Q2 2025 Landstar System Inc Earnings Call
Good afternoon and welcome to Landstar System Incorporated's second quarter earnings release conference call. All lines will be on a listen-only mode until the formal question and answer session. Today's call is being recorded; if you have any objections, you may disconnect at this time. Joining us today from Landstar are Frank Lonegro, President and CEO; Jim Applegate, Vice President and Chief Corporate Sales Strategy and Specialized Freight Officer; James Todd, Vice President and CFO; Matt Daniger, Vice President and Chief Field Sales Officer; and Matt Miller, Vice President and Chief Safety and Operations Officer. Now, I would like to turn the call over to...
I'll now pass it to Lance, our CEO, Frank Lonegro, for his opening remarks.
Thanks, JT, and good afternoon, everyone.
I think our because and agents.
Every day, it was great to spend time with our BCO, a million miles in Road Stars at our annual AllStar event in Savannah, Georgia, recently, and to celebrate their incredible safety accomplishments.
It was my honor to preside over Lance Star's 51st truck giveaway, awarding newly inducted Million Miles Safe Driver, your Jason from Owensboro, Kentucky, with a new 2026 Freightliner Cascadia.
The capability, resiliency, and level of commitment exhibited day in and day out by our network of independent business owners is unique in the freight transportation industry.
Their adaptability and dedication to safety, security, and service for our customers is truly impressive.
They are exceptional business leaders and key to driving the continued success of Landstar's business model.
Amidst ongoing challenges in the freight environment, compounded by volatile federal trade policy and lingering inflation, concerns for the 2025 second quarter included several important positive developments for Landstar.
While overall revenue was down 1% year-over-year, truck revenue was up year-over-year for the first time since the third quarter of 2022, as noted in our earnings release. Our second quarter revenue per truckload outperformed pre-pandemic levels, typical seasonality, and the number of trucks. Provided by Becuz, it was approximately equal to the 2025 first quarter, representing the best sequential net BCO truck performance in 124 quarters.
Notwithstanding the political and macro uncertainty thus far, in 2025, our focus continues to be on accelerating our business model and executing on our strategic growth initiatives. I continued to see a major bright spot. I am extremely pleased with the performance of Landstar's Heavy Haul service offering.
We generated approximately $138 million of Heavy Haul revenue during the 2025 second quarter, a 9% increase over the 2024 second quarter.
This achievement was driven by a 5% increase in Heavy Haul revenue per load and a 4% increase in Heavy Haul volume.
Turning more broadly to our core truckload service, offering the foundational work. We continue to invest in what puts us in a great position to leverage the freight environment. When it eventually turns our way, we are also focused on our commitment to continuous improvement in the level of service and support we provide to our customers, agents, and carriers each and every day.
Turning to slide 5, the freight environment in the Q2 2025 was characterized by relatively soft demand from a seasonal perspective, admittedly comping off a seasonally strong Q1. The impact of accumulated inflation remains a drag on the amount of truckload freight generated in relation to consumer spending.
Truck capacity continued to be readily available with small pockets of Supply demand equilibrium and market conditions, continue to favor the shipper amidst choppy conditions in the industrial economy as evidenced by an ism index below. 50 for the entire 2025 second quarter. I would note however that the combination of sequential truck Revenue per load Improvement, coupled with the sequential compression of our brokerage net revenue margins, would indicate a market that we believe is working its way back toward being balanced.
Considering that backdrop, Lance starts revenue. Performance was admirable in the 2025 second quarter, with truck revenue per load 2.6% above the 2024 second quarter, partially offset by a 1.5% decrease in the number of loads hauled by the truck over the same period.
Our balance sheet continues to be very strong, and our capital allocation priorities are unchanged.
We will continue to patiently and opportunistically execute on our existing buyback authority to benefit our long-term stockholders. As noted in the release, during the first six months of 2025, we deployed approximately $103 million of capital towards buybacks and repurchased approximately 686,000 shares of common stock.
We continue to invest through the site in leading technology solutions for the benefit of our network of independent business owners and have allocated a significant amount of capital this year to refreshing our fleet of trailing equipment, specifically on unsighted platform equipment.
Of Landstar, because operating safely every day and the agents and employees who work to reinforce the critical importance of safety at Landstar. I'm proud to report an accident frequency rate of 0.67 reportable accidents per million miles during the first half of 2025, well below the last available national average released by the FMCSA for 2021. We continue to be committed to driving down that number closer to the company's trailing 5-year average of 0.61 or lower.
