The bottom line is back.
Some of the biggest names in trucking have recently told investors they plan to spend substantially less this year than in 2024 on equipment and real estate as they increasingly focus on price and profitability in a freight market that is steadily—albeit still slowly—returning to pre-pandemic normal.
In recent earnings reports and conference calls, the leaders of Old Dominion Freight Line Inc., XPO Inc., Saia Inc., Werner Enterprises Inc., and ArcBest Corp.—all FleetOwner 500 top 25 for-hire carriers that span the truckload and less-than-truckload segments—detailed their spending priorities for the year ahead. The headline number coming out of those discussions is 23.6%—as in, the five executive teams’ combined capital spending budgets for the year are forecast to be a shade under $2.4 billion, nearly a quarter smaller than their collective 2024 outlays of more than $3.1 billion.
“With a lower capex profile and sustained earnings growth, we can generate higher levels of free cash flow, giving us greater flexibility to return capital to shareholders over time,” XPO CFO Kyle Wismans told analysts Feb. 6, exemplifying the mindset of several other C-suites.
Breaking down the aggregate capex forecast:
- Executives at Old Dominion (No. 10 on the FO500) are forecasting 2025 capex of $575 million versus more than $771 million last year.
- The capex budget for Werner (No. 11) is expected to be between $185 million and $235 million versus $235 million last year as the company’s investments lean more toward its asset-light business.
- The leaders of XPO (No. 13) said they will spend between $600 million and $700 million this year. That’s down from $789 million in 2024, which was the second year of a big expansion push that included acquiring dozens of former Yellow Corp. terminals.
- At Saia (No. 19), President and CEO Fritz Hogrefe and his team plan to spend about $700 million, a big drop from last year’s total of a little more than $1 billion. As with XPO, Saia placed big bets on filling some of the hole in the market left by Yellow’s end.
- ArcBest (No. 24) Chair and CEO Judy McReynolds said capex will be between $225 million and $275 million this year versus $288 million in 2024.
The step back from spending comes after several years of large investments across the trucking sector as fleets sought first to capitalize on booming demand during and immediately after the height of the COVID-19 pandemic and then to grab market share in the wake of the collapse of Yellow.
See also: After $1B LTL investment, Saia eyes rate gains
But enduring overcapacity and an industrial sector that is only now getting off the mat after two years of stagnation have kept a lid on carriers’ pricing power and thus profitability. On recent conference calls, several leadership teams pointed to some positive price metrics from late last year—often noting that rate increases have barely, if at all, offset increases in operating costs—and made it clear they view 2025 as the year that dynamic will start to change in earnest.
In short: Done with discounts.
“It’s an exciting time, but it’s one where we have to be careful and cautious,” Werner Chairman and CEO Derek Leathers said February 6. “We have to improve the performance—not just in dedicated, but across the portfolio—and rate is the single biggest lever to do so. So that is at the forefront […] It’s going to be more of a rate initiative and rate approach as we go forward.”
XPO Chief Strategy Officer Ali Faghri struck a similar tone. The leaders of Connecticut-based LTL carrier have been pushing hard to improve the company’s performance by, among other things, investing in technology and bringing in house business it previously outsourced. Now it’s time to reap some of the rewards from that work.
“Our service quality is at record levels, and we expect our pricing initiatives to continue to drive above-market yield growth,” Faghri said after a 2024 in which XPO grew yield (excluding fuel) by 7.8%. “We’re just beginning to capture the massive pricing opportunity ahead of us.”
Other carriers’ executives have said similar things of late despite also putting up solid numbers. At Werner, for instance, revenue per truck per week rose 6.4%. ArcBest’s team produced a 4.9% price increase in 2024—which Chris Adkins, the company’s VP of yield strategy and management, pointed out is a top-five result over the past two decades.
Still, executives have talked almost uniformly this earnings season about the need for rates to climb quite a bit more so that their companies can reach historical levels of profitability.
“We’re very focused on making sure that new business that we bring on—whether it’s from bringing on new logos or whether it’s from growing with existing customers—is profitable,” Adkins said Jan. 31.
Fleet teams looking for a rebound in industrial activity this year just might get their wish. The closely watched Institute for Supply Management Manufacturing PMI turned positive last month after suggesting a contraction for two years, and a handful of notable manufacturing names have in recent weeks said they are seeing solid growth beginning to take shape.
Rockwell Automation Inc. joined that group Feb. 10, saying its fourth-quarter orders grew more than expected. CEO Blake Moret told analysts the increase was based on “broad geographic outperformance [and a] balanced mix of hardware, software, and solutions orders.”
