TFI upgrades outlook, unlocking more potential from TForce Freight

TFI International entered this year in the best position in the company’s history, and is only scratching the surface when it comes to unlocking the value from last year’s acquisition of UPS Freight.

That was the message from chairman and CEO Alain Bedard, when discussing the company’s Q1 financial performance with analysts. In fact, he felt bullish enough to raise the company’s guidance from $6.25 to $6.50 in earnings per share this year, to $6.50 to $6.75.

On integrating UPS Freight, now dubbed TForce Freight, Bedard said, “We are just scratching the surface. We have so much to do.”

The basic premise behind the turnaround is to optimize the network and have drivers make more deliveries while driving fewer miles.

“Less miles, more freight, more heavy freight,” he summed up, noting the U.S. LTL business — one that was barely breaking even when acquired — has potential to achieve an 80% operating ratio within a couple years. “When we look at the number of miles we have to travel in the U.S. between each and every pickup, it doesn’t make sense.”

Bedard has instructed his management team to focus on deliveries within five to 15 miles of a hub, not the 70 miles that some are traveling for deliveries today. “It’s crazy. We drive more than 6 million miles a month to deliver freight, excluding linehaul. We shouldn’t do more than 3-3.5 million. We want drivers to pick up freight, not drive a truck. We have to pick up more freight per stop and drive less miles.”

TForce Freight
Gains from the acquisition of UPS Freight have been stronger than expected, TFI reports. (Photo: TFI International)

While the company has made great progress in turning around the struggling UPS Freight division, the work hasn’t come without challenges. Like everyone, TFI International has had trouble getting new equipment. The U.S. LTL division wanted 1,100 new tractors last year to update the aging fleet it acquired, but by the end of this March had received only 500.

Bedard said it will be next year before the age of the fleet is optimized, and that comes at a cost. He said the cost of maintaining an older truck due for replacement is 45 cents a mile, while a new tractor costs five to seven cents a mile to maintain.

“It’s a crazy amount of money we are spending [on maintenance], and because the trucks break down there’s a domino effect on customer service and driver satisfaction. Our guy is driving a 2010 [truck] in 2022 and his peers that park next to him are driving a 2020 or 2021. There’s a domino effect on morale and service,” Bedard said.

The company brought in three different suppliers to ensure better access to new equipment this year.

There are also looming contract negotiations with the U.S. Teamster drivers in the U.S. LTL fleet, but Bedard is confident in reaching a deal by keeping lawyers out of the negotiations and getting operations staff involved. “Our goal is to pay our people fairly,” he said, noting the company has a long history of successfully working with unions in Canada.

On the M&A front, Bedard said the company is likely to make smaller tuck-in deals later this year. Any larger deals will have to come in the U.S., due to heightened Competition Bureau scrutiny in Canada given TFI’s size. In the meantime, Bedard sees stock buybacks as the best use of money, given TFI’s stock price, which he described as “shit.”

In terms of the market outlook for the remainder of 2022, Bedard isn’t worried about falling spot market prices. He said the lack of equipment and labor will keep capacity tight, and that customers paying contract prices are still more concerned about service availability than they are price. The earliest Bedard sees any real risk of a significant freight recession is 2023, which is too distant to predict.

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James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 20 years and holds a CDL. Reach him at or follow him on Twitter at @JamesMenzies.

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