This long-run average is an impressive operating metric that speaks to the strength, skill, talent, and dedication of our team and provides a point of differentiation. Our agents are able to highlight this in discussions with our freight customers.
I'd also like to take a moment to recognize that Landstar is nearly a $500 million agent based on our 2024 fiscal year results. Importantly, retention within the million-dollar agent network continues to be extremely high.
Turning to slide 7 in the capacity side on a year-over-year basis, the VCO truck count decreased approximately 6% compared to the end of the Q2 2024. On a sequential basis, the BCO truck count was essentially flat, decreasing only 9 trucks in Q2 from Q1, representing the best net truck count performance in Q1 2024.
It is typical to incur turnover in bco, truck count in a low rate for load environment. Bco turnover continues. To be influenced by a persistent low rate for load environments combined with the significant increase in the cost to maintain and operate a truck today. Compared to before the pandemic directionally, we are pleased to see our trailing 12-month truck. Turnover rate dropped from 34.5% as of fiscal year in 2024 to 31.9% at the end of the 2025 second quarter through the first 4 weeks of our 2025 third quarter. The number of trucks provided by bco independent contractors has declined by 23 or approximately 1 quarter of 1% sequentially directionally consistent with the trends in truck Revenue per load experience during fiscal July. I will now pass the call back to JT to walk you through the 2025 second quarter financials in more detail JT. Thanks Frank. Turning to slide 9 is Frank mentioned earlier. Overall truck Revenue per load increased 2.6% in the 2 0 1,
In the 2025 second quarter compared to the 2024 second quarter, the increase is primarily attributable to a 3.2% increase in revenue per load on loads hauled by unsighted platform equipment, and by a 1.2% increase in revenue per load on loads hauled by van equipment. On a sequential basis, truck revenue per load increased 3.2% in the 2025 second quarter versus the 2025 first quarter, stronger than the typical pre-pandemic normal seasonality increase of approximately 2% in comparison to overall truck revenue per load.
We consider Revenue per mile and load solved by bco trucks. A pure reflection of market pricing, as if excludes fuel, search charges billed to customers that are paid 100% to the bco.
In the 2025 second quarter, revenue per mile on unsighted platform equipment hauled by BeCuz was 14% above the 2024 second quarter, and revenue per mile on van equipment hauled by BeCuz was 3% above the 2024 second quarter. Delving deeper into seasonal trends, revenue per mile on loads hauled by BeCuz on unsighted platform equipment declined 1% from March to April, was approximately flat from April to May, and increased 8% from May to June. The March to April decline and the April to May approximately flat performance both underperformed pre-pandemic seasonal trends. However, the May to June increase outperformed pre-pandemic historical trends. With respect to loads hauled by BeCuz on van equipment, revenue per mile was more stable, grinding slightly higher. As we move through this second quarter, revenue per mile on van equipment hauled by BeCuz was approximately flat from March to April, outperforming these trends. It increased 1% from April to May, again outperforming these trends, and increased another 1% from May to June, which underperformed pre-pandemic levels.
Made a June historical trends. It should be noted that month-to-month seasonal trends on the unsighted platform are generally more volatile compared to that of van equipment.
2024 second quarter, the decrease in non-transportation, Revenue was mostly due to a 20% decrease in Ocean Revenue per shipment of 14% decrease in Ocean volume and a 9% decrease in Intermodal Revenue per load.
Turning to slide 10, we've provided revenue share by commodity and year-over-year change in revenue by commodity Transportation Logistics. Segment revenue was down 1% year-over-year on a 2% decrease in loadings, partially offset by a 1% increase in revenue per load compared to the 2024 second quarter. It should be noted that our US-Mexico and US-Canada cross-border businesses both underperformed our domestic revenue performance during the 2025 second quarter. Within our largest commodity category, consumer durables, revenue decreased 3% year-over-year on a 5% decrease in volume, partially offset by a 2% increase in revenue per load.
