TFI International's second-quarter results reveal a tale of two segments: while LTL provided 41% of revenue, its EBITDA margin of 18% lagged far behind Truckload's 24.1%, according to the company's earnings call covered by FreightWaves. Overall, diluted earnings per share jumped 41% year-over-year to $1.65, and EBITDA rose more than 11%, but the divergence in profitability between the two core segments underscores shifting market dynamics.
Context: Supply, Not Demand, Driving Truckload
CEO Alain Bedard explained that the strong pricing environment in Truckload is "mostly because of the supply constraint, not because demand is going through the roof." This marks a departure from past cycles, where demand surges fueled bull markets. "What I like about this market, which I’ve never seen before in 30 years, is now it’s the supply," Bedard said. "I think this is more of a permanent thing than we’ve ever seen before." CFO David Saperstein noted that Truckload's revenue per truck per week accelerated through the quarter: up 11.1% YoY in April, 13.3% in May, and 14.4% in June. The operating ratio improved from 92.7% in Q1 to 86.1% in Q2.
In contrast, LTL shipments increased 7.53% year-over-year, but revenue per shipment declined 2%. Bedard said the volume surge "incurred way too many costs" and caused service to suffer. Saperstein highlighted new technology tools that analyze "about 500,000 lines and tons of columns" to identify problematic lanes and adjust pricing surgically.
Segment Performance Metrics
| Metric | LTL | Truckload | Logistics |
|---|---|---|---|
| Q2 EBITDA Margin | 18.0% | 24.1% | 16.3% |
| Q1 EBITDA Margin | 12.1% | 19.5% | — |
| Shipments YoY Change | +7.53% | — | — |
| Revenue per Shipment YoY | -2% | — | — |
| Revenue per Truck per Week (April) | — | +11.1% | — |
| Revenue per Truck per Week (May) | — | +13.3% | — |
| Revenue per Truck per Week (June) | — | +14.4% | — |
| Operating Ratio (Q2) | — | 86.1% | — |
| Operating Ratio (Q1) | — | 92.7% | — |
Impact of Daseke Acquisition
The acquisition of flatbed carrier Daseke in 2024 has played a role in Truckload's performance. Bedard noted that Daseke had been "too aggressive in acquiring new equipment," leading to excessive depreciation. However, depreciation of property and equipment dropped 5.6% year-over-year, much of it from Truckload. "We bought Daseke in '24 and we were stuck with its capex," Bedard said. "These guys liked to buy trucks and trailers. So we had too much cap ex." That is now declining.
Implications for Shippers and Operators
The supply-driven truckload market means rates are likely to remain elevated as long as capacity is constrained. Shippers should expect limited leverage in negotiations. For LTL operators, the lesson from TFI is that volume growth without disciplined pricing can erode margins and service quality. TFI's investment in data analytics to target problematic freight suggests that carriers are becoming more surgical in pricing, which could lead to more lane-specific rate adjustments.
Watch List
- Technology rollout: Saperstein's mention of new pricing tools using large datasets signals potential margin recovery in LTL as TFI refines pricing.
- Daseke integration: Continued reduction in depreciation could further boost Truckload margins.
- Supply constraints: Bedard's assertion that this is a permanent shift will be tested as capacity slowly returns to the market.
- LTL service recovery: Volume management and cost control will be critical for TFI to improve LTL margins without sacrificing service.
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