Old Dominion Freight Line Q2 2021 Earnings Call Transcript

Participants

Corporate Executives

• Unidentified Speaker
• Greg C. Gantt, President, Chief Executive Officer & Director
• Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary

Analysts

• Jack Atkins, Stephens
• Jon Chappell, Evercore ISI
• Jason Seidl, Cowen Inc
• Allison Landry, Credit Suisse Group AG
• Ravi Shanker, Morgan Stanley
• Tom Wadewitz, UBS Group AG
• Chris Wetherbee, Smith Barney Citigroup
• Ariel Rosa, Bank of America Co.
• Todd Fowler, KeyBanc Capital Markets
• Scott Group, Wolfe Research
• Bruce Chan, Stifel Nicolaus
• Tyler Brown, Raymond James

Presentation

[Operator]

Good morning, and welcome to the Old Dominion Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Drew Anderson. Please go ahead.

[Unidentified Speaker, at Old Dominion Freight Line]

Thank you. Good morning, and welcome to the Second Quarter 2021 Conference Call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through August 4, 2021, by dialing (877) 344-7529, access code 10158075. The replay of the webcast may also be accessed for 30 days at the company's website. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements.

Without limiting the foregoing, the words believes, anticipate, plan, expect and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, that are set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's news release. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. [Operator Instructions] At this time, for opening remarks, I would like to turn the conference over to the company's President and Chief Executive Officer, Mr. Greg Gantt. Please go ahead, sir.

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Thank you. Good morning, and welcome to our second quarter conference call. With me on the call today is Adam Satterfield, our CFO. After some brief remarks, we'll be glad to take your questions. The OD team produced another record-breaking quarter and established new company records for quarterly revenue, operating ratio and earnings per diluted share. While the comparison of our numbers with the second quarter of 2020 is somewhat skewed due to the impact of the pandemic-related shutdowns last year, our second quarter business momentum this year helped drive the improvement in our revenue and profitability. Our revenue grew 47.2% to $1.3 billion, and our operating ratio improved 550 basis points to 72.3%. As a result, our earnings per diluted share grew 84.8% to $2.31. We achieved these results by continuing to execute on our long-term strategic plan. This plan has guided us through many economic cycles, and it is currently driving impressive growth in this strong market.

Two key elements of this plan are delivering superior service at a fair price and consistently investing in capacity to help ensure that our network is never a limiting factor to our growth. We often discuss our unwavering commitment to providing our customers with superior service. This quarter, I would like to offer a deeper dive into how we think about capacity, given its relevance to the current environment. There are three major elements of capacity with an LTO: Doors at our service centers, our equipment and our people. Doors can be the most limiting form of capacity in the short term, which is why we try to stay several years ahead of our anticipated growth curve. We have invested $1.7 billion in our service center network over the past 10 years, which has allowed us to expand our door count by over 50%. Our current capital expenditure plan includes $275 million to further expand the capacity of our service center network, but we are willing to spend even more if we identify properties that are included in our long-term plan.

Our commitment to the ongoing expansion of our service center network is important regardless of the macroeconomic environment due to the strong returns on capital for our business. We have consistently invested in Old Dominion's expansion even in years when our market share trends have been flattish due to the confidence we have in our long-term market share potential. Although expanding the capacity of service centers takes a significant amount of time, demand trends can change very quickly in our industry, which is why we have historically been proactive with respect to our expansion efforts. This unique strategy has created a large capacity advantage for us in the marketplace, which becomes most apparent to shippers and tight environments like this year. We estimate that we currently have 15% to 20% excess capacity within our service center network, and we expect to open several new facilities during the second half of this year. As a result, the capacity of our overall service center network is in good shape, although we continue to focus on the needs of certain locations to help ensure we are keeping up with increased opportunities for growth.

We are prepared to address these needs as well as any other elements of capacity that need to be expanded as it appears that current demand trends will continue into 2022. We believe the domestic economy is strengthening for both our industrial and retail-related customers, and we expect additional growth in volumes based on current economic forecast as well as customer feedback. We also continue to see accelerating trends with our revenue. We have exceeded our normal sequential trends for each quarter since the cliff event that affected the second quarter of 2020. This outperformance has continued with our month-to-date revenue for July 2021 as well. While we feel good about our service center network, we have faced challenges with the other elements of capacity this year. There have been some delays with equipment deliveries that have caused us to continue to operate older units that were intended to be replaced. We are fortunate to have this as an option due to the fact where we have one of the youngest fleets in our industry. While our suppliers are somewhat behind schedule, we do believe that we will receive each unit that we have ordered this year.

These new units will supplement our current pool of equipment and are expected to satisfy our equipment needs through the second half of this year. The capacity of our people continues to be our biggest need to support ongoing growth. We were successful during the second quarter with our hiring efforts and actually exceeded our goal for the period. We added over 1,100 full-time employees between March and June, and we expect to add another 1,000 full-time employees during the third quarter of this year. We will continue to use third-party purchase transportation to supplement the capacity of our people and our fleet until those two elements of capacity catch up with the growth in our volume. Regardless of whether it is our employees and equipment or a third party moving the freight, we remain focused on providing best-in-class service to our customers. As I previously said, providing superior service at a fair price and having capacity to stay ahead of our growth curve are two key pillars to our long-term strategic plan. The centerpiece of our plan remains our people. Our OD family of employees is committed to servicing our customers while also growing our business. As a result, we believe we are better positioned than any other carrier to take advantage of the opportunity for further profitable growth and increase shareholder value over the long term. Thank you for joining us this morning, and now Adam will discuss our second quarter financial results in greater detail.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Thank you, Greg, and good morning. Old Dominion's revenue growth of 47.2% in the second quarter included a 28.1% increase in LTL tons and a 14.9% increase in LTL revenue per hundredweight. Excluding fuel surcharges, LTL revenue per hundredweight increased 10.3%, reflecting the success of our yield improvement initiatives as well as changes in the mix of our freight. While the growth in our revenue and volumes reflects an easier comparison with the second quarter of 2020, the sequential acceleration in our revenue during the second quarter was once again well above normal sequential trends. On a sequential basis, second quarter LTL shipments per day increased 12.1% over the first quarter of 2021 as compared to a 10-year average sequential increase of 7.6%. LTL tons per day increased 9.7% as compared to a 10-year average sequential increase of 7.9%