Aggregate revenue across our top 5 commodity categories, which collectively make up about 69% of our transportation revenue, declined approximately 3% compared to the Q2 2024. While slide 10 displays revenue share by commodity, we thought it would also be helpful to include some context on volume performance within our top 5 commodity categories from the Q2 2024 to the Q2 2025. Total loading is as follows: Machinery increased 4%, automotive equipment and parts decreased 16%, building products decreased 6%, and Hazmat decreased 7%. Additionally, substitute line haul loading is one of the strongest performers for us during the pandemic.
And 1 which vary significantly based on consumer demand increased 24% from the 2024. Second quarter, as we've mentioned many times before last star is a truck capacity provider to other trucking companies 3pls and truck Brokers during periods of tight truck capacity. Those other Freight Transportation providers reach out to Lance hard to provide truck capacity, more often than, during times of more readily available truck capacity.
The amount of freight hauled by Landstar and other truck transportation companies is reflected in almost all of our commodity groupings, including our substitute line and all service offerings.
Overall Revenue, hold on behalf of other truck, transportation companies in the 2025 second quarter with 19% below. The 2024 second quarter a clear indicator that capacity is readily accessible to the marketplace Revenue hauled on behalf of other truck. Transportation companies was 11% and 13% of Transportation Revenue in the 2025 and 2024, second quarter is respectively.
Even with ups and downs and various customer categories, our business remains highly diversified with over 23,000 customers, none of which contributed over 8% of our revenue in the first half of 2025.
Turn to slide 11 in the 2025 second quarter. Gross profit was 109.3 Million compared to gross profit of 120 million. In the 2024, second quarter gross profit. Margin was 9% of Revenue in the 2025 second quarter as compared to gross profit, margin of 9.8%. And the corresponding period of 2024
In the 2025 second quarter, variable contribution was $170.5 million compared to $175.1 million in the 2024 second quarter. The variable contribution margin was 14.1% of revenue in the 2025 second quarter, compared to 14.3% in the same period last year. The decrease in variable contribution margin compared to the 2024 second quarter was primarily attributable to a decreased variable contribution margin on revenue generated by Truck Brokerage carriers, as the rate paid to Truck Brokerage carriers is 46 basis points higher than the rate paid in the 2024 second quarter.
Turn the slide 12, operating income declined as a percentage of both gross profit and variable contribution, primarily due to the impact of the company's fixed cost. Infrastructure principally, certain components of selling General, administrative costs and comparison to smaller gross profit and variable contribution bases. Other operating costs were 19.6 million and the 2025 second quarter compared to 14.124% of certain financial responsibility. Related agreements with the affected independent commission, sales agency, excluding the 4.8 million. Pnl, reclassification other operating costs increased approximately 700,000 dollars as compared to the 2024. Second quarter primarily attributable to increased trial equipment. Maintenance costs partially offset by
Increased gains on disposal of used trailing equipment.
Due to strategic cargo theft and an increase in net unfavorable development of prior claim estimates, partially offset by decreased BCO miles traveled during the 2025 period and a decreased frequency of cargo claims during the 2025 and 2024 second quarters, insurance and claims costs included $2.3 million and $1 million of net unfavorable adjustments to prior year claimed estimates, respectively.
Selling, General, and Administrative costs were $55.7 million in the Q2 2025 compared to $54.9 million.
Excluding the favorable impact of the previously mentioned $4.8 million reclassification from selling general administrative costs.
Those costs increased approximately $5.6 million as compared to Q2 2024. The increase in selling, general, and administrative costs was primarily attributable to an increased provision for incentive compensation, increased information technology costs, increased wages and employee benefit costs, and increased costs associated with our annual agent convention.
The provision for incentive compensation was, during the Q2 2025, compared to a $1.4 million reversal of previously recorded incentive compensation costs during the Q2 2024.
Depreciation and amortization was $12.1 million in the 2025 second quarter, compared to $14.5 million in 2024. This decrease is primarily due to decreased depreciation on software applications.
The effective income tax rate was 24.6% in the 2025 second quarter, compared to an effective income tax rate of 24.5% in the 2024 second quarter.
Turn to slide 13 and looking at our balance sheet. We ended the quarter with cash and short-term investments of $426 million. Cash flow from operations for the first half of 2025 was $63 million, and capital expenditures were $4 million.
The company continues to return significant amounts of capital back to stockholders, with $97 million in dividends paid and approximately $102 million in share repurchases. During the first half of 2025, the strength of our balance sheet is a testament to the cash-generating capabilities of the last. Our model back to you, Frank.
