MONTREAL, Que. – TFI International posted record fourth quarter results on Feb. 27, and CEO Alain Bedard expanded on the company’s operations and industry trends in a customary conference call with analysts this morning.
Here are some key takeaways from the discussion:
Bedard is confident TFI International will make further progress this year in pushing price increases. In U.S. truckload, he anticipates rate increases of 2-8%.
“It’s still a very solid year for us in terms of being able to adjust to a more fair pricing environment,” he said.
For Canada LTL, rate increases will be more modest, in the 3% range.
“Pricing in Canada is really tight on the LTL side,” Bedard said. “In the U.S., carriers are getting something like around 10%. I believe in Canada 2019 pricing on the LTL side, we should be able to get about 3% improvement. So, we are going to do better by being better on the cost side.”
The rollout of the Canadian electronic logging device (ELD) mandate should help improve prices, Bedard anticipated. But he said the biggest benefit of the ELD mandate will be improved safety.
“This is going to help safety on the roads in Canada, not having drivers who are cheating,” said Bedard.
On the freight environment
Freight volumes remain solid, especially in the U.S., where Bedard said truckload volumes are extremely strong.
“When I looked at January for U.S. truckload operations, I fell off my chair,” said Bedard. “It was really, really good. February is a little different story because of the weather issues we had in the U.S. and in Canada as well.”
Canadian volumes are mixed – truckload is doing well, package-and-courier is down, and specialty truckload is a little slower due to seasonality.
“We believe the bellwether will be March,” Bedard said of volumes. “When we talk to our customers, they anticipate they’ll be busy, so we’ll be busy as well.”
On the driver shortage
The issue of driver retention could not be more different between the U.S. and Canada. Here in Canada, Bedard said driver turnover is around 10%. In the U.S., it’s closer to the industry average at about 90%. Bedard said the industry must put more pressure on shippers to respect drivers’ time, because even if they’re being paid to wait, drivers want to drive.
“You have to pay them a better rate per mile, which has happened over the last two years, but you also have to give those guys miles. They can’t sit in traffic. They can’t sit in a customer’s yard for hours. This is where our operations guys are working more and more with customers to say, this is no more,” Bedard said. “A guy cannot run in circles in a yard for two hours trying to find his trailer. No. It compounds the problem.”
Bedard also said TFI International is focused on hiring experienced drivers, as newer drivers tend to have higher turnover rates.
On mergers and acquisitions
TFI International spent about $150 million on acquisitions in 2018, and that number could climb to as much as $200 million this year. Bedard said any deals are likely to be smaller in nature. While the company is always on the lookout for good acquisitions, Bedard said buying back TFII stock is an attractive alternative.
“This is the best thing we can do is buying our own, because we know 100% what TFI is all about. I know the company inside out,” Bedard said.
For details on the company’s Q4 and full year 2018 financial performance, click here.
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