Less-than-truckload carrier XPO said Thursday it was adding another veteran from competitor Old Dominion Freight Line to its roster.
Effective Friday, Dave Bates will join XPO (NYSE: XPO) as the chief operating officer of its LTL unit. Bates has been overseeing daily operations at Old Dominion for the last 12 years as senior vice president.
In March, XPO added Old Dominion’s former longtime chief financial officer, Wes Frye, to its board.
Old Dominion announced earlier this year that Chief Operating Officer Marty Freeman would become president and CEO in July. In March, Old Dominion said its head of sales, Greg Plemmons, would take over as the company’s chief operating officer in July.
Bates is an LTL lifer, starting his career at Roadway Express in 1987 as a supervisor. He followed that stint with six years at Carolina Freight Carriers in the same capacity. He has been with Old Dominion for the last 27 years.
“Dave is a high-impact executive with a strong track record of driving excellence in all aspects of LTL operations,” said XPO CEO Mario Harik. “We’re delighted that he’ll be leading our operations in creating ongoing value for our customers and investors.”
Bates will become XPO’s first chief operating officer since the spinoff of its brokerage unit, which now operates as RXO (NYSE: RXO).
Bates arrives at XPO at an interesting time
XPO’s yield strategy was questioned heavily by analysts on its fourth-quarter earnings call held on Feb. 8.
The company reported a modest tonnage gain year over year (y/y) in the quarter while the rest of the industry saw mid- to high-single-digit declines. Conversely, XPO’s revenue per hundredweight was barely positive when excluding fuel surcharges while its peers booked mid- to high-single-digit increases in yield during the period.
Management said the timing of a general rate increase and taking on more freight from large, national accounts, which tend to have leaner yield profiles, weighed on the metric. The company had been pursuing small shippers, which often have better margins, but noted it took on more national freight to keep the network full during the fourth quarter.
Pricing on annual contracts renewed during the period was up 7% y/y on average.
XPO doesn’t provide intraquarter updates like other carriers do. On the fourth-quarter call it said tonnage was again positive y/y in January by an undisclosed amount and that first-quarter yield would increase y/y by a similar percentage booked in the fourth quarter.
Table: Q1 operating metrics (Source: company reports)
Bates will be responsible for helping XPO achieve long-term targets established in October.
“I’m excited by the sheer size of the potential that exists in XPO’s LTL operations,” Bates said. “As COO, I’ll be taking a strong network to the next level, with a great team of 23,000 talented employees in North America. We’ll deliver that value together.”
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