Saia to Expand Into Northeast Next Year
Less-than-truckload company Saia Inc. will expand into the Northeast next year, CEO Rick O’Dell announced Oct. 26.
It will lease three to five terminals in Pennsylvania and New Jersey as soon as April 1, 2017, moving the regional and interregional carrier to nationwide with the expansion. While O’Dell wouldn’t rule out acquiring regional carriers in the Northeast, he said the goal is to use cash on hand to build the network from within. He added that there will be other terminals opening up in 2018 and 2019.
Saia’s current network servicing the Northeast is located in Virginia and Ohio, but it has no foothold in the nine states of the Northeast.
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“We think organic movement with some meaningful real estate investments in the marketplace is a good way to get started,” O’Dell said. “These are attractive markets, and we’re ready now. The business case looks good on this organic expansion, and we’re ready to progress.”
Saia ranks No. 25 on the Transport Topics Top 100 list of the largest U.S. and Canadian for hire carriers.
The company estimates that the Northeast region generates about $7 billion in annual revenue from freight, and $5 billion of it travels through Saia’s current network, O’Dell added. Saia expects capital expenditures for 2017 to be about $200 million, including investments in leased property, equipment and technology for the expansion.
“We’re generating good cash flow. Our age of fleet is where it needs to be. We have the capital to invest in the real estate to support this geographic expansion,” O’Dell said.
He added that, even if Saia gained only 4% of the market share on the $7 billion in annual revenue, it still would generate “meaningful” improvements in the company’s operating income. Margins could tighten in the 2017 earnings reports because the startup expenses will outweigh the revenue generated at the outset, but O’Dell called it a “minor” drag.
“We’re pretty far along in securing the facilities," he said. "Leadership candidates have been identified. We’ve got an executable plan ready.”
