Less-than-truckload carrier Saia reported Friday another modest tonnage decline for the month of May, suggesting the worst of the industry’s demand degradation may be in the rearview.

Saia (NASDAQ: SAIA) said tonnage was down 2% year over year (y/y) in May, the combination of a 4.2% decline in shipments and a 2.3% increase in weight per shipment. The company also provided final results for April, which saw a 1.1% decline in tonnage (shipments were down 5.7%, which was partially offset by a 4.9% increase in weight per shipment).

At first blush it appears Saia saw y/y volume declines accelerate in May compared to April, however the carrier faced a tougher y/y tonnage comparison in the month. On a two-year stacked comparison, Saia’s tonnage was up 3.3% in May and just 1.2% higher in April.

Looking forward, Saia’s y/y tonnage comps step down through the summer, turning negative in September. The peak of the volume declines occurred in the 2022 fourth quarter, when the carrier booked nearly an 8% y/y decline.

First-quarter reports from LTL carriers showed there was very little change in demand during March and April, months that normally see a seasonal inflection as weather improves, construction heats up and consumers start buying springtime and outdoor goods. Although most management teams noted the lack of seasonality, the consensus was that the worst of the volume declines likely occurred in the first quarter.

Extrapolating the y/y tonnage declines booked by Saia in April and May, it appears the carrier will likely see a high-single-digit percentage increase in tonnage in the second quarter when compared to the first quarter.

“We also think it’s possible for year-on-year tonnage growth to inflect positively in June based on May’s data and our observations of the comps, though this is a little harder to pin down,” Deutsche Bank’s (NYSE: DB) Amit Mehrotra told clients on Friday. “If this happens, we think SAIA shares would take another large leg up when the company reports 2Q results next month.”

Saia doesn’t provide any revenue-based metrics in its intraquarter updates, however it said revenue was down roughly 1% y/y on its first-quarter call. That far outpaced the 14% revenue decline reported by Old Dominion (NASDAQ: ODFL) in the month.

Old Dominion noted that some of its customers said they were moving freight to lower-cost carriers in the interim to meet internal budgets but planned to give it back once those cost thresholds were met.

Lower diesel prices — down 22% y/y on average in April and off 26% quarter to date — are also weighing on carrier revenue. However, Saia’s revenue has been buoyed by its market share initiatives as it has opened 21 terminals over the last two years. Those sites are running at mid-90s operating ratios (expenses expressed as a percentage of revenue), which is more than 1,000 basis points worse than its consolidated OR.  

Saia normally sees 200 to 300 bps of sequential OR improvement in the second quarter but guided to just 100 bps of improvement this year. Revenue headwinds from lower volumes and declines in diesel fuel, as well as thinner margins at the new terminals, were the reasons cited.

Mehrotra said the company will likely hit its OR target (84% implied) in the second quarter.

“For example, we estimate shipments in 2Q will actually grow mid- to high-single digits sequentially while yield gross of fuel is down less than 1%; this implies a healthy level of sequential revenue growth from 1Q to 2Q, which supports the 100 basis points margin improvement guidance.”

Multiple LTL carriers are expected to provide second-quarter updates in the coming days. Stayed tuned to FreightWaves for continuing coverage.

Shares of SAIA were up 3.7% in early trading on Friday compared to the S&P 500, which was up 0.9%.

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