Thanks JT.
Given the highly fluid freight transportation backdrop, an uncertain political and macroeconomic environment, as well as challenging industry trends with respect to insurance and claims costs, the company will be providing third quarter revenue commentary rather than formal guidance.
Turning to slide 15. The number of loads hauled via truck in July was approximately 1% above July 2024 on a dispatch basis, while revenue per load in July was approximately 3% below July 2024 on a process basis. As a result, we view July's truck volumes as slightly better than normal seasonality, whereas July truck revenue per load was below normal seasonality. It should be noted that the launch point of the second quarter from a sequential pricing perspective was relatively high, given the strong seasonal performance of 2025 second quarter truck revenue per load.
Looking at historical seasonality from Q2 to Q3, pre-pandemic patterns would normally yield.
A slight decrease in the number of loads, all via truck, was almost entirely offset by a slight increase in truck revenue per load, yielding a relatively flat topline sequentially.
As noted above, fiscal July truck volumes trended slightly above normal seasonality, while fiscal July truck pricing trended slightly below. With respect to variable contribution margin, the company typically experiences a relatively flat variable contribution margin from the second quarter to the third quarter.
Although we are not providing guidance, there are three points regarding the expense side in the 2025 third quarter that we want to bring to everyone's attention.
First, assuming a normalized provision for customer bad debt and normalized employee benefit costs, we would assume SG&A costs would decline by approximately $3 million sequentially as we cycle. The impact of the 2025 Agent Convention held during fiscal April is another factor. Second, that approximately $3 million sequential tailwind to SG&A will be partially offset by the impact of our BCO All-Star Celebration in fiscal July, which we expect to result in a $1.5 million sequential headwind on the other operating costs line.
And third, one of Landstar's operating companies, Landstar Ranger, is a defendant in the trial currently underway in El Paso, Texas, involving a tragic accident between an RV occupied by...
Family and a small independent trucking company that, at the time of the accident, was hauling a load brokered to it by Landstar Ranger.
Although it is hard to predict the potential outcome of this matter, the trial could result in a substantial verdict against Landstar. During the 2025 third quarter, Landstar intends to preserve its rights to appeal any such verdict. Additional information regarding this matter is included in Landstar's second quarter 10-Q, filed today with the SEC. With that, we would like to open the line for questions.
Thank you very much, sir. At this time, we will begin the question-and-answer session. If you would like to ask a question, please press star 1 on your touchtone phone. Once again, that is star 1 to ask a question. To request the council, please press star 2. We have the first question coming from the lineage, Attel, of Evercore ISI. Your line is now open.
Thank you, good afternoon. Um, Jim hates to start off with a super minutiae question, but here we go. Um, you know, Frank gave us that SG&A outlook for '32. You had mentioned earlier the $4.8 million impact to the good guy in second quarter SG&A. So, when we think about that, $3 million minus the $1.5 million sequential decline, is that off the $557 that was actually reported in Q2, or is that the $5557 plus the $4.8, and then make the seasonal adjustment?
Hey, hey, John, uh, all good. Um, yeah, so the 557 on an as reported basis was inclusive of a p&l, reclass out of GNA into other operating costs. So that favorably impacted the customer bad debt line, uh, in the second quarter of 25. So I would tell you to to put that back and then have the million dollar uh, fall off from convention.
Great helpful. Um and then uh, another 1, maybe a bit in the weeds. The other side of platform Revenue per load, um, really stepped up sequentially. You'd mentioned kind of the monthly, uh, Cadence. And then that that big 8% move from May to June. So how do we kind of put those 2 together? Did you just have a phenomenal June, kind of exit rate. Um that kind of helped you both from a, a volume perspective and a pricing perspective at the same time and is that the right kind of launch Point as we think about seasonal Trends in the 3Q know? John, it's a great question so that that comment was specific to bco Van rate per mile on inside of platform. So our our bco as a percentage of that category is probably 30% or so and the folks that that play in that space the bcos, they tend to to skew more on the heavy uh heavy specialized side. So to your point on a sequential basis. Our unsighted platform Revenue per load stepped up about 7% sequentially. It was steady John. So it was it was 320
Basis points, good guy, March to April 620, um, April to May and 4:40, uh, May to June. Um, so it was impressive, and, uh, each month at a quarter. I would tell you van revenue per load, uh, as well. It wasn't as, uh, pronounced, but, uh, plus 0.8%, uh, plus 0.6%, and plus 1.1%, uh, April, May to June. So, we felt good about rates on both equipment types all the way through the quarter.
