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Old Dominion Freight Line Inc.’s strategy of expanding its real estate footprint is helping the carrier add capacity, a company executive said April 5 in an exclusive interview with Transport Topics.
“This is something over the past several years that we’ve been extremely aggressive with,” said Dave Bates, senior vice president of operations for the Thomasville, N.C.-based less-than-truckload carrier. “In the past 11 years, we spent $1.8 billion in real estate expansion. That’s buying land, building additional service centers or expanding existing service centers. That aggressiveness has been our motto and really has been our strategy as we continue to grow our market share.”
The company on March 29 announced its latest expansion push, with new or improved facilities in seven cities. Across the fourth quarter of 2021 and through Q1 of this year it expanded in Clear Lake, Iowa; Marysville, Wash.; West Columbia, S.C.; and Westfield, Mass. It opened facilities in Alliance, Texas, Byhalia, Miss.; and Kernersville, N.C. The last two were built to handle surplus local demand from existing facilities.
“Byhalia is a spinoff of Memphis, Tenn.,” Bates said. “Kernersville was a spinoff of Greensboro, N.C. Memphis and Greensboro had very large local operations. Their local pickup and delivery operations were extremely large and growing to the point that it took resources to be able to process all of our local freight there.”
Bates is confident this strategy is helping ODFL gain market share. The locations are chosen based on anticipated growth and heightened customer demand, he said, with the goal of reducing shipping times, enhancing delivery flexibility and allowing for increased capacity in key metropolitan areas.
“We continue to push that revenue number and that market share number up,” Bates said. “The only way to stay ahead of it is [to] expand your service center network. Once you get to the point where you get to capacity, it prohibits your ability to grow.”
"Each new and expanded facility helps to facilitate the economic growth of the local communities in which we operate while better serving our customers.” – Senior VP of Strategic Planning, Chip Overbey. Read more: https://t.co/ktkT1Ij14W. pic.twitter.com/XTL9SO0QCj— ODFL, Inc. (@ODFL_Inc) March 30, 2022
Bates said the company aims for around 75% capacity utilization to provide room for growth. Adding service centers has helped ODFL stay above that 25% threshold as it relates to facilities, door count, yard space, workers and equipment.
The latest additions come amid increasing revenue and strong demand, which he said will fuel future expansion.
“We’re expecting that to continue through this year,” Bates said. “We expect to open another eight to 10 additional service centers. And if you look at it from a door standpoint, our expectation is for this year, from December of 2021 until the end of 2022, we expect to add about 1,100 additional doors within our network.”
The company currently has 253 service centers.
KeyBanc Capital Markets analyst Todd Fowler said ODFL has been one of the most consistent LTL carriers for reinvesting in and expanding its network, and said these expansions have propelled its growth.
“By adding terminals and by adding service centers closer to their customers, that helps improve their service with their customers and allows them to continue to grow,” Fowler told TT. “We look at [the March 29] announcement as being something very consistent with ODFL’s strategic focus within the LTL market, really over a 20-year period at this point.”
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Fowler noted that while other carriers also are seizing growth opportunities, ODFL has followed a steady trajectory.
“They’ve been very consistent in growing within the market,” Fowler said. “Some of their competitors have grown maybe a little bit more sporadically, or at other points in the freight cycle when demand has been good. The piece [that] I would say really stands out with Old Dominion is just the consistency, and their approach to continually invest in the market throughout freight cycles.”
Old Dominion Freight Line ranks No. 10 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.