These 10-year average trends exclude our 2020 metrics for more normalized comparison. While both our shipments and tons outperformed our long-term averages, the discrepancy between our shipment and tonnage trends is a result of the decrease in our LTL weight per shipment. We have made operational changes over the past few quarters, mainly through pricing actions to limit the number of heavy weighted and larger, harder-to-handle types of shipments in our network that are typically more transactional in nature. We increased these efforts during the second quarter, given the ongoing tightness in our industry to preserve capacity for our customers' traditional LTL shipments. At this point in July, with only a few days remaining in the month, our revenue per day is trending higher by approximately 35% when compared to July 2020. The year-over-year revenue comparison gets tougher for us in the third quarter as our revenue per day turned positive in August 2020 and increased overall for the third quarter of 2020.

We will provide actual revenue-related details for July in our second quarter Form 10-Q. The operating ratio for the second quarter improved 550 basis points to a company record 72.3%, with improvement in both our direct operating cost and overhead expenses as a percent of revenue. This improvement was essentially in line with the target we discussed on our first quarter earnings call. Overhead-related cost as a percent of revenue improved 490 basis points due primarily to the operating leverage created by the quality of our revenue growth. Much of the overall improvement in overhead as a percent of revenue related to our depreciation and wage and benefit costs for our sales and administrative employees. Within our direct operating cost, the wage and benefit cost for our drivers, platform employees and fleet technicians improved due primarily to an improvement in the overall efficiency of our operations. This improvement more than offset the increases in operating supplies and expenses, which reflects the rising cost of diesel fuel and other petroleum-based products as well as the increased utilization of purchased transportation to supplement our workforce.

While we will continue to add employees during the second half of this year to support our anticipated growth, we believe we can effectively balance our direct operating costs with revenue as we continue to focus on productivity and ultimately, reduce our reliance on purchased transportation. Old Dominion's cash flow from operations totaled $198 million and $508.3 million for the second quarter and first half of 2021, respectively, while capital expenditures were $155.1 million and $206.1 million for the same periods. We returned $63.2 million of capital to shareholders during the second quarter and utilized $395.4 million of cash through the first half of this year for both our dividend and share repurchase programs.

This year-to-date total for share repurchases includes 68.8 million that is deferred until the third quarter when the final settlement occurs on our current accelerated share repurchase agreement. We announced this morning that our Board has approved a new share repurchase program that provides us with the authorization to repurchase up to $2 billion of our outstanding stock. We intend to fund this program with cash flows from operations and existing cash to continue our focus of returning excess capital to our shareholders. Our first priority for capital spending, however, will continue to be strategic investments in capital expenditures to support the long-term profitable growth of our business. Our annual effective tax rate for the second quarter of 2021 was 26% as compared to 25.7% in the second quarter of 2020, and we currently anticipate our effective tax rate to be 26.0% for the third quarter. This concludes our prepared remarks this morning. Operator, we'll be happy to open the floor for questions at this time.

Questions and Answers

[Operator]

[Operator Instructions] The first question comes from Jack Atkins with Stephens. Please go ahead.

[Jack Atkins, Analyst at Stephens]

Okay, Greg, good morning and Greg, Adam, congrats on a great quarter.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Thanks, Jack.

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Thanks, Jack.

[Jack Atkins, Analyst at Stephens]

So I guess, first question. Adam, could you talk about -- you referenced the July revenue per day being up 35%. How does that compare relative to normal seasonality? From what Greg was saying, it sounds like that's -- you're trending above normal seasonality and then when we think about the operating ratio, given we're seeing inflationary cost pressures across the supply chain, you guys are talking about hiring an additional 1,000 folks in the third quarter. How should we think about operating ratio trends in the third quarter versus the 2Q relative to normal seasonality, which I think calls for some very modest degradation, if I'm thinking about that right.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Sure. Revenue per day basis, obviously, we've still got a few important days to close out the month, but we're trending very favorably at this point for the month of July. Our revenue per day at this point is a little bit stronger than what our normal sequential trends would indicate, and it really just follows the pattern that we've seen over the last four quarters that we referenced. We've exceeded normal sequential trends on a quarterly basis and really see no reason at this point why that would change as we go into the third quarter. The market continues to be really tight. The feedback that we're getting from customers, we just continue to see the service advantage and capacity advantage that we have in the marketplace and is winning share for us and so we're trying to do all the things, as we referenced in our prepared remarks, to continue to prepare for further growth and to provide best-in-class service to our customers.

So we'll continue to do all those elements to get prepared and as we get through the balance of this year and really continue to try to position the company for 2022. With respect to the margin question, we typically see about a 50 basis point increase in the operating ratio from the second to the third quarter and I think that we'll see somewhere in that same ballpark 50 to 70 basis points maybe. So kind of flattish as we go from the second quarter. I consider that flattish, but just a slight increase, we typically see and have our wage increase is effective the 1st of September. We're a little behind schedule on some of our equipment deliveries, as Greg mentioned as well. So that means that we'll have a little bit more depreciation hitting us in the third quarter than typically where it would have been loaded into the first half of the year. So a few factors like that, that may come on board, but certainly, continuing to see strength as we work our way into the third quarter.