Great. Thanks a lot. Jim, for sure, John.
Thank you. We'll move on to the next person. Coming from the line of Daniel Imbro, Stevens. Your line is now open.
Yeah. Hey, good evening, guys. Thanks for taking the questions.
For sure.
Um, maybe starting on a higher level, you know, Frank Lonegro, a few months ago. A lot of uncertainty from shippers. As I think about some of your bigger movers this quarter, I think auto down 17%, energy, electrical up meaningfully. Can you offer some color by end market on how you're thinking about the back half of the year? Any updated thoughts on how they're changing? I mean by those big end markets you're exposed to.
Ya know, good, good question, nice to hear your voice and I'll, I'll take this um, over to Jim Alpha gate here in a second. But um, when you, when you look at the second quarter and then think about the translation uh into the third quarter, I think you're largely going to see the the same Trends. I would say you know automotive apps in a move in interest rates um or incentives or something like that to stimulate demand, I would continue to see auto as being something that uh is a bit sluggish until we see um
Interest rates and tariffs find their equilibrium. You know, housing hasn't been our friend either. Um,
Uh, so on the construction side, that's obviously going to impact building products and things like that. On the other side of Building Products is going to be the data center business and things like that, which have done, uh, fairly well in JT's remarks. Um, he did mention the cross border business, both, uh, us, Mexico and US Canada, and again, until I until we see something that shows a level of stability politically and uh and through trade, I I do think we're going to continue to to see that on the year-over-year probably Trend to the negative side.
I think it, I mean, Frank well said, um, you know we do look at you know, kind of the data centers and everything is kind of powering that whole infrastructure build with AI. Um, you know, the electrical equipment. Um, any of the power generation uh, type stuff is, is really been a positive and that's going to continue, we see uh we see a pretty long Runway. Um, and I think a lot of that infrastructure build out is just in its infancy. Um, and I think, you know, you kind of attack on uh you know, just some of the administration things now that they're doing with the, the big beautiful Bill and trying to Spur domestic investment. Um, it plays very nicely um into um additional um, infrastructure type uh type Investments. So so we're very positive about that. Um, I think Frank touched on, you know kind of some of the negatives that you know, around the Tariff related, uh, impacted Industries, you know, you know, Automotive, obviously, uh, very very down. Um, you know, and until you get some clarity as far as, uh, you know, where some of these tariffs are going to shake out. I think that continues um, you know, same thing with, you know, other like metals and you know kind of some of the consumer related uh products.
I think you're going to continue to see some choppiness over on that end.
Yep, that's a tough one, and then JT maybe a near-term one on the Q3 setup, I guess. I think Frank mentioned variable contribution margins. Margins typically will be flat sequentially from Q2 to Q3 or from Q1 to Q2. Obviously, rates have underperformed seasonality, and I would think that's helping variable contribution margin. But how should we think about VCM relative to that historical flat? Is there any offset we should be aware of from mix or something else that would keep us from being better than that seasonally normal?
Uh, it's a good question, Daniel. So to Frank's point, I mean, we're essentially flat, if you go back 15 years and walk to Q to 3 Q to your point. If the, if the rate softness, you know, today, full disclosure today is day 2 of, of July clothes, so I I don't have perfect visibility. But to your point, if the rate Revenue per load softness, we're seeing in July results, in wider spreads, uh, on the brokerage side, that could be a Tailwind, uh, to vcm outperformance. The other thing I would call out, uh, the Miller can speak to better than me, the bco. Utilization number, uh, was it was a good number in the second quarter. I think it picked up 3% year-over-year. Uh, now that could be faced a little bit of a headwind with the rate direct, uh, direction we see rates going in July, but if that continues at a strong clip, uh, that could help uh, in, you know, conversely, if if rates fade a little bit, that could be a headwind from utilization side that. That's how I'm thinking about it.
Great. Appreciate the color, guys. Good luck. Thanks.
Thank you. We'll move on, but not to the next person. Coming from the line, Scott from the group of all research, your line is now open.
