Executives of less-than-truckload specialist Saia said Dec. 1 that their business has notably decelerated since the end of the third quarter, adding another data point suggesting the economy is broadly slowing in the face of Federal Reserve interest-rate hikes.
Georgia-based Saia last month reported that its third-quarter shipments per workday had fallen 2.5% year over year while tonnage per workday had slipped 0.4%. Since then, shipments slipped to a drop of 4.4% in October and then to -8.6% in the first 29 days of November. The year-over-year decline in tonnage, meanwhile, grew to 3.0% in October and 7.7% through Nov. 29.
Those drops were more than Bank of America analyst Ken Hoexter had been expecting. In a note downgrading shares of Saia to "underperform," Hoexter said he had been looking for daily tonnage to be down 3.4% during the fourth quarter but that Saia is now tracking at more than 5% on that metric. The data, Hoexter told investors, suggest “demand is deteriorating faster than we expected.”
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Saia’s operational update came shortly after the Institute for Supply Management said its widely-watched Purchasing Manager’s Index fell to 49.0% last month, the first time since mid-2020 that it was below the 50% threshold that signifies overall growth in the manufacturing sector.
And while Saia—the No. 23 carrier on the FleetOwner 500 list of for-hire carriers—doesn’t have a single customer that accounts for more than 5% of its revenues, it does list a decline in U.S. manufacturing activity as a risk factor in its annual report. A recent investor presentation also shows home goods retailers Home Depot, Lowe’s, Sherwin-Williams, and Benjamin Moore as key customers, suggesting the housing market’s struggles in a higher-rate environment have quickly begun feeding through to the transportation sector.
One relative bright spot in Saia’s Q4 update: The company’s weight per shipment rose 1.4% in October versus the year before and was still up 1% in November. That speaks to a return to smoother markets for many shippers, who have, since the beginning of the COVID-19 pandemic, often had to compromise on transportation efficiency.
Shares of Saia (Ticker: SAIA) fell more than 2% to about $238 Dec. 1. They are still up about 15% over the past six months, a move that has grown the company’s market capitalization to more than $6 billion.
