As we approach the midpoint of 2024, I wanted to share a few thoughts on the first half of the year and highlight the investments we continue to make to support your business. Despite the ongoing softness in the domestic economy, we remain committed to providing exceptional LTL service that will drive value in your supply chain. We are making strategic investments to ensure we continue to meet your shipping needs with reliability first and foremost. At OD, we are dedicated to being your trusted partner and are ready to support and grow alongside you in the months and years ahead.
We’ve seen the American economic landscape transition and understand this can bring uncertainty. The Federal Reserve’s decision to raise interest rates has been necessary to keep inflation in check, but it can also impact economic growth.
Recent data, like the ISM’s May report on business manufacturing PMI, suggests that while the industrial economy remains under pressure, we are seeing some signs of stabilization. US Manufacturing, according to ISM data, showed signs of growth in March for the first time in 17 months but once again modestly contracted in both April and May. OD closely monitors this economic indicator to ensure that we’re prepared ahead of time to help our customers manage their growth needs.
Consumer confidence has also dipped slightly, reflecting a natural wariness about inflation’s bite. Coupled with the backdrop of the upcoming presidential election, we’ve heard from many of our customers that there is ambiguity in the economic environment and that it is impacting their businesses.
Despite these uncertainties, it’s important to remember the broader picture.
At OD, we’re committed to being your trusted partner, regardless of the macroeconomy. Our team constantly monitors key leading indicators, like the ISM index, consumer confidence, interest rates, manufacturing output, and freight market trends, to ensure we continue providing you with the most reliable LTL shipping solutions to meet your business needs.
Despite the softer economy, OD’s philosophy has always been to continue investing in our business throughout the economic cycle to maintain the necessary capacity to support your business. You can always count on us to be ready to handle your shipments in any economic environment.
Service Centers and Real Estate
To date in 2024, we’ve opened four new service centers in our LTL network: a new facility in Green Bay, Wisconsin, to service eastern Wisconsin; a new breakbulk facility with 139 dock doors in Tannersville, Pennsylvania; a new service center along our southern border in Del Rio, Texas to improve our Mexico Direct Distribution service, help with cross docking freight going to and from Mexico, and building capacity in the area as we are seeing more manufacturing nearshoring activity; and a new and improved facility in Webster, Massachusetts to serve our customers in the greater Worcester area. These additions are part of our 2024 capital expenditure plan, which includes an allocation of approximately $350 million to purchase land and further expand the capacity of our service center network. This also follows a year where we opened six new facilities in 2023.
OD remains committed to our existing real estate strategy to continue adding capacity in growing markets that are important to our customers. We finished the first quarter of 2024 with approximately 30 percent excess capacity in our service center network. The excess capacity, while often costly to maintain, allows us to be ready for an increase in demand from our customers, so we’re prepared to grow when you grow.
Equipment
We also continue to invest in new equipment, with plans to spend $325 million on equipment in 2024. Keeping and maintaining a young fleet allows us to continue providing you with best-in-class service, transit times, and capacity. Our OEM partners have communicated to us that their supply chains have improved, and we continue to take delivery of new tractors, trailers, forklifts, switchers, and other equipment. OD’s tractor replacement program has allowed us to have an average tractor age of 4.5 years.
Technology
We hear from you that doing business with OD digitally is an important step in making your supply chain more efficient. We’ve invested significant time and resources in improving our API connections for shippers that want to transmit data to us for rating, billing, pickup, tracking, and document retrieval. Whatever the size of your organization—whatever technology platforms or languages—OD API Integrations allow you to develop a complete transportation management process. Our solutions integrate with your systems to help manage shipments. Overall, OD plans to consistently invest in new technologies to make it easier for you to do business with us. For customers without the ability to connect their systems with APIs, we are continuing to improve our website to make it easier to move electronic records and documents from tracking to creating electronic bills of lading.
As we look ahead to the rest of 2024 and beyond, we are confident that our continued focus on service excellence, building capacity, and technology improvements will enable us to meet your LTL shipping needs.
We appreciate your trust and partnership as we navigate the changing landscape together. Thank you for choosing Old Dominion as your trusted LTL Carrier.
Contact us by email or simply call 1-800-235-5569 to be connected to an Old Dominion customer service representative.