The outlook for Thomasville, NC-based national less-than-truckload carrier Old Dominion Freight Line (ODFL) is optimistic.
That was the word from Greg Gantt, ODFL President and CEO, speaking at the SMC Jump Start conference in Atlanta this week.
“We are rather bullish on 2022 and think the economy is going to be strong,” said Gantt. “We know the industrial economy is very strong right now. There is money out there to spend, and the consumer economy is good, too.”
Looking back at 2021, Gantt described the year as extremely strong, with ODFL seeing the same trends so far into 2022.
“We know our customers’ inventories are low and that there is still going to be a resupply going on,” he said. “With that and other things in play, we remain bullish on 2022. All modes, whether it be truckload, LTL, rail or whatever, will have their hands full as it relates to that. We have a lot of the economy sitting on the water out at the Port of Los Angeles and Port of Long Beach. There is an awful lot of stuff to be moved.”
Addressing global supply chain conditions, as they relate to freight sitting off of West Coast ports, coupled with some freight shifting to Southeast and Northeast Coast ports, Gantt said that there is not a major material impact on that for ODFL.
“In some cases, it is more difficult to get freight out of a port to get it into the domestic supply chain and into and out of a warehouse,” he said. “It has not had a real negative impact on us for the most part, but there are tons of product to be moved. It does need to be figure out. While many ports are now open 24 hours a day, I don’t think they are actually moving containers. They are just allowing the drivers to come in, instead of actually moving containers in and out 24 hours per day. They still have to go in earlier and get in line. It has not had a huge impact on our business either way.”
And he added that with import levels remaining elevated, there has been some, but not a huge amount of, demand pressure there, while intermodal capacity remains constrained.
E-commerce and LTL: Gantt said that when looking at the influence of e-commerce on LTL, it is hard to separate the e-commerce pressure on carrier networks and the big retailer impact on carrier capacity.
“In a lot of cases, we are taking e-commerce [freight] into big box retailers, and it becomes e-commerce at that point, so those kinds of work together,” he said. “There has been a lot of pressure on LTL to get into these e-commerce distribution networks and that sort of thing. We don’t play a lot in the final mile at all but certainly we do in the middle mile. That is a big deal for ODFL.”
Labor shortage: Gantt said he has heard from his customers that they are having issues maintaining staff levels, due largely to the pandemic, which subsequently led to a stoppage in unloading trucks and is an issue.
And, in some ways, it presents a situation in which carriers are forced to compete with their customers for workers.
“I would like to think that as an industry we pay better and are in a little better spot than they are,” he said. “Getting drivers is a challenge. I tell our investors that we are getting drivers, but it is just a lot harder to get them. You need to have job fairs and recruit through advertising, stuff we really have never done in the past to any degree. They [drivers] are out there; you just need to work harder to get them.”
As for the possibility of drivers as young as 18 on the road, which has gained traction in recent months, Gantt described it as a potential resource, which needs to be considered given the current situation.
State of LTL: With the LTL sector riding high, due to current market conditions related to the pandemic, Gantt quipped it would be nice if the high level of demand for LTL services went on indefinitely.
“There are cycles…and we have been through the down cycles,” he said. “2016 was a down cycle, and 2017 and 2018 went up, with 2019 kind of flat, and then Covid hit in 2020. We have been through the downcycle and this is really our second year of an up cycle. Certainly, we think we will be busy this year. We think that at least for the foreseeable future it looks pretty good.”
Another driver for LTL sector growth in 2022 is the strength of the consumer economy, observed Gantt.
“People have money to spend, and the government put a lot of money into people’s pockets,” he said. “If people have money, they are going to spend it, and that is what is going to drive this thing, at least for the foreseeable future. Hopefully, everybody goes back to work, and, at some point in time, if the pandemic subsides like we think hope and hear that it will, then I think we will really be back in business in all of the industries we live and die by. That is what we are hoping for anyway.”
On the manufacturing side, Gantt said that it is concerning how output will fare in 2022, due to the securing and sourcing of certain components and commodities, too, such as aluminum and steel.
Part of that is due to a lack of workforce, as well as the ongoing semiconductor shortage and truck manufacturing challenges, which he said is a “big deal” for the LTL sector.
“There is concern there, even though there is easing in some parts of manufacturing,” he said.
Should there be a pronounced shift from consumer spending to services, Gantt said that even with that type of pent-up demand, trucking remains in a good spot.
“That pent-up demand needs to be met before we can get to the end of the cycle,” he said.
As for the future, Gantt said he is optimistic that the economy is closer to the end of the pandemic-impacted conditions, and that the semiconductor shortage was getting better, and a normalization of the supply chain.
“We may get back to normal business…I am not even sure what that is,” he said. “The key is to figure out how much capacity is needed and what are the needs and requirements, and tell us where they are, and let us prepare for that. I don’t think any of us have unlimited resources.”
About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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