[Jack Atkins, Analyst at Stephens]

Okay. That's all very helpful, Adam. Thank you and I guess maybe for my second question, more of a bigger picture, longer-term question. But there are a lot of just concerns among investors with sustainability of the freight market and trends. And obviously, you guys are expecting the current strength in the market to continue well into 2022, if I'm quoting you correctly. But the investments you're making in your business should position you to take market share and I think when you look at the market more broadly, how are you thinking about secular growth within LTL, given its leverage -- increasing leverage to e-commerce and the importance of e-commerce -- middle mile e-commerce demand to overall LTL growth over the next several years. Could you maybe talk about that for a moment, Greg? Because it seems like that's something that could really lift tonnage in the broader LTL industry and you guys are in a great position to capitalize on that.

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Sure, Jack. No question about it. I mean the e-commerce has continued to grow, as everybody knows, and we benefited from that as well as some of our competitors, but it's strong. I'm not sure I see any change in that. If anything continued growth especially with the changes that we've had with the COVID have, people continue to stay at home and work from home and those kind of things, I think that will continue to drive some of the e-commerce and the middle mile business that we've enjoyed in the last period of time -- over the last period of time. So definitely strong, getting stronger and I think, like I mentioned before, with all the investments that we continue to make and positioning ourselves to have capacity and to be able to do the things that some of our competitors can't because of it, I think we're in a good position, Jack.

[Jack Atkins, Analyst at Stephens]

Okay, thats helpful. Thanks guys.

[Operator]

The next question comes from Jon Chappell with Evercore. Please go ahead.

[Jon Chappell, Analyst at Evercore ISI]

Thank you. Good morning, everybody. Greg, kind of continuing on that theme. If my notes are correct, last quarter, you said you had about 25% to 30% excess capacity in your network for growth, and today, you said 15% to 20% Are you pushing up against the limits of where you're more actively going out to try to take share to keep around that 15% kind of just in case excess capacity? Or do you still feel that you could be more aggressive as it goes out with pricing and trying to take share in the back half of the year?

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

I can tell you, we won't be aggressive and take share with price. We've never used that strategy and certainly, don't intend to do that in this market that we're in today. As you know, we're extremely busy as you -- the 47% growth, that type of growth, it does take capacity out of your network pretty darn quick. But I will say this, we've got some nine -- if I looked at it correctly, we've got nine facilities that we're trying to open in the back half of this year. I'm not sure we'll get all nine of them open, but we will get several of them between now and the end of the year and the others should come early in '22 and we have some one dozen or 12 service centers, where we're adding doors capacity. So we're working on continuing to grow our capacity just as quickly as we can and besides that, those are just the projects that are underway. That's not counting all the things that we're trying to accomplish with land purchases and those kind of things. So we're working to grow it as we speak. It's an ongoing effort. Again, this business that we're facing today, it takes it out pretty darn quick. Sometimes it takes it out quicker and you put it back, but we are working on it, like I said, as we speak.

[Jon Chappell, Analyst at Evercore ISI]

Okay and to be clear, I wasn't insinuating you'd be taking share with price. So I was hoping that you'd be taking share with capacity and then pricing as efficiently as you have been. Just the follow-up for Adam. Once again, going back to April, you had insinuated that PT hopefully would be down in 2Q, but most likely wouldn't be and it really wasn't, but really expecting it to come down in second half. I know you look at it holistically with wage and benefits as well, and you're adding 1,000 people in the third quarter. Is it still likely that the PT can come down on a meaningful basis in second half? Or given that capacity shrink and maybe some issues with hiring we should think about PT being maybe a bit more inflated than usual in the second half of the year?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Yes. I think for the third quarter, especially that it's going to stay at an elevated amount. We actually use quite a bit more in the month of June as we work through the end of the quarter. The strength that we typically see there, we actually had to step up our utilization of it somewhat, and we expect it to be actually probably a little bit higher in the third quarter than the 3.3% that we used in 2Q, but I think that as we continue to be successful with bringing people on board that we'll be in the position to hopefully through the fourth quarter and as we transition into 1Q of next year to be able to increasingly use our people and our equipment and reduce that reliance. But because of the strength of the topline, we just had to continue to pull that lever of using the purchase transportation to continue to serve our customers qnd so that's certainly something that we can continue to do through the third quarter, and -- but ultimately, as you know, our strategy is to try to have everything in source from a domestic line haul standpoint, and that's where we ultimately want to get back to. So it's just because of the strength of the topline. We've had to use it a little bit longer through the year than we had originally intended.

[Jon Chappell, Analyst at Evercore ISI]

All right. Hope a good problem to ask. Thanks Adam. Thanks Greg.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Sure.

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Thanks.

[Operator]

The next question comes from Jason Seidl with Cowen. Please go ahead.

[Jason Seidl, Analyst at Cowen]

Thank you, operator. Hey, Greg. Hey, Adam. Good morning, gentlemen. I wanted to touch a little bit on freight selectivity and any accessorial charges because one of your competitors who had reported really noted that, that helped them out in the quarter. I got a sense that maybe their accessorial charges were sort of not up to market. But just curious how much do you think that gave you a boost in the quarter and on freight selectivity, how much of that is permanent versus just depending upon the market itself?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Jason, I don't know that we necessarily any competitors' actions in terms of new accessorials or changes in accessorials necessarily impacts us. Obviously, when the pricing environment is strong, like it is right now, that provides a lift to everyone and supports our own pricing initiatives. But I think we have a differentiated approach to pricing, and we've seen that, and it's really been the foundation for why we produce such long-term profitable growth. We have a strategy of looking at our cost inflation, and then we try to target increases in our revenue per shipment to give us a cost plus pricing and that formulates the approach every year goes into our generate increase when we push that out, it goes into what we try to achieve from a contract renewal standpoint as well. With that said, each account must stand on its own from an individual profitability standpoint and so we look at each account on an individual basis and what the cost inputs are for that particular account and what our pricing needs to look like to provide an appropriate return for us and I think we've got really good consistency across our book of business.

