Demand, meet supply.
In a trucking market where customer needs are outstripping many fleets’ ability to provide drivers, equipment and dock doors, TFI International Inc. might have an occasional answer for the last of those three.
On the heels of the Montreal-based trucking and logistics firm’s strong fourth-quarter earnings report, Alain Bédard, company chairman, president, and CEO, told analysts and investors his team is focused on improving the efficiency of its operations, particularly the UPS Freight operation it acquired last spring for $800 million and now runs as TForce Freight. That push includes getting more from the company’s real estate network, which spans more than 560 facilities in three countries.
TFI ranks No. 6 on the FleetOwner Top For-Hire Fleets of both 2021 and the soon-to-be-released 2022 rankings.
Bédard said TFI’s service centers today have a combined 12,000 or so doors but added that the company needs 8,000 at most, and maybe as few as 6,000, to run its operations with desired efficiency. That has TFI looking to sell or lease real estate as peers such as Old Dominion Freight Line Inc.—which is planning to spend $300 million this year on real estate and service center capacity—and ArcBest Corp. are among the big-name buyers looking to grow. Bédard said TFI has of late:
- Closed and subleased a Chicago service center.
- Closed two small West Virginia facilities, which it is looking to sell, as well as a center in Canada that Bédard pointed out was handling a mere 40 shipments per day.
- Prepared to lease 40 doors of a similarly underused terminal in Rialto, California, to another carrier to park equipment and another 40 doors to a third company for handling shipments. Those deals, Bédard said, will generate between $2 million and $2.5 million per year for TFI.
“We’re just scratching the surface,” Bédard said of real estate work that’s focused primarily on Western states for now. “That’s an opportunity for us for growth, either organically or through M&A. But in the meantime, anything that doesn’t make sense, we’re fixing it.”
Helping get TFI toward those fixes, Bédard added, is a TForce Freight team that’s on board with the eyed changes and willing to listen to the company’s “recipe for success” that helped the company’s Canadian LTL operation finish 2021 with an operating ratio of 79.9% versus the U.S. arm’s 90.1%.
“They’re really drinking the Kool-Aid, they’re part of the solution,” TFI’s boss said. “We don’t have these kinds of pushback that sometimes you may have with an acquisition.”
Shares of TFI (Ticker: TFII) were up more than 5% to nearly $102 per share during the afternoon of Feb. 8. They are still down nearly 10% over the past six months.
