Forward Air Corporation (NASDAQ:FWRD) Q3 2023 Earnings Call Transcript

And it’s been a bit rocky over the last several months trying to get to the best path to execute here. Four months from now, when we all wake up in February to our Q4 release and an outlook for 2024. I certainly we’ll do everything possible to have stability in place so that we know kind of how we’re going to go forward organically with that strategy. Secondly, I would expect us to be extremely mathematical with a multiyear scorecard of LTL revenue, LTL margins and LTL as a percentage of overall company revenue. And third, I would expect that, that corporate clarity with our portfolio review will have yielded consequences by then.

Operator: We’ll now go to the line of Christopher Kuhn with The Benchmark Company.

Christopher Kuhn : Tom, maybe just to the extent if you did take on some Yellow and SD’s volume, your sort of thought process around keeping that line. Do you think some of that then kind of settles somewhere else? Or do you feel confident you can keep some of that? .

Tom Schmitt: Yes. So again, Chris, the one thing and I think we even talked about this before, I strongly believe based on data sets that we saw from 1 week to the next like over the last 2 or 3 months, we were a volume beneficiary from those 2 dislocations but we were much less a volume beneficiary than some of the great class rate companies. So we’re talking literally a couple or 3 percentage points, not 8 or 10. And — but the business that we were going after was long-haul business that fits us well, and it also was some events business. So my sense is what came here for a reason, it wasn’t a hell of a lot, but what came here should have come here and is going to be here to stay. So those volume trends that we’re seeing right now, I expect to continue seeing them.

Christopher Kuhn : Okay. And then just as you go after sort of the larger customers for your direct sales, I know you’re going after customers that don’t use forwarders, but do forwarders market to them? And will you be stepping on some of your customers’ toes as you try to grow the large businesses?

Tom Schmitt: Yes. So this is again where, Chris, we have to get this as black and white as possible. Gray is not helpful here. So I mean — but fundamentally, if you look at this, going to the automotive industry going to the — like some of the industrial verticals, you do have companies and they are in the same space, and some of them say, transportation and supply chain for us is a core competency. And others say, in the same industry, that’s not something that’s core to us. We’re going to use a world-class company to help us with that. And all we have to do is it’s very surgical. We have developed the right questions to make sure we understand, are we dealing with a company that basically uses forwarders as their supply chain transportation department or are we dealing with a company that has built out that capability and has 50 or 80 people sitting in their operations, research and transportation floor and doing all of that themselves.

And if it’s the latter, these people tend to not use forwarders. I was at DB Schenker for 3 years between 2015 and 2018. And we had customers in the same industry embracing us and the same industry, other customers telling us, sorry, no need for you. We’re going to deal with the transportation providers directly. So I’m very used with that two-pronged complementary approach. And it’s actually — as we saw in the last 2 years, very well executed by our sales team with the SMB space, it’s fairly — if you go about it in a disciplined way, it’s fairly doable to find out which of these two you’re dealing with. So Chris, I would not expect that stepping on our partners toes at all.