I think we saw that last year and the disruption in particular in the second quarter when a large percentage of our business shifted to larger national accounts. I think there was a concern by some on the street about what that would do to margins. And we went through the second quarter last year with a 15% decrease in revenue, a change in the mix of our business, but we were able to still improve our operating ratio with the pricing actions and the cost control measures that we had in place as well. So we're going to stick to our long-term consistent approach and continue to push for cost plus pricing because it's important for us to continue to expand our capacity. We're one of the few carriers that really has invested over the long term. As Greg mentioned this morning, we've invested and expanded our door count over the last ten years by over 50%, and that supported about a 50% improvement in shipments per day over that same time frame. So we're uniquely positioned to continue to gain share in a market that continues to somewhat at least from the reports we get on the public carriers.

The number of service centers over that ten-year period has stayed about the same or reduce slightly. So it's a good spot for us to be able to continue to take advantage of opportunities. Certainly, we're going to do it with price, but we should see the volumes come through and improve density as well. And as you know, that density and yield formula produces long-term improvement in our operating ratio, and so we got further room to improve from where we are today.

[Jason Seidl, Analyst at Cowen]

Well, you guys have clearly been the best at that density and yield formula over my career. Wanted to get back to the excess capacity and you said obviously, 15% to 20% is in the network right now. That obviously doesn't include any even nine facilities that you're targeting at in the back half of the year. If we look on a historic basis, sort of what's the lowest that number has ever been in terms of excess capacity?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Gosh, Jason, we'd have to go way back. I think there was maybe a point in time, and I'm going way back some 20-plus years when we probably had very little capacity. But if you -- I don't know how long you followed us exactly, but...

[Jason Seidl, Analyst at Cowen]

22.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

22. Well, that's probably about when we really ramped it up. Really, it was in the early 2000s, we really ramped up our efforts to start expanding our capacity, and it's kind of been ongoing since then really. So I don't know that we really measured it or talked about it. If we did, I don't recall it back then, but I can -- just from me in here, it was extremely minimal. How about that?

[Jason Seidl, Analyst at Cowen]

Okay. I guess what the question I'm trying to get at is, there is a certain amount of excess capacity that you probably want in your network. Otherwise, you you sort of get this economies of scale and things become tight and your operations might suffer if you're operating at 105% or something like that and [Indecipherable] freight through the network. So what's that number? What's a comfortable number to get down to? Obviously, 20% is probably too much capacity and allows you to grow, but what's a comfortable level on an operational basis to keep up sort of your service metrics [Indecipherable]?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Jason, let me say this. We talk about the 15% to 20% or 20% to 25%. We talk about those numbers really for your benefit. The data truth that's not necessarily how we look at it. We look at it on a need basis, we look at where we know that we're outgrowing our capacity, and those are the places that we try to address first. Now obviously, when we expand the location or build a new location, whatever, we're building capacity and we know, okay, we're 50%, 70%, 80% of capacity in that place and we'll roll it up to come up with the number for you guys. But honestly, we look at it on a case-by-case basis. We look at it on a market-by-market basis, where we're busting at the seams and where we're growing and maybe where we just haven't done quite the job from a marketing standpoint or from a sales standpoint. We know we're on the low side, and we know we can improve in those markets, and those are the ones that we target for growth or for expansion, if you will. So I hope that makes sense, and I hope that answers your question.

[Jason Seidl, Analyst at Cowen]

No, it doesnt. Makes a lot of sense and appreciate the time as always, gentlemen.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Sure.

[Operator]

The next question comes from Allison Landry with Credit Suisse. Please go ahead.

[Allison Landry, Analyst at Credit Suisse Group]

Thanks. Good morning. Just going back to the question on purchase transportation. Could you maybe tell us what percent of your line-haul that you're currently outsourcing, and if that's changed over the last couple of quarters? And maybe remind us, what it's been historically and when you think you'll be able to bring lot to that back in house?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Allison, we don't necessarily track in terms of number of dispatches. I mean, we see how many we're utilizing and in what thoughts and are selective with where we're doing it, but the baseline purchase transportation that we have that is our Canadian operation and truckload brokerage primary usually runs about 2.2% thereabouts of revenue. So we're up about a full operating point on that, about 110 basis points or so. And like I said, I think that, that may go up slightly, maybe 3.5%, 3.7% or so in the third quarter as we continue to utilize it, but we're making our efforts every day. Every driver that we can find we're bringing in and onboarding and continuing to put in place, but it's overall a very small percentage of dispatches that we have that are being outsourced.

[Allison Landry, Analyst at Credit Suisse Group]

Okay. That's helpful. And then, I mean, obviously, there's been some notable transactions in the LTL space by some from TL carriers. Just curious to get your thoughts on any potential implications, whether that's from a pricing standpoint or perhaps, it opens up some terminal availability for you. And maybe if you think there's the potential of further industry consolidation or M&A. Thank you.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

It's something that, at least from the early indications of what's been pointed out on the street, the few transactions. Each one have talked about increasing pricing to improve margins. So again, that's something that will certainly help with our pricing initiatives. If you've got every other carrier that's going out and trying to raise rates. So we'll see if there are any other transactions. Certainly, the market is very consolidated, as you know, and we don't expect any new entrants in terms of just new carrier. It's -- any changes have been new players by way of acquisitions. So we'll continue to watch and see how some of the new owners manage those other businesses.

