Less-than-truckload carrier Saia Inc. has announced the addition of more service centers. The openings are part of a plan that will likely make the company one of the most active real estate players in the LTL market over the next few years.
The company added facilities in Macon and Valdosta, Georgia, both of which are positioned in close proximity to the I-75 corridor. The announcement follows previous additions this year: two locations west of Chicago and the carrier’s first center in West Virginia.
In all, Saia (NASDAQ: SAIA) plans to open between 10 and 15 terminals in 2022 and relocate another 10 facilities into larger locations. Last year, Saia added seven facilities and nearly 1,500 employees to accommodate record growth. By the close of 2021, it was operating 176 service centers.
“Since the end of last year, we’ve been working to add capacity to our network in Georgia,” Jared Mull, VP of operations in the East, stated in a press release. “These two new facilities, coupled with the terminal we opened [north of Atlanta] in December, supports our strategy of expansion within markets where we’ve long had a strong presence and customer base but needed to improve efficiencies, shorten transit times and offer more flexibility when it comes to same-day shipping requests.”
In addition to taking on incremental volumes, the new service centers will help Saia provide better coverage throughout the network, improve service levels and optimize operations. Capacity additions are centered on improving key LTL performance metrics like adherence to appointment windows, quicker delivery times and lower claims ratios.
The company is hoping to up its service offering, which in turn will drive yields and margins higher. It has also been increasing throughput at its terminals via a heavier freight mix and is looking to better optimize its linehaul operations.
Saia reported record results during the 2022 first quarter. Revenue of more than $660 million was an all-time quarterly high and an 84.4% operating ratio (15.6% operating margin) was 550 basis points (bps) better year over year. The first-quarter operating result was a record for any first quarter, which is usually the slowest period of the year and often includes incremental costs associated with weather-related service outages.
At the time of the first-quarter report, the company’s president and CEO, Fritz Holzgrefe, said the trend was supportive of Saia besting its longer-term annual goal of improving operating margins by 150 bps to 200 bps. The company reported an OR of 85.4% for full-year 2021.
Deutsche Bank (NYSE: DB) analyst Amit Mehrotra recently wrote in a note to clients that Saia has roughly 70 real estate projects in the pipeline. Earlier in the year, he said he could see Saia’s network growing to include some 230 terminals over the next four years. His expectation is for the company to reach a sub-80% OR over time.
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