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At first blush, XPO’s February update showed volumes fell at the same pace as they did in January. However, the carrier was facing a more formidable comp in the recent month, suggesting the falloff was less severe.
The Greenwich, Connecticut-based LTL carrier announced Tuesday after the market closed that tonnage was down 8.1% year over year in February following an 8.5% decline in January. The February result was the combination of a 6.2% decline in shipments and a 2% decline in weight per shipment.
However, January was comping to a 1.1% decline from a year ago whereas February was up against a positive-3.5% comp.
There’s little doubt that demand across the less-than-truckload space remains tepid but XPO’s two-year-stacked comps are improving. Tonnage was down 4.6% in February after a cycle-low 9.6% decline in January. The current guide implies further improvement to the two-year-stacked result in March.
XPO’s (NYSE: XPO) tonnage for the first two months of the year was in line with management’s guidance for a mid-single-digit-plus y/y decline in the first quarter (roughly flat sequentially).
The company is actively changing a portion of its freight mix to include more volume from local accounts, which have better margins, and more shipments that incur accessorial charges. The increased selectivity presents a headwind to volumes but should continue to deliver improved margins.
The start of 2025 hasn’t been easy as severe winter storms across the southern and eastern U.S. resulted in increased service interruptions across carrier networks. XPO previously said abnormally harsh weather was a 3-point drag on its January tonnage result.
Also, the manufacturing complex, which can account for two-thirds of total freight for some carriers, remains tepid but improving.
The Institute for Supply Management’s Purchasing Managers’ Index (PMI) remained in expansion territory for a second consecutive month in February following 26 months of contraction. A 50.3 reading (50 is neutral) was 60 basis points worse than in January, but the new orders index, which is predictive of future manufacturing demand, dropped 6.5 percentage points to 48.6.
LTL volumes normally lag the PMI data by three to four months.
“Our February volume outperformed seasonal trends relative to January, aligning with our expectations for the quarter-to-date,” said XPO CEO Mario Harik in a news release. “The industry pricing environment is favorable, and we’re executing on our initiatives to drive sequential pricing growth throughout 2025, supporting our margin outlook.”