管理層發言
Good morning. My name is Gary, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2026 Saia Incorporated Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I will now turn the call over to Matthew Batteh, Saia's Executive Vice President and Chief Financial Officer. Please go ahead.
Thank you, Gary. Good morning, everyone. Welcome to Saia's second quarter 2026 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should know that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 2000. These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially. We refer you to our press release and our SEC filings for more information on the exact risk factors that could cause actual results to differ. I will now turn the call over to Fritz for some opening comments.
Good morning and thank you for joining us to discuss Saia's second quarter results. We are pleased to report a strong quarter that reflects the dedication of our team, the consistency of our service offering and the continued progress we are making on our long-term strategy. Our results demonstrate the benefits of our disciplined execution, ongoing investments in our network and people and our commitment to delivering high-quality service for our customers. Our second quarter revenue of $950 million surpassed last year's second quarter by 17.1% and is a record for any quarter in our company's history. Shipments per workday, which were a record for a second quarter, increased by 4.4% and pricing and mix management efforts drove an increase in revenue per shipment, excluding fuel surcharge, of 1.5% compared to prior year. Our mix management efforts as well as an improving freight backdrop contributed to a 3.9% year-over-year increase in weight per shipment. Notably, weight per shipment improved 4.9% sequentially from the first quarter of 2026 and improved the seventh consecutive month exiting the second quarter. Importantly, our mix management efforts and pricing actions are taking hold, and revenue per shipment excluding fuel surcharge improved throughout the quarter with June improving 4% from April and about 4% compared to June of last year. Operating income increased 26% year over year to $125 million. Operating ratio for the quarter was 86.9%, an improvement from 87.8% in the second quarter of 2025, and a 480 basis point improvement sequentially from the first quarter, far outpacing historical seasonality of 250 to 300 basis points of improvement. Service levels continue to improve across key performance indicators during the quarter, reflecting our ongoing focus on putting the customer first in our daily operations. Despite lower headcount and increased shipments compared to prior year, we achieved a record cargo claims ratio of 0.3%, demonstrating our ability to deliver high-quality service across our now national footprint. We also continue to see the benefits of decentralizing our customer service operation. One year after that transition, average customer inquiry handling time is improved by 50%, strengthening customer relations, improving responsiveness and enhancing the overall customer experience across our expanded network. Even as we have expanded our footprint, equipment base and team, we continue to see the benefits of our investments in our driver training and safety programs. Miles between preventable accidents improved by more than 45% compared to the second quarter of 2025 and hours between lost time injuries improved by 17% year over year. With our value proposition increasingly clear, we continue to see strong customer recognition of the service and reliability we provide. Contractual renewals were 10.7% for both June and for the quarter, reflecting our continued focus on pricing discipline and the value we deliver to customers. In addition, our GRI of 7.1% implemented in early July is consistent with the quality of service we deliver and our expectation that pricing appropriately reflects that value. Customers expect high-quality service and our record-level investment over the last few years reflects our dedication to providing unique solutions in every market. While customers always have options for managing their freight needs, our value proposition is becoming more apparent as demonstrated by continued investments in the customer experience. More than ever before, customers are choosing Saia; our expanded footprint is providing more opportunities with both new and existing customers. We recently announced the launch of Saia REV, a company-wide initiative, REV or Revenue Expanded and Visible, which reflects our commitment to the customer. The customer will see our faster transit times, expanded logistics capabilities and enhanced shipment visibility. This initiative demonstrates the value of our national network and continued commitment to improving the customer experience. As part of Saia REV, we were able to offer our customers faster and more consistent transit times, including more than 2,000 transit time improvements across our network. The initiative will also automate our guaranteed 10:00 a.m. delivery service, the earliest guaranteed delivery of any nationwide LTL carrier. In addition, the initiative will provide customers with dynamic real-time shipment tracking, updated ETAs and predictive insights to help anticipate special service needs. The announcement of Saia REV is yet another example of our best-in-class technology that will continue to drive improvements in our operation and enhance the customer experience. I will now turn the call over to Matthew for more details from our second quarter results.