And in the meantime, if that creates great opportunity for us, that's typically what we see as there becomes a little freight churn and we either get freight directly or in some cases, just indirectly as the turn within the industry happens, but we will continue to work with our customers and if we're a common carrier with a customer that has got one of these other entities, our sales team is always in there trying to identify freight opportunities for us. And so in some cases, that's what creates some market share opportunity for us, but we've got multiple sources of how we win share and we certainly believe that we've got a long runway for growth ahead of us, and we'll continue to execute on that front and in regards to service center availability, we haven't necessarily seen anything at this point in terms of reducing the number of service centers for many of the other big public carriers and certainly, we're -- we've got our eyes out and would be willing to look at any opportunities because obviously, in our long-term plans, we continue to have a pretty long list of areas that we want to expand to.

So we're at 248 service centers today and think that we've got a list of sort of 35 or 40 locations on our long-term plan that we want to continue to add to the network and support additional market share opportunities for us and if we have to build them, we we will. That's what's been a bigger part of our plan in recent years. But certainly, if existing terminals become available, we take advantage of those opportunities as well.

[Allison Landry, Analyst at Credit Suisse Group]

Okay. Perfect. Thanks Adam.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Thanks Allison.

[Operator]

The next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.

[Ravi Shanker, Analyst at Morgan Stanley]

Thank you. Morning gents. So you guys continue to execute incredibly well in a good market, but I'm a little surprised that you're stepping up the pace of the buyback here. I mean, clearly, that could be good for shareholders, and that's awesome. But historically, you've been an entity that's kind of really reinvested back in the business. Your stock kind of just on consensus numbers right now, it's not particularly cheap. So what's the messaging there? I mean do you think that you guys can become the first trucking company to break into the 60s or and so normalized EPS is just significantly higher than current levels. So the stock is much cheaper than we think it is? Or what's the messaging there on the buyback step-up? Thanks.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Well, there's a lot to unpack there, but I'll say this since I started with Old Dominion in 2004, I've heard the story that our stock was expensive and look at where we are today from a stock price standpoint versus where we were back in 2004. So -- but that's dependent on our continued ability to execute on our plan. And from a buyback standpoint, we continue to look at the buyback program and our dividend program in terms of returning excess capital to our shareholders. I think that we've been clear that our first priority for capital spending is going to be capital expenditures and strategic investments that provide very solid returns on invested capital for us, and we want to continue to grow the business. In some years, that will be heavier capex than planned, and we've got the flexibility of the buyback program to look at what our capital needs for the business are and to use it more or less in returning excess capital to our shareholders.

So we think it's been a good program for us in the past, but again, our first priority is to continue to invest for growth and that's what we've seen over the long term, and that's what we continue to expect and Greg mentioned that 50% growth and keep coming back to this. I know we start thinking about short-term trends and things like that, but over the next 10 years, we've talked about in the past, but over the next 10, we continue to expect that the industry will grow above GDP. We continue to have plans to expand our service centers and take advantage of market share opportunities and grow our shipment counts significantly over the next ten years. So it just takes continued execution of our business model. It's been successful in the past, and we think that it will continue to be successful for us into the future, producing very strong returns.

[Ravi Shanker, Analyst at Morgan Stanley]

That gives me no debate in what youve executed so far. Thanks very much gents.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Thank you.

[Operator]

The next question comes from Tom Wadewitz with UBS. Please go ahead.

[Tom Wadewitz, Analyst at UBS Group]

Yeah, good morning. I wanted to ask you a bit about the -- I guess, the 2022 view and kind of thinking about cycle impacts from truckload spillover. It seems like you're pretty proactive about the pricing and trying to keep the right quality of freight in your system. But how do you think about the potential risk to '22 tonnage, if either freight growth slows down or truckload capacity, if they finally get some traction on drivers, which I know is tough. Do you think of that as a meaningful potential headwind? Or how do you think about -- just how much truckload spillover effect there may have been in 2021? It just seems like that, that could be a meaningful factor?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Tom, that's a good observation and the exact reason why we've taken the actions that we have to protect our capacity now to support our customers' traditional LTL shipments. Those truckloads bill over tight shipments that can weigh 8,000 to 10,000 pounds. Typically, we manage those within our spot quote system. Spot quotes for us historically have been somewhere 3% to 5% of our revenue. Right now, it's less than 1% and we've got a truckload brokerage operation that some of our existing customers moving the LTL shipments that have these larger opportunities for us. We can put through our truckload brokerage and provide a solution for them, but we want to make sure that we're paying more attention to our traditional LTL shippers that we're protecting our service and capacity for them as we continue to get feedback that they need capacity. Industry capacity is tight. We're hearing that more and more. It started probably a little bit sooner this year than I expected. We thought that we would hear that feedback, given what the sequential trends have looked like for us, but it certainly come to us maybe a little bit sooner at least the panic, if you will and so we want to make sure that we're protecting our customers and giving them what they need, but there's no reason for us to tie up capacity with these transactional type loads that are here today and gone tomorrow. We want to make sure that we're doing the right thing and protecting the market share that we have, that will be with us for the long term.

[Tom Wadewitz, Analyst at UBS Group]

Right. Okay. So you think you're pretty well protected in terms of risk on truckload spillover going away in '22, just because of some of the actions you've taken recently? Is that the right way to read it?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Correct. We've already moved it out essentially of our system as evidenced by that reduction in the spot quote type of business that we have. So we feel good about where we are and transitioning into next year. And obviously, we have customer conversations every day, but I continue to believe that there will be ongoing freight opportunity for us with traditional good paying LTL shipments.

[Tom Wadewitz, Analyst at UBS Group]

Okay. Thank you for that and then just a follow-up question. Inflation and labor availability is such a big topic these days and certainly, seems to be affecting transports where normally we don't in a different way and yet you seem like you're -- I don't want to say immune, but that's not having much impact on your business. Is there a bigger wage increase than normal coming potentially related to that? Is there kind of maybe risk of higher dock pay? Or have you seen some of that come in? Or how do you think about that inflation impact on your business? Or perhaps, just the jobs and quality of culture you have are a real differentiator that help you. But maybe if you could offer some thoughts on tight labor market? And is there an impact or a coming impact?

