Change at the top for national LTL powerhouse ODFL: Congdon retiring, Gantt to take over as CEO

There is a change at the top of Old Dominion Freight Line (ODFL), the nation’s most profitable less-than-truckload (LTL) company, but the company is promising no change in its customer-centric focus to success in the regional, interregional and long-haul focus on service.

The new regime at the top of ODFL’s executives’ ladder also says it has no intention of giving up the mantle as the most profitable company in trucking, as based on its operating ratios. ODFL said its board, as part of its designed succession plan, approved strategic leadership changes that provide continuity for both its executive leadership team and its long-term strategy.

Effective May 16, Greg C. Gantt is succeeding David S. Congdon, who has served as Chief Executive Officer since January 2008 and Vice Chairman of the Board of Directors since May 2015. Gantt, who will also retain his current title of president, originally joined ODFL as a Regional Vice President in 1994 and has assumed ever-increasing roles and responsibilities over the past 24 years.

At that time Congdon will become Executive Chairman of the Board, succeeding current Executive Chairman Earl E. Congdon Jr., who will transition to the role of Senior Executive Chairman in mid-May. Earl Congdon and his son, David, will both remain executive officers.

In the past 84 years, ODFL has grown from its founding in 1934 when Earl and Lillian Congdon began with a single truck running between Richmond and Norfolk, Va. After Earl Congdon died, Lillian Congdon assumed the presidency and was joined by sons Earl Jr. and Jack.

Under the Congdon’s, ODFL has successfully grown from a sleepy Southeast regional LTL carrier into a national powerhouse. ODFL has managed the difficult feat of expanding into new markets and longer haul services while growing profitability.

Last year, ODFL enjoyed $463.8 million net profit ($575.9 million operating income) on $3.35 billion revenue.  In 2016, ODFL posted $295.7 million net profit ($483.8 million operating income) on $2.95 billion revenue.  It had an eye-popping 82.9 operating ratio last year compared to an 83.8 OR in 2016. By comparison, many large LTL operators say they’re having a good year when they post ORs in the lower 90s.

“Dave led ODFL during a period of rapid growth--both organically and with strategic acquisitions-- and accomplished that while maintaining the best operating margin of public carriers in the market,” Satish Jindel, who closely tracks the LTL sector as principal of SJ Consulting, Pittsburgh, told LM. “He developed a culture at ODFL such that they are driven to provide the best value to the customers but for the right price.”

Regularly posting operating ratios in the mid-80s, ODFL perennially leads all LTL carriers in profitability while posting double-digit growth in revenue. Usually when a trucking company expands into new territory, it tries to win market share at the expense of profitability—but ODFL has turned the envious trick of doing both simultaneously.

That eye-popping growth continues today. ODFL reported 17.9 percent growth in LTL tons per day in February compared to February 2017 due to a 13% increase in LTL shipments per day and a 4.4% increase in LTL weight per shipment. For the quarter-to-date period, LTL revenue per hundredweight increased 5.9% as compared to the same period last year, ODFL said.

"Our quarter-to-date revenue growth accelerated as compared to the growth rate in our fourth quarter of 2017, as we continue to benefit from ongoing strength in the domestic economy and a positive yield environment,” David Congdon said in a statement.

“We believe that we can win additional market share in this current environment by continuing to deliver superior service at a fair price, while also investing in the long-term capacity of our network to support increasing customer demand,” Congdon added.

Father Earl Congdon said a big part of Old Dominion’s success has been its “consistent approach to operating with a long-term perspective.” The succession announcement reflected ODFL board’s thoughtful approach to timely and careful succession planning, he added.

“We are fortunate to have a remarkable team, and we are committed to developing leaders from within as part of our unique culture,” Earl Congdon said. “This culture -- our OD Family Spirit -- has been cultivated for decades and is critical to our long-term performance.”

“I could not be prouder of what we have accomplished nor more excited about our future,” Earl Congdon added.

Analyst Jindel said he expects ODFL to continue leading the LTLs in profitability because of David Congdon’s vision and leadership savvy. “He mentored management to take on bigger responsibility such that in last few years, the CFO has been replaced and now the CEO is being replaced by home grown managers who will continue to produce the industry best results for the customers, the shareholders and the employees,” Jindel said.

Gantt said he is “humbled by the opportunity” to lead ODFL. He said he wants to enhance ODFL’s market position and drive continued growth in shareholder value at Old Dominion.

Jindel said the rest of the LTL industry to learn from ODFL’s basic tenets of success. “The lesson for other carriers from Dave’s success is that you as the carrier needs to have control over the price and service combination you want to provide, get paid properly for it and have the willingness to walk away if the shippers want unreasonable pricing,” he said.

“ODFL has time and again demonstrated its ability to manage that in times of excess capacity (2008-2010) and tight capacity (2017-2018), and that all public carriers can operate below 90 OR,” Jindel said.