Saia announces plans for Northeast expansion

Multi-regional less-than-truckload (LTL) carrier Saia, the ninth largest U.S. LTL carrier serving 34 states, announced this week that it plans to extend its network into the Northeast, effective next year.

Saia said it plans to open three-to-five Northeast terminals in the second quarter of 2017, with an eye on major markets in Pennsylvania and New Jersey.

"These new markets line up perfectly with our existing geography and allow us to offer more direct shipping points for our loyal customers," said Chief Customer Officer Ray Ramu in a statement. "Not only do we plan to invest in new facilities and equipment, but we intend to invest heavily in certain areas of our existing network so that we will be able to handle the increased freight flow to and from these new markets. We estimate that the Northeast LTL market represents approximately $7 billion in annual market revenue opportunity."

Saia officials said that this expansion will be supported and enhanced by the various initiatives Saia has instituted over the last several years, adding that expanding into Pennsylvania and New Jersey is a first step in a strategic growth plan that will continue into 2018 and beyond as the company works to provide complete coverage of the continental United States. 

David Ross, Stifel analyst, observed in a research note that Saia’s service does not currently go east of Ohio or north of Virginia, with its coverage map basically the same since its last acquisitions in 2006-2007 of The Connection Company and Madison Freight Systems.

“Management has long made it clear that the goal is to ultimately fill in its U.S. service map (and become what we believe will be the last regional LTL carrier to grow to provide full national coverage,” Ross wrote. “Old Dominion, Estes, and R+L have done it over the past 10 years), but its first target was to get to a <93% annual operating ratio (OR), and they are very close presently.”

Saia President and CEO Rick O’Dell said on a conference call yesterday that along with the Northeastern LTL market representing approximately $7 billion in annual freight that moves in both directions between its existing service area and the 12 Northeastern states it does not currently serve directly.

“This is an approximate 25% increase in the size of our addressable market,” he said. “Of course a lot of our best customers do business in this market and currently used providers other than Saia. We view this market as one that hold significant market potential for Saia over time.”

After its first phase of terminal openings he said Saia is targeting a similar pace of new markets to be added in 2018 and 2019, and he also hinted this could be done with the assistance of “any acquisition opportunities” that could enable it to accelerate the process and otherwise fill in an uncertain geographic market.