Thank you, David, and good morning, everyone. I am very pleased to report that we’re off to a positive start for 2021. On a consolidated basis, we recorded our best first quarter operating income in company history and the highest quarterly revenue of any quarter in our history with growth in all areas of our business.
Our first quarter results also reflect the positive impact of yield strategies and cost control.
We are in a very different place than we were a year ago and that’s good news. In 2020, we had a solid first quarter, but as we close the quarter and entered April, we began experiencing revenue declines due to the effects of the COVID-19 pandemic.
However, we were well-positioned as we entered the pandemic and our successful navigation of those challenges over the past year is really a testament to our values-driven culture and the resiliency and adaptability of our teams. The demand environment is robust with simultaneous strength in manufacturing and retail, providing unusual pressure on supply chains.
So foot traffic to retail stores remains below pre-COVID levels. Retailers have seen strong consumer demand, particularly for electronics, furniture and home improvement. Between COVID, historic winter weather events, port congestion and the recent Suez Canal blockage, customers are experiencing unprecedented levels of supply chain disruption. At ArcBest, we see our business through the customer lens and the benefits of our approach have never been more apparent.
Over the last year and into 2021, we’ve worked alongside our customers to navigate the impacts of the pandemic and other disruptive effects on supply chains.
Our sales and customer service teams are aligned with the specific needs of our customers and we use data science, analytics and technology tools to effectively engage with them.
Our approach allows us to identify the best solutions to meet their changing needs, including unique combinations of capacity. We utilize our Asset-Based network as well as our owner operators and carrier relationships to serve them.
We have a $3.5 billion growth opportunity for logistics services within our existing customer base. With respect to new customer opportunities, we are encouraged by the growth of large markets we participate in, such as the LTL and domestic transportation management markets.
We are well-positioned to take advantage of these opportunities. An indication of our strategic progress is our Asset-Light revenue as a percentage of consolidated revenue, which was 36% in the first quarter of 2021. By comparison, that percentage was 30% in last year’s same quarter.
As this percentage grows, ArcBest revenue base better reflects customer transportation and logistics spend. Also, we find that with deeper customer relationships, we experienced greater growth, retention and profitability in our Asset-Based and Asset-Light solutions. To address the growth we’ve experience and to further position ourselves as a capacity resource for our customers, we are hiring drivers and dock workers across the ABF network and additional logistics and technology professionals enrolled throughout ArcBest.
We are taking an earlier than normal look at our 2022 CapEx plans in anticipation of increased purchases of additional equipment for the ABF network to facilitate growth in our business and to allow us to continue to effectively serve our customers’ needs. And we are aggressively recruiting owner operators and contract capacity in our Asset-Light business. Obviously, we will manage these investments according to the business levels in light of the eventual cyclical change to the current momentum in the macro freight environment. We see solid growth opportunities in this environment and we are focused on taking advantage of them. And now, I’ll discuss some additional detail on the first quarter performance of our service offerings. In the first quarter, our Asset-Based business benefited from the effects of healthy market conditions in the midst of tight industry capacity. We responded to the increasing less than truckload needs of our customers in an effective manner with an emphasis on building partnerships and solving their supply chain challenges. This resulted in the highest first quarter operating income in ABF’s history. Revenue totals were positively impacted by strength in the housing market which resulted in continued strong demand for our consumer moving services. The high number of first quarter U-Pack shipments was not typical and was a result of the effects of the pandemic, which significantly reduced consumer moving activities in last year’s second quarter that’s pushing them out to future periods. Increases in non-U-Pack residential delivery shipments were the result of continued strength in e-commerce activity. Despite decreases in total weight per shipment associated with the mix of truckload-rated shipments in the Asset-Based network, increases in average weight and revenue on LTL-rated shipments was another positive factor contributing to higher first quarter Asset-Based revenue versus last year. Efficient utilization of ABF operational resources and effective cost management were important factors contributing to higher first quarter profitability.
First quarter freight handling metrics were better and our customers benefited from further improvement in cargo care compared to both last year’s first quarter and the recent fourth quarter. These operational improvements occurred despite significant weather disruptions that occurred mid-quarter, resulting in the highest number of February service in our closure days and linehaul lane closures in the last 10 years.
As we did in the second half of 2020, the recent quarter included the use of an elevated level of local and linehaul purchase transportation to supplement our ABF network resources.
As a percentage of revenue, these first quarter costs were above last year.
We are having some success in adding employees in key geographic areas of need throughout the country. This is part of our strategy for growth, while reducing our purchased transportation usage. Though the impact of these hiring actions may not immediately lower the level of purchase transportation, we hope to make progress on that later this year and as we move into 2022. The strength and rationality of the LTL market pricing environment is illustrated by our recent success in yield management initiatives that resulted in solid increases in our revenue per hundredweight metric. This was a significant contributor to improved profitability. The average revenue percentage on contract and differed pricing agreements negotiated during the quarter was the best first quarter in – increase in 20 years. The current LTL market offers opportunity for us to improve overall account pricing and thus Asset-Based profitability.
Our past success has been in providing value to our customers and return for a competitive price. And as we began the second quarter, we continue to experience strong demand for our Asset-Based network capacity.
During the recent quarter, our ArcBest Asset-Light business was able to effectively respond to current market conditions that reflects strong customer need for our logistics services and limited equipment availability. This combined with consistent rate stability resulted in the best first quarter operating income in the history of the ArcBest segment.
In fact, it was one of the most profitable quarters of any quarter we’ve ever had for this segment.
Solid shipment growth along with a significant increase in revenue per shipment contributed to the year-over-year gains we experienced in first quarter revenue. Margins were somewhat pressured by market costs for equipment capacity from our Asset-Light carrier partners.
However, more effective utilization of existing personnel and internal resources supported by the benefits of ongoing technologies utilized for our customers and carrier partners allowed us to maximize incremental profits which resulted in strong operating results we reported for the quarter.
So far in the second quarter, trends in this business continue to be good and we are working diligently to meet the needs of our customers. At FleetNet, growth in total events during the first quarter was driven by increased roadside repair activity.
The first quarter revenue increase reflected higher revenue per event combined with the event growth, while digital connectivity initiatives continued to contribute positively to greater efficiencies.
This quarter’s operating income was comparable with last year’s first quarter due to the investments in personnel designed to maintain a high level of customer satisfaction and to ensure workforce consistency. And now, I’ll turn it over to David Cobb for a discussion of the earnings results and operating statistics.