
• The company’s non-union labor force bestows greater cost flexibility and operational efficiency.

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ODFL’s weaknesses

• Volumes in the company’s operations are subject to variability in US macroeconomic conditions.
• Since the company operates in a single business segment, any downturn in the segment would lead to losses.
• The company is subject to seasonal trends and harsh weather conditions adversely affect the company’s earnings.

ODFL’s opportunities

• The company is exploring international opportunities in newer countries and markets in emerging economies such as BRIC nations (Brazil, Russia, India, and China).
• It is expanding into the full truckload segment.
• It is expanding operations in the drayage market.

ODFL’s threats

• The company competes with industry heavyweights such as FedEx and United Parcel Service, which have a greater network and a competitive edge.
• Price competition drives down the profitability of all providers during periods of anemic freight demand.
• Unionization of the company’s employees would have an adverse effect on the company’s business and its financial condition.
• Newer regulations on hours of operations could adversely affect the operating efficiency of the company.

Other trucking companies in the US include YRC Worldwide (YRCW), JB Hunt Transport (JBHT), and Werner Enterprises (WERN). These companies are part of the iShares Transportation Average ETF (IYT).


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