The LTL (less-than-truckload) segment in the trucking industry involves the transportation of relatively small freight. The US trucking industry consists of less-than-truckload carriers, parcel carriers, and the full truckload carriers. Normally parcel carriers carry freight that weighs less than 150 pounds.
The US and global e-commerce boom has boosted the business prospects of LTL carriers. Thus, investors should keep track of their performance in the coming quarters.
Top ten LTL players
The overall US trucking industry including less-than-truckload is highly fragmented. Global parcel delivery giants such as FedEx (FDX) and United Parcel Service (UPS) have less-than-truckload operations in their freight segment. With the acquisition of Conway, a premier LTL carrier in the US, XPO Logistics (XPO) has catapulted itself into the top three LTL players in the US on a revenue earned basis.
Based on revenues earned in 2016, FedEx’s freight segment, XPO, Old Dominion Freight Line (ODFL), Yellow Freight Roadway, UPS Freight, Estes Express Lines, ABF Freight, a subsidiary of ArcBest (ARCB), YRC Regional (YRCW), R+L carriers, and SAIA Motor (SAIA) are the top ten LTL carriers. Old Dominion, SAIA, YRCW, ARCB, and XPO are among the top public LTL carriers.
The SPDR S&P Transportation ETF (XTN) has exposure to the major trucking companies in the US. Prominent railroads in the US make up 13.7% of XTN’s portfolio holdings.
In this series
This series will compare the 2Q17 financial performance of the LTL carriers in the US. Here, we’ll consider only the top public companies in the LTL transportation services. They include ODFL, SAIA, YRCW, ARCB, and XPO. Later, we’ll compare the valuations of these companies.