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Yes. Tom, no question, it's a tighter labor market than certainly we're used to. Of course, I've been here for a long time, and I don't ever remember the growth percentages that -- in the past that we've got today. So it's definitely a bigger challenge than it's ever been, but there is a labor market out there. As I mentioned in my prepared remarks, we've had some -- I think it was 1,100 in the second quarter, and we plan to continue to hire in the third quarter. There are folks out there. It is more difficult than it's been and I think I've mentioned that on our last call or two, it's a little harder to acquire people than it used to be, but we're having success. We're working extremely hard at it and I think I mentioned that before, they're there. You just have to work harder to get them, and that's what we're doing, and that's why we have had some success. But as far as the dollars go, surely, we have to respond based on the market. We give a wage increase every year. As Adam mentioned before we give it in September, and we certainly plan to do that this year and and it may possibly be better than it's been in the past. So yes, you have to respond, but you have to work at where your needs are. You have to work to fix them. So that's what we've been trying to accomplish, but it's an ongoing effort for sure.

[Tom Wadewitz, Analyst at UBS Group]

Okay. Great. Congratulations on the strong results.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Appreciate that.

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Thanks.

[Operator]

The next question comes from Chris Wetherbee with Citigroup. Please go ahead.

[Chris Wetherbee, Analyst at Smith Barney Citigroup]

Hello. Thanks and goodmorning. Maybe just picking up on the labor issue. You're adding, I think, another 1,000 in the third quarter. What do you think the sort of quarterly needs might look like beyond that? I guess, is fourth quarter, maybe another 1,000 people when you think about sort of where the volume is, where your resources are. Sort of what's the right numbers or some catch-up that's going on right now?

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Well, I think you probably know our peak season is the third quarter, particularly in September. So hopefully, if we get the folks on board in the third quarter, I would expect those needs to really to level off into the fourth quarter. The other thing that we have to deal with in the summer months, obviously, we have to cover vacations and those kind of things. So that pushes your needs up a little quicker, too, than sometimes you realize. So hopefully, well, we'll see. Who knows where the growth goes. If the growth continues to expand and how quick it expands, all those things will make a difference in our needs. But certainly, we'll try to respond however we need to.

[Chris Wetherbee, Analyst at Smith Barney Citigroup]

Okay. That's very helpful. I appreciate that and then just picking up on that growth dynamic. I mean maybe if we take a step back, you guys have talked a lot about sort of the longer-term opportunity for growth in the business and sort of where you see your share opportunities. If we were to look out three, five years, how much more tonnage do you think you sort of should be able to take on over that period of time? Obviously, there's some secular dynamics that are benefiting the LTL industry, and you guys are certainly taking share. And maybe some of these recent transactions instead of potentially making the landscape a little bit more challenging from a share perspective as Adam mentioned. Maybe may open up some opportunities for you. So I don't know if you could just maybe take a step back and give us some bigger picture perspective on where you think this might go.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Yes. Chris, we haven't necessarily put out any specific targets necessarily for revenue growth and market share, but certainly, believe that given the tightness in the industry and generally, the lack of investment in service center expansion by the other carriers. And we look at the public group, which is about 65% of the overall industry, but we're just not seeing necessarily any significant investment out of that group as a whole and so that creates more and more market share opportunity for us. So we're sitting at 10% to 11% market share today, and I certainly believe that we were the biggest winner of market share over the last ten years and believe we'll be the biggest winner in regards to market share over the next ten. So however, it takes us to get to where we're going, we'll see. We haven't, like I said, published that number, but we certainly believe that the opportunities there. We've got the capacity now and intend to continue to invest in capacity ahead of our growth and try to stay a couple of years ahead of the growth curve. So we just don't necessarily want to publish anything specific, I guess, at this point.

[Chris Wetherbee, Analyst at Smith Barney Citigroup]

Okay. Thats helpful though. I really appreciate the color. Thank you.

[Operator]

The next question comes from Ariel Rosa with Bank of America. Please go ahead.

[Ariel Rosa, Analyst at Bank of America]

Hey, good morning guys.Congratulations on a nice quarter. So I wanted to stay on the subject of wage inflation a bit. I think if I look at compensation for employees, it was up about 10% year-over-year and kind of recognizing there were some anomalous things with last quarter, but it was also seems to have taken a pretty big step-up sequentially. So I wanted to think about third quarter and as you think about kind of the wage increase thats planned for September, maybe any kind of indication in terms of how that looks either on a sequential or year-over-year basis? And if theres some kind of targeted measures that you're doing in terms of targeted bonuses or certain geographies where youre really focusing on maybe taking wages up. Just some thoughts around that would be helpful.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Yes. Just looking at the average salary, wages and benefits number that we publish and dividing that by the average number of employees can somewhat be skewed, if you will and I think that thats driving some of that quarter-over-quarter increase, thinking about the actions that we had to take last year and then the actions that were taking now. But to try to give you a little bit more color, I can say that when we started this year, we talked about our core inflation being somewhere around 4% on a per shipment basis, excluding fue and that included the normal 3% to 3.5% increase that we give. That's what we did last September, and certainly, we will be giving an increase. We haven't announced that to employees yet and so I want to hold back on sharing any color before it goes out. But as Greg mentioned, we connect the success of the company with our employees, personal financial success and certainly, feel that they will be rewarded for their efforts and for how well the company is performing. Looking into the second quarter in particular, though, and we kind of expected this, we did have an increase in some of our fringe benefit cost over the period.