Hey, thanks afternoon guys. Um I just want to clarify 1 thing about Q2 just to start, right? So the the there was a reclassification of that, what 4.8 million, or whatever of of costs from 1 line to another, but the the net of it is clean, right? So like the dollar 20 is a, is a clean quarter and we just take like the earnings from Q2 and then add back a million and a half for the
Net of the agent convention. Is that right? Or do we need to?
I just... yeah. Is that right? Yeah. So when you think about the agent matter that, um,
We talked about last.
Quarter. As you think about um, the classification on the p&l, we had to move a couple of things around but you're you're correct. The net number is zero. In terms of that reclass, I'll let JT hit the other moving Parts. Yeah, no. That's, that's absolutely right, Scott. You're thinking about the right way. It was a zero Penny impact of the second quarter just pnl geography. Um so yeah, the convention falls off $3 million, Tailwind I the bco. All-Star is probably 1.2 to 1.4 1.5 million headwind discrete to the third quarter.
Okay. Perfect. Okay, okay, that's what I thought and then the bco count flat sequentially. That's good to see the
Number of approved, and active brokerage carriers spell off a, a decent amount is, is that you? Are you seeing accelerated pieces of of bankruptcies? Is that what's causing that or or any additional color there? Yeah, 1 of the things we we telegraphed, um, Scott on the last call was we we mentioned on the last call that there would be a pretty significant change as a result of some uh, things that that Matt's doing there. So it did exactly what we thought um, it was going to do but let me back up the color on sure. And just a great deal of efforts that's happening on the fraud front and and really becoming more selective on who we're choosing to do business.
with is is a result of of all the work that's going on there to really call through the carriers that are in the database and make sure we're partnering with those we want to partner with
okay, and then just last 1, you know, you you talked about the
Is is there something unusual about July from a comp standpoint? Or is this just we can't get a sustained and inflection yet.
I think the the short answer is the last thing, uh, that you said, when I, when I look at the sequential Improvement which literally started. Uh, you know, March April, April, May May to June, um, you know, we thought maybe we were catching a bid there. Um, when you look at it in retrospect, I think there's a, a couple of things. There were some unique items in, uh, Q2 you've got, certainly the road checks and Memorial Day. And then you had the, you know, very late quarter implementation of the English language proficiency, which we got what matter of weeks of or something like that. Yeah, like 10 days. Uh,
so that will remain to be seen what actually happens there. Um, and then we probably had some tariff, pull forwards in the first half of the year, which probably gave it a little bit of, uh, bid and then the the launch Point, uh, you know, from June to July. It was a, it was a pretty good June number for us and a pretty good July 2024 number. So I think you're coming off of some heavier comps and uh, you know, demands demands, just okay. Uh, inventory levels are probably, uh, a little higher based on some of the pull forward, you've got the Tariff uncertainty, and, uh, I think it's too early to tell what the ultimate impact is going to be from the Big Bill, uh, but we're certainly favorable on the things that we saw in there.
Thank you. Appreciate it, guys.
Thank you.
Thank you. We'll move on to the next person. Coming from the line of Bruce Channel's, default. Your line is now open.
Hey, good evening, guys. I appreciate the time here. Um, maybe just a follow-up on some of the end markets. You mentioned that, you know, Substitute Lyon Hall was up nicely this quarter. I’m wondering if that was related to post-pause restocking at the end of the quarter and maybe, you know, get your thoughts on whether that sustains into Q3 or, you know, maybe that falls off a little bit. And then, you know, I know it's early, but uh, any kind of early read on, you know, what the sort of peak season looks like, especially with that line.
Hey Bruce. Uh, so so you know substitute line off for us is probably our uh least Diversified End Market. So we had some pretty good demand in the first quarter from 1 of the big partial players. Uh, in the second quarter. We had pretty pretty solid demand from the other partial player, uh, along with 1 of the ltls. So uh, just left less Diversified and you could have 1 or 2 shippers. Uh, really move the needle there for for thoughts on uh read through to the the back half. I'll let I'll let the sales team come up.
Hey Bruce. This is uh manager. Uh in regards to the peak. Uh we're right at that time of year where we start uh looking into that. And the jaygees point it's really just on on our part uh, a handful of uh, the partial players and substitute line haul.
