ArcBest anticipates weak demand impacting margins in Q4, potentially leading their asset-based unit to near-breakeven results and post-pandemic lows. Despite beating Q3 expectations, they aim to cut costs to maintain margins. They reported adjusted earnings per share of $1.46, slightly above estimates but lower y/y.

The asset-based unit saw volume growth but faced rising costs, impacting margins. Shipments per day rose 4% y/y, while weight per shipment fell 2%. Tonnage increased by 2%, with a focus on core customers. However, weakness in manufacturing and housing sectors affected shipment weights.

Tonnage increased y/y in Q3, but October saw a downturn. ArcBest faced similar volume challenges as other carriers. The Purchasing Managers’ Index fell in October, signaling manufacturing contraction. Despite challenges, ArcBest expects tonnage to rise slightly y/y in Q4.

ArcBest’s third-quarter yield was down y/y, but the pricing environment remains rational. The company reported elevated bid activity and implemented a general rate increase. Asset-based revenue rose 2% y/y, but adjusted costs and revenue per shipment faced challenges.

The asset-based segment reported a 92.5% adjusted operating ratio, 150 bps worse y/y. Management anticipates a 400 bps margin decline in Q4 due to market challenges. They aim to outperform expectations. ArcBest’s long-term goal is an 87% to 90% operating ratio by 2028.

The asset-light segment reported a profit after consecutive losses. Record volumes were seen in Q3, but revenue per shipment declined. They expect an operating loss in Q4. ARCB shares were up slightly on Wednesday. Management remains focused on long-term profitability goals.

Read more at Yahoo Finance.: ArcBest flags margin pressure in Q4