That rate -- that fringe rate was quite a bit higher than where it was in the second quarter of last year and quite a bit higher, frankly, than where we were in the first quarter and thats some of the anomaly that comes along with the growth in employees. Our employees have been working very hard, working more hours. And as you add to your employee count, if youve got four employees that were working 50 hours a week and now you got five that are working 40, that changes the dynamics. The same amount of hours are there to be worked and the wage looks the same, but you got the benefit cost for that fifth employee that increases there. So thats something that weve seen historically when we're growing headcount that you get a little bit of a lag effect with those benefits, and some of that will continue into the third quarter as well. Id expect that we might have a little bit higher fringe percentage rate than coming into the year I targeted and believe we'd be somewhere around 34%. That is our fringe benefit as a percentage of salaries and wages. We were a little north of that during the second quarter, and I expect us to be a little bit north of that as well as we transition into the third.

But we're offsetting those were obviously costs that we overcame in 2Q, given the strong topline revenue performance and the leverage that creates on other costs and then weve got the base, a larger base of employees to thereby grow from. So its all good, and its all included. Our expectations will be included as we transition in 3Q and some of the comments that I made earlier about where we think that operating ratio might trend to, but we will start to see as we get into the back half of this year that core inflation start looking more on a per shipment basis. Like what we had expected through the first half of the year, it looked a little different. Weve actually, in the second quarter, our cost per shipment excluding fuel was down slightly, certainly seeing a big increase in fuel cost right now, but that will normalize a little bit more as we get into the back half of the year.

[Ariel Rosa, Analyst at Bank of America]

Got it. Thats really helpful color. Thanks for that Adam and then just -- for my second question, I wanted to hit on -- and maybe I missed this, but just in terms of -- I know you usually disclose cargo claims ratios and on-time performance. I dont think I heard that earlier on the call and kind of in a related vein, I wanted to hear, having this kind of elevated purchase transportation expense or kind of onboarding new employees, maybe how that's impacting service? I know there's usually kind of a little bit of a transition period there. Just your thoughts around, if having kind of less direct oversight over freight as a result of kind of outsourcing more line-haul, if that's kind of in some way impacting your service metrics or how you guys think about kind of managing service to the level that youve expected given that youre outsourcing more of that freight to third parties?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Yes. Yes. Certainly, when you lose a little bit of control, there is that risk that it can have a negative impact on service and as we talked about in prepared remarks that our expectation, whether its our employees or that of a third-party partner that were utilizing to move the freight, the expectation is the same that we want to give superior service to our customers, and thats what were always striving for. I certainly believe that we continue to show the best-in-class service metrics. Our cargo claims ratio continued at 0.1% during the quarter and that's really what we strive to do. Its the value proposition that we offer our customers, and it's something that we've got to pay very close attention to.

But when you have the control, if you will, over managing the employees and the freight and having the equipment, its certainly a lot easier to continue to have each of our employees bought into the overall success of the company. They understand over the years as weve improved our service metrics, what thats done in terms of the profitable growth that we produced and are totally bought in into delivering the very best service to our customers. So we want to continue to keep on that promise, if you will and I think every employee is continuing to be motivated by delivering the very best service to our customers.

[Ariel Rosa, Analyst at Bank of America]

Great. Sounds good. Thanks for the time Adam.

[Operator]

The next question comes from Todd Fowler with KeyBanc Capital Markets. Please go ahead.

[Todd Fowler, Analyst at KeyBanc Capital Markets]

Hey, great. Thanks and good morning. Were pretty long into an LTL call, and I don't think that there's been a question on kind of core pricing or core yield. So Greg, Ill see if youll entertain this one. Yields during the quarter ex fuel were up 10%. And obviously, there's some impact there from mix and the lower weight per shipment, but do you have any comments just directionally on what youre seeing in kind of the contract renewal environment? I know you're not giving a specific number there, but is this an environment where contract renewals are still accelerating? And as you think about kind of the potential for some tightness in the back half of the year, is this a market that can sustain another GRI here this year? Is that something thats more of a 2022 type phenomenon at this point?

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Yes. Todd, if youre talking about a GRI, we have no intentions of anything in the second half of the year. That will be a 2022 event, for sure. But the environment has been favorable, probably more favorable than I can ever recall, which is a good thing. But as we've always done in the past, Ill say this stuff, the renewals are probably a little better than we've experienced before, okay? Were having some more success, but as we've always done, weve addressed accounts on an as-need basis. If we have needs to improve those accounts, weve addressed those needs and try to make improvements accordingly. So I don't think our strategy or our approach will change at all and that's what well continue to do to try to be consistent and try to be fair with our customers.

[Todd Fowler, Analyst at KeyBanc Capital Markets]

Yes. Got it. That makes sense and I would think similar to some of the earlier comments that there are some tailwinds from what others are doing in the industry. So just as a follow-up on the weight per shipment here in the quarter, it was down about 4% year-over-year. It was down sequentially and it sounds like that maybe that reflects some actions taken with some spot TL shipments, but is that roughly where the weight per shipment should settle out at this point? Or do you see that moving more either based on economic factors or specific mix issues within the network?

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Yes. I would think so. It seems to have somewhat stabilized in the last couple of months. So I would expect those -- that trend to continue unless something changes with what were doing with spot quotes, and I dont anticipate that not anytime soon. And Adam may have something to add to that, but thats kind of where we are today.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

No. I think well continue to see kind of in that 1,550 to 1,600-pound range, where we've somewhat settled now, but it could move up and down a little bit from here, but I think at this point, were kind of settled in for likely the balance of the year.

[Todd Fowler, Analyst at KeyBanc Capital Markets]

Great. Understood. Thanks so much.

[Operator]

The next question comes from Scott Group with Wolfe Research. Please go ahead.