Uh, so we're starting to look into that. Now, we don't have a full look at what that's going to be yet, we normally airm that up September October and have a better look at at rates and volumes, uh, but the earliest we're not looking for a huge Peak just like last year. Um, A lot's changed since the postco over the last couple of years. Uh, I think there's more people going back into the store. You got e-commerce. They're finding different ways to manage your own transportation. So we're just not seeing the same amount of, uh, uh, that substitute line off from our traditional customers that we've seen in the past. So, uh, early estimation, like I said, probably a little bit flat. I think last year, we were 1 or 2% over 23 and uh, we're probably looking, uh, pretty similar this year. Uh flat maybe up a little, maybe down a little bit, but no huge swings like we've seen in in some of the uh, years past. Uh, but we'll have better information on that. Uh, uh,
Later on in the, in the fall.
Okay, yeah, super helpful. And then just a quick follow up on the forwarding side. I know, you know, smaller part of the business, but, um, obviously a big drop off, um, in the second quarter, I'd imagine, you know, related to tariff, uh, kurl, um, any line of sight on that, you know, improving so far in in 3Q,
Bruce. I I do not have a view based on July, uh, thus far, you know, we we saw ocean rates probably start to roll over a quarter or 2 ago. And I think um, on a year-over-year basis that continued uh and sequential I believe it continued as well. But to your point not not a huge piece for us and some project type stuff. Can can influence that from quarter to quarter
Got it. Thank you.
Thank you. We'll move. Not to the next person. Coming from the line of David zazula or Berkeley. Sulan is now open.
Were there any actions you took to be able to you know, better recruit or better, retain BCS to join the quarter. Yeah, no, David good question. Um, you know, a quarter ago we mentioned that um, as the rate environment stabilized,
And as the actions that Matt and his team have started to take took hold, um, that we would see fewer cancellations and more ads. Obviously being in the second quarter versus the first quarter. Uh, is helpful, just from a seasonal perspective but we were, we were delighted to see effectively a flat, you know, quarter over a quarter of bco, count and uh, you know, continuing to do everything we can on the, uh, you know, recruiting and the qualifications and the orientation and everything we do from a retention perspective, but I'll let Matt, uh, sing his own phrases because he's done a heck of a job for you in the last 6 months. I appreciate that Frank. I appreciate the question. Yeah, ads are tough in this environment. Would love to get a little bit more help on rate. That said, as as Frank mentioned we we have a number of strategic initiatives. Focusing on how we recruit, how we qualify how we onboard without sacrificing safety. Safety is 1 of those things. We hold near and dear to the heart. Uh, a big differentiator for us uh, that said,
Uh, best gross ads, uh, in 7, quarters, uh, sequentially. The gross ads were up 9 and a half percent and year-over-year. The gross ads were up 12 and a half percent. So, so overall, uh, pleased with the Improvement we've seen
Thank you and then if I just squeezed 1 in on Heavy Haul seems like a very positive environment for you out there. Uh is there. Are there any headwinds on the horizon is is that segment you know, exposed to tariffs or you know, anything else that would keep that from continuing the momentum?
No.
on the Heavy Haul side, not necessarily tariff related, there's a little bit that goes
But a lot of that's domestic. Um, you know, I think the the question on everybody's mind as we look at the the big bill is what the impact of that's going to be on wind energy and and some of the things that have been uh subsidized. But, um, Let me let Jim Applegate. Talk a little bit more about that. Yeah, and as it relates to, you know, kind of near-term. Uh, know, I, I think we're, we're hearing from all of our customers and it's pretty broad-based. I believe, we're not just kind of, uh, you know, pigeon holding 1 customer or, or 1 industry. We're seeing it. And when Machinery, electrical equipment, data, centers, you know, even 3pls, I kind of specialize in that type of movement of, of equipment, um, we're seeing it across the board. So we think people are pretty well insulated from a customer and Industry standpoint. There are some things in the bill to Frank's Point, um, you know, the alternative energy credits. Um, you know, we're we're keeping an eye on that, but we do feel no matter what happens.
People need energy, people need power. Um, we're going to see that business, uh, you know, just kind of moved it to different uh, to different customers. Um, and and different providers depending on where they're going to need to kind of build their power to power. All this investment that's happened in across uh North America right now, so so we still remain bullish on it. But we're we're keeping a good eye on uh you know what, you know, customers might uh might benefit from this bill.
Thanks so much.
Thank you so much. We will move now to the next person coming from the line of Brent austyn back of JP Morgan. Your line is now open.
