Less-than-truckload carrier Saia announced Monday the opening of three terminals in Kentucky and Ohio. The additions are part of a $1 billion capital expenditures plan that has added more than 20 new facilities to its network this year.
The Johns Creek, Georgia-based carrier said a facility in Akron, Ohio, opened Monday and that two service centers in Bowling Green and Paducah, Kentucky, will open on Oct. 28. The three locations appear to be part of the $236 million, 17-terminal portfolio Saia acquired from bankrupt Yellow Corp. last December. Saia picked up 11 leased properties for $8 million in a second auction of Yellow’s (OTC: YELLQ) real estate shortly after.
Saia currently services the three markets but said the new locations will provide “increased capacity and better freight handling,” a Monday news release said.
“Opening these terminals in Ohio and Kentucky will improve service for our customers, allowing us to deliver freight faster,” said Jared Mull, Saia’s vice president of operations.
Last month, Saia opened its first two terminals in North Dakota and added a fourth location in Montana. In August, it added six locations in Montana, South Dakota and Wyoming. The carrier opened an additional 10 sites earlier this year.
The company’s roughly $1 billion net capex plan calls for $550 million in real estate investments and for $400 million to $450 million to be spent on equipment. An additional $50 million will be spent on IT projects.
New locations can take months to achieve profitability.
Saia said on a second-quarter call that terminals opened within the past three years operated at a 95% operating ratio (inverse of operating margin) during the quarter, compared to its legacy locations, which posted an 82.2% OR. The company is also contending with a shift in freight mix to lower-weight, retail shipments as well as more freight from national accounts, both of which carry lower margins.
Even with the headwinds, it expects to see only normal seasonal margin erosion of 100 to 200 basis points from the second to the third quarter this year, implying an 84.8 OR (at the midpoint). Saia will report third-quarter financial results on Friday before the market opens.
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