MONTREAL, Que. – TFI International doubled the profit margins of its truckload business in the first quarter, and saw earnings improve across all four of its operating segments.
“Over the past year, Canadian truckload operations have remained strong, and most recently, U.S. truckload operations are showing very clear signs of improvement,” Alain Bedard, chairman and CEO of TFI International said on a conference call with analysts last week after announcing Q1 financials. “We’ve placed significant emphasis on U.S. operations in the past year and we’re pleased to see the improvement now on the way.”
TFI International announced it’s combining its original logistics segment with the last mile portion of its package and courier segment.
Bedard remains “cautiously optimistic” about the rest of the year.
“The North American economy is expanding, and as a result volume has been on the rise,” he explained. “The transportation industry is somewhat capacity-constrained and this has shipping rates on the rise. Even U.S. truckload, which was the slowest market to recover for us, now shows signs of improvement due to these forces.”
Bedard said TFI has been pushing prices increases in each sector and abandoning poor-paying LTL shipments. He said in the U.S., contract pricing improved in the first quarter by 6-7% and will see further gains.
“I think now we’re playing more in the double-digit numbers, like the 8%, 9%, 10%, 12%, and this is where it’s got to go,” he said.
Like all carriers, the company has struggled to retain owner-operators. Bedard acknowledged the company must be better at communicating its pay package to keep owner-operators from jumping ship.
“We’re probably going to change our approach,” Bedard said. “So it’s easier for these guys to understand that we have a great deal for them.”
He said owner-operators will sometimes jump to a carrier paying a higher rate per mile, without considering the additional benefits or expenses covered by TFI. Bedard said TFI has increased driver pay. But the company is not looking to add capacity, despite the strong market.
“We’re not adding capacity,” Bedard said. “Our story in 2018 is really based on improving the quality of revenue, which we’re doing now, and improving our cost structure…we’re not adding any capacity, no way.”