Hey thanks. Good evening. Appreciate you taking the question. Um, just to go back to the comment on the EOP and there's a lot of other different implications from that. And there's a few other truckload regulations out there as well. That might tighten some capacity, but just want to get your your thoughts, uh, having some, you know, exposure to that especially down around the Border, um, or imagine a lot of the focus is so, any thoughts in terms of what you've seen so far and any, um, Trends you expect, you know, with that going to be a big impact to capacity or not.
Yeah, good question, Brian. Um, I'll let Matt fill in some of the numbers that we've been looking at. Obviously, the FMCSA is publishing in arrears their experience with ELP enforcement. Um, we think from a BCO fleet perspective that we don't have any exposure. I mean, we have a very disciplined approach to quality.
Have so far from fncs, say really covers 10 days, so it's June 25th through July 4th so far 349 out of service violations. Um, that's the big change here, is that, it's now an out of service violation. So, you wouldn't have likely seen any out of services prior to June 25th. So, so that 349 it's hard to read into 10 days with, you know, the potential enforcement ramped up. So we think come come next quarter, we'll have a much better read on that. Uh, coming out of that executive order on April 28th. There's also a review of non-domiciled CDLs and that has the potential to have an impact. But right now, secretary Duffy announced an FMCSA compliance reviews of of the state's, issuing non-domiciled CDL. So that's kind of a wait and see right now.
I think there is potential there Brian.
Okay, thanks for the rundown there. Uh, maybe is um,
A follow-up for Jim. Can you just talk about the insurance costs and claim trends? It sounds like you've got a potential settlement coming out, so you can talk a little bit more about that. And then, also just the underlying trends that you're seeing when it comes to claims. And then, you know, what you think renewals are going to start to look like before we get there before too long. Thanks.
Sure Brian and and just to be clear. So you're looking for a color on the second quarter.
Uh, the 1 coming up, you mentioned that could hit in the third third quarter, I think, uh, the the accident claim, uh, and then just more broad comments about just, uh, severity instance premiums. You know, just generally about the the backdrop
Yeah, on the first 1, Brian, let me take that 1, obviously, we, um, were alerting investors and analysts to the fact that we have an ongoing trial. Um, and given the fact that it's an ongoing trial, we probably shouldn't go into any level of detail. Uh, if you go back to my prepared remarks and look at, um, a couple of the disclosures in the 10q, you'll get a sense of of what we're talking about. I'll let JT hit the the trends as well as, you know, potential impact on renewal as we get into next year. Thanks Frank. Uh yeah Brian. So uh you heard Frank and is prepared to talk about a, a little slightly higher um, dot accident frequency. And as a result of that, we've seen our severity or cost per crash. Uh, on the trucking Side, Run hotter thus far in 2025 uh, than 2024. Uh, we, we wrapped up our, uh, Insurance renewal. Um, back on May 1, uh, on an Apples to Apples basis. We actually achieved a slight decrease, uh, but we procured some additional, uh, risk.
Transfer, um, on some other policies that basically brought it to Flat uh year-over-year. Which if you go back, you know, 2 years, 3 years, 5 years. Uh, we were pleased, uh, to achieve a flat renewal despite the fact, you know, clearly exposure is running lower and and truck Revenue per load, uh, has has continued to, you know, run soft, uh, as compared to 2022, which then pressures your insurance, as a percentage of that bco Revenue number. I got to think Brian that that flat year-over-year Compares really well against uh, the group credit to the safety profile, and the professionalism of the of the bcos. Amen.
Alright okay. Thanks very much guys. Thanks Brian.
Thank you. So, we will have the last person to ask the question coming from the line of Stephanie. More of Jeffrey, your line is now open.
Stephanie Moore from Jeffrey's, your line is now open.
Now, we can go ahead and close out. Yeah, it sounds like we lost
I see that is noted. So at this time I show no further questions. I would like to turn the call back over to you sir for closing remarks.
Thank you, Bill. In closing, while the freight environment remains challenging, we do see some positives in the near term. We were encouraged by the sequential pricing trends during the second quarter, and with a choppy industrial economic backdrop, we were pleased with the 9% year-over-year revenue increase in our Heavy Haul service offering.
Conference call in late October. Thank you.
Thank you for joining the conference call today, have a good afternoon. Please disconnect your lines at this time.