2Q26 LTL Preview: Volumes Inflecting as Industrial Demand Firms; Upside to OR

Research evidence excerpt

2Q26 LTL Preview: Volumes Inflecting as Industrial Demand Firms; Upside to OR

-2Q Sequential OR

Expectations

Near-Term Margin Expectations Look Well Anchored and Beatable: The most consequential BETTER

update of the intra-quarter cycle was ARCB's raised 2Q Asset-Based OR outlook to 600-700bps of

sequential improvement from the 400-500bps range communicated on the 1Q call and well above

the historical Q1-to-Q2 average of ~350bps. Elsewhere, SAIA is set up for 400-450bps of sequential >300bps QoQ 300-350bps

OR improvement on the strongest volume print in the group, XPO for at least 300bps of sequential QoQ 400-450bpsQoQ

improvement with YoY OR accelerating from 200bps to ~250bps on continued LTL 2.0 execution, 600-700bps

ARCBand ODFL for 300-350bps of sequential improvement roughly in line with seasonality but with XPO ODFL SAIA (Asset-Based)QoQ

upside if June tonnage tracks the May trajectory. Equally important, initial 3Q OR expectations look .Source: Company filings, Jefferies

conservative to us, with most estimates calling for flat to slightly worse sequential OR performance

despite firming volume and pricing trends. If trends hold through July, sequential OR improvement Figure 3 - 2Q-to-3Q Sequentiaal OR

Expectations (JEF vs. Cons.)

into 3Q is the bull case that nearly nobody is modeling. 90bps

80bps

Tweaking Estimates for Fuel: We are tweaking 2Q and full-year estimates modestly lower to reflect

fuel movements. Recall we last refreshed models with the May updates in early June when retail 30bps 10bps

diesel was sitting at cycle highs, and prices have since retreated into quarter-end. The adjustment 0bps 0bps 0bps

is purely fuel pass-through related, with no major changes to our core operating assumptions.

(30bps)

XPO ODFL SAIA ARCB