[Scott Group, Analyst at Wolfe Research]

Hey. Thanks. Ill turn it quick. Adam, can you just talk directionally about some of the components of that 35% revenue growth in July?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Well, I dont want to get too much just because it certainly can move around. But I would just say that certainly, the yield performance is remaining consistent. Some of the year-over-year change, if you will, and weight per shipment, we're trending down about that same 4%. So youre seeing a similar type of change in the yield, and obviously, that implies -- and that was around 14%, as you know. So that kind of imply what the tonnage number would be. We'll see where it falls in, but plus or minus, it's just going to be somewhere around a 19% threshold.

[Scott Group, Analyst at Wolfe Research]

Okay. Great and then in terms of the uses of cash, would you guys ever think about buying another LTL? And then -- or maybe with the buyback, if you wanted to do it in in a full year like you've typically done in the past, would you think about using any debt on the balance sheet for the buyback? Thank you.

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Yes. Ill let Adam answer that financial question last. But at this point, we certainly arent looking to acquire another LTL. I'm not sure that makes sense. And at the same time, if you go back through the history of acquisitions, certainly major ones, we havent seen a whole lot of success. So I dont think we want to weigh into that at this point. But we certainly did our share back in the day, but most of those are smaller tuck-ins in geographies where we have needs and those kind of things. So just our needs are different today than what they used to be. And at this point, we have no real strong appetite for that.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

On the buyback, we have no intention at this point of using debt to finance additional buybacks. We want to continue to use the cash that we have on hand, and we continue to expect significant cash flow from operations as we continue to see improvement there and despite the increases that weve had in capex and certainly, could have a big capex number next year as well, we havent really fine-tuned that. That will come later in the year, but based on demand trends that we see, I would expect that well have another pretty healthy year of capex. We just have a tremendous amount of free cash flow, and were trying to return that to our shareholders and weve got a pretty nominal dividend and just will continue to use the flexibility of the buyback program as we have in the past to return that excess capital back and maybe work down some of the cash balance that's on the balance sheet as well.

[Scott Group, Analyst at Wolfe Research]

All makes sense. Thank you guys. Appreciate it.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Thanks Scott.

[Operator]

The next question comes from Bruce Chan with Stifel. Please go ahead.

[Bruce Chan, Analyst at Stifel Nicolaus]

Hey, Greg. Hey, Adam. Thanks for the time here. Just wondering if you can remind me what your cross-border presence look like. I know we talk a lot about e-commerce when we think about some of these secular growth opportunities, but just wondering if theres anything on the nearshoring side that's meaningful. And whether youve seen any more demand for that cross-border capability either north or south.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

That's -- its -- we've got the services certainly to Canada primarily. We've got services to Mexico and really consider Puerto Rico, Alaska, Hawaii and so forth in our OD Global division as well, but Canada is the biggest opportunity. We continue to see growth there, but we don't have assets there. Weve got a good partner and that partnership in regards to the business that we may have going north, and they handle it or their customers that may have freight coming south has created opportunities for us. And certainly, we would expect some growth to continue there in that regard, but its a smaller element of business overall for us.

[Bruce Chan, Analyst at Stifel Nicolaus]

I appreciate that and just one last one here. Can you remind us of what your mix of 3PL business looks like right now? And do you have any meaningful plans to change that in the near future?

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

It's about 20% to 25% of our overall revenue. A lot of our top 50 customers, weve got a pretty healthy mix of big 3PL accounts that are in there. And weve seen growth last year, especially during the pandemic, as they were helping their customers out. We were continuing to get a good amount of freight coming out of those 3PL customers. So weve got very good relationships. Most are strategic in nature. We dont have as many relationships with the 3PLs that are more transactionally minded and now trying to sell cheap rates because thats just not us and doesnt necessarily fit with our profile. But I think when theyre out selling value to their customers, I think they can help in regards to independently proven our value equation and looking at our on-time performance and our claims ratio in regards to inventory management and so forth, and how may be paying for a little bit more upfront for Old Dominion service can deliver cost savings, if you think about things on a total cost of transportation standpoint for their customers. So its been a good independent source coming in to support revenue growth, and wed expect that we continue to see some growth with them as well into the future.

[Bruce Chan, Analyst at Stifel Nicolaus]

Okay. Great. Thanks Adam. Appreciate the color.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Sure, Bruce.

[Operator]

The next question comes from Tyler Brown with Raymond James. Please go ahead.

[Tyler Brown, Analyst at Raymond James]

Hey, good morning guys.

[Adam N. Satterfield, Senior Vice President of Finance, Chief Financial Officer & Assistant Secretary at Old Dominion Freight Line]

Hey, good morning Tyler.

[Tyler Brown, Analyst at Raymond James]

Hey, Just one quick question. I know the call has been long here. I want to come back to the equipment, talk that you did upfront and its role in the capacity equation. So Im just curious, but does this shift in e-commerce and serving these big distribution centers, I would imagine that, thats driving more drop and hook request. But does that change your trailing equipment means fundamentally., Could that be an area of investment? Or is that really not a needle mover?

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Tyler, at this point, it hasnt significantly changed our needs or requirements. Without a doubt, we have experienced some delays with some accounts and getting our equipment unloaded. We certainly try to manage those events when they happen so we can get our equipment back. But its just definitely been a challenge, but at this point, we haven't -- I don't think weve changed the ratio of trailing equipment to tractors that we typically look at to determine the needs of trading equipment. So we'll continue to look at that, but I think that's a very fair question. And if those needs change, then well certainly address it, but at this point, nothing significant.

[Tyler Brown, Analyst at Raymond James]

Okay, perfect. Thanks guys.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Greg Gantt for any closing remarks.

[Greg C. Gantt, President, Chief Executive Officer & Director at Old Dominion Freight Line]

Well, thanks to all of you for your participation today. We appreciate your questions, and please feel free to call us if you have anything further. Thank you, and have a great day.

[Operator]

[Operators Closing Remarks]