Saia, Inc. (NASDAQ:SAIA) Q3 2023 Earnings Call Transcript

But if it is, what I think would happen then is even that those players or a player that would still probably lead to facilities being shifted around and some staying in service in the industry and others exiting. And I think what’s important to note is that kind of ongoing even without this current situation, I mean these LTL assets are getting traded amongst competitors as it is now. We’ve – the facilities that we’ve opened this year, certainly, we’ve opened new ones, but we’ve also purchased ones from folks that are repositioning their footprints on their network. So I think what’s important is the ability to get those facilities and then replicate service. And I think as these facilities trade and move within the industry, I think you’ll see that.

So it will be kind of probably a combination of all those things. So first would be whoever ends up, if there’s one bidder that gets it all and they probably reposition some of those in their own network. Others maybe they sell, they get traded amongst other competitors and some will ultimately probably exit the market entirely.

Bascome Majors: The exit of that capacity tightened the market from a pricing perspective overnight, do you have concerns that the redeployment, even if gradual, can loosen it even as the economy is hopefully getting better next year and the year after?

Fritz Holzgrefe: No. I think the – if I look at how the market has responded here in the last several years, I think that generally, this is a high-cost inflationary business that requires a lot of capital. And those – as facilities get redeployed and some get expanded. And as the macro economy grows, I think those things will all kind of match. I’m not really concerned about significant changes in increases in capacity. Frankly, if you watch what’s happened over time, it continues to shrink.

Doug Col: And remember, Bascome, the industry was only able to absorb the volume so relatively smoothly. Because as an industry, we’ve all seen shipments and tonnage negative for the better part of a year when this event occurred. So I mean, if you thought you had capacity a year before you add more capacity after 12 or 15 months or down. So, if your model says ISM is always going to be negative and nearshoring benefits aren’t going to be a tailwind, then that’s one thing. But remember, we’ve been in a freight slump here. So that’s why we had capacity as a group to kind of fill in the holes for customers. But if you get back to a more normalized industrial environment, we get some growth going again, you get port activity going again, you get benefits on nearshoring. Well, then that’s another kind of moat around pricing.

Bascome Majors: Thank you, Doug. Thank you, Fritz.

Fritz Holzgrefe: Thanks Bascome.

Operator: Thank you. I will now turn the call over to Fritz Holzgrefe for closing remarks. Please go ahead.

Fritz Holzgrefe: Thank you for everyone that called in to hear the update on the exciting opportunities at Saia and our outlook for success in the coming quarters and look forward to giving everybody an update next quarter. Thank you.

Operator: Thank you. Ladies and gentlemen this concludes today’s call. Thank you all for joining, and you may now disconnect your lines.