Thanks, Fritz. Second quarter revenue was a record for any quarter in the company's history, increasing to $956.5 million, which is a 17.1% improvement over the prior year. Shipments per workday increased 4.4% and tonnage per workday increased 8.4%. Fuel surcharge represented 22.3% of total revenue for the quarter compared to 14.6% in the prior year. Revenue per shipment excluding fuel surcharge increased 1.5% to $303.12 compared to $298.71 in the second quarter of 2025, reflecting continued execution on pricing and mix management initiatives. While our mix headwinds eased throughout the quarter, our Los Angeles region business, which is generally our highest revenue per shipment, was still down about 2.5% shipments per workday year over year. Despite those mix headwinds, our pricing actions continued to take hold throughout the quarter; June revenue per shipment excluding fuel surcharge increased about 4% from June 2025. Revenue per shipment including fuel surcharge increased 12% compared to the second quarter of 2025. Yield, excluding fuel surcharge, decreased by 2.2% primarily reflecting a 3.9% increase in weight per shipment during the quarter, while yield including fuel surcharge increased by 7.9%. Adjusting for the impact of the 3.9% increase in weight per shipment and the 0.6% decrease in length of haul, as well as lingering headwinds from declining shipments in the Los Angeles region, all of which have negative impacts to yield, core yield excluding fuel surcharge was up about 3% compared to prior year. We continue to see traction in our recently opened terminals. Our terminals opened in 2023 and 2024 operated in the low 90s and improved nearly 300 basis points compared to the second quarter last year. We successfully opened five new terminals in the second quarter and we are excited about the opportunity to provide solutions for customers in these new markets. Length of haul decreased 0.6% to 888 miles compared to 893 miles in the second quarter of 2025. Shifting to the expense side for a few key items to note in the quarter: salaries, wages and benefits increased $43.4 million or 11.1% compared to the second quarter of 2025. This increase was primarily driven by higher employee hours in response to increased volumes and higher compensation levels associated with improved company performance, in addition to a company-wide wage increase in October 2025. Group insurance costs increased $7 million and workers' compensation costs increased $2.2 million reflecting inflationary claims costs. These increases were partially offset by a 1% decrease in headcount at quarter end versus the prior year. Excluding line haul drivers, headcount decreased 1.7% compared to the second quarter of 2025, reflecting our continued focus on cost management and maximizing workforce efficiency. Purchase transportation expense, which includes both non-asset truckload volume and LTL purchased transportation miles, increased by 47.3% year over year and represented 8.9% of total revenue compared to 7.1% in the second quarter of 2025. This increase was primarily driven by higher volumes, our disciplined approach to headcount, and significantly higher diesel fuel costs embedded in purchase transportation rates. Since purchased transportation includes fuel, higher diesel prices contributed to the year-over-year increase. Truck and rail PT miles represented 15.4% of total line haul miles in the quarter, up from 12% in the prior year. The year-over-year increase in miles was largely driven by greater rail utilization as we continue to optimize our national network. Fuel expense for the quarter increased by 49.6% compared to the prior year; company line haul miles increased 3.2%. The increase in fuel expense was primarily the result of a 50.3% increase in national average diesel prices on a year-over-year basis. Claims and insurance expense increased by 6.9% year over year, primarily driven by the development of open cases and increased claim activity. Depreciation expense of $64.2 million in the quarter was 2.6% higher year over year, primarily due to ongoing investments in revenue equipment, our terminal network and technology. Compared to the second quarter of 2025, cost per shipment increased 10.9% primarily due to higher fuel costs in the quarter. Salaries, wages and employee benefits also increased on a per-shipment basis reflecting higher compensation costs associated with improved operating performance as well as the 3% company-wide wage increase implemented in October 2025. Purchased transportation costs on a per-shipment basis were also higher, driven by increased usage compared to the prior year and higher fuel costs. Total operating expenses increased by 15.8% in the quarter compared to Q2 2025, with the year-over-year revenue increase of 17.1%. Operating ratio improved to 86.9% compared to 87.8% a year ago. Our tax rate for the second quarter was 24.9% compared to 25.3% in the second quarter last year. Our diluted earnings per share were $3.51, a 31.5% increase compared to the second quarter a year ago. Turning to the balance sheet, we ended the quarter with $84 million of cash on hand. After paying down our revolver balance during the quarter, total debt outstanding at period end was $100 million, further strengthening our financial flexibility. I will now turn the call back over to Fritz for some closing comments.
Thanks, Matthew. While 2026 has included periods of volatility, volumes appear to be stabilizing and several external economic indicators suggest the operating environment is improving. Fuel costs remain elevated from pre-March levels and continue to fluctuate meaningfully on a day-to-day basis. Demand improved into the second quarter as is typical and I was pleased with our team's ability to handle the increased volume while achieving a record cargo claims ratio. While external metrics continue to point to an improving demand environment, the macro landscape continues to be dynamic. Importantly, we remain focused on driving returns on the investment we have made over the past several years, and it is clear that shippers are choosing Saia more than ever before. At Saia, we have positioned the company to support customers' next phase of market recovery by expanding our terminal footprint, modernizing our growing fleet and maintaining a disciplined focus on driver training and development. Since 2022, we have deployed approximately $1 billion in real estate investments, adding 33 terminals to our operations and relocating or expanding more than 25 others. This network investment has increased our operational door count by approximately 25% since 2022. In addition, since 2022, we have deployed $1 billion in expanding and enhancing our fleet, resulting in a 20% increase in tractor and trailer counts. While we have carefully managed headcount to align with current volumes, we ended the second quarter of 2026 with 26% more line haul drivers than we had at the end of the second quarter of 2022. In LTL, capacity is created through more than just physical footprint. Our investments in our network, fleet and most importantly our people set us up for continued improvement in the freight backdrop. As we have highlighted over the last several years, we have been very intentional about making investments that support our value proposition. Q2 results were gratifying in the sense that we began to see returns for the substantial investments that we have made in our company as evidenced from the free cash flow returns. Our customers benefited from our ability to scale, meet and exceed their expectations quickly and efficiently. Our strong execution has allowed us to be the organic growth story in the industry and a strong steward of shareholder capital. At the same time, we are also acutely aware that we are in the very early innings of reaching our company's full potential. As we look forward, we continue to see opportunities to invest in our maturing network and we will be able to support these investments with continuing operating cash flow improvement. With that said, we are now ready to open the line for questions. Operator?
分析師問答
We will now begin the question and answer session. To ask a question, if you are using a speakerphone, please pick up your handset before pressing keys. If you have additional questions, you may rejoin the queue. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Jonathan with Evercore ISI. Please go ahead.
Thank you. Good morning. Let's start with the obvious. Matthew, to the extent you can give July shipments and tonnage, how does that look relative to seasonality? It sounds like your exit rate in June on certain metrics was much improved from April. So just that July trend and what that presages for potential seasonality in the operating ratio in the current quarter.
Sure, Jonathan. I will give the full quarter and recent trends. For April, shipments per day were up 5.6% and tonnage per day up 6.9%. For May, shipments per day were up 3.7% and tonnage per day up 8.4%. For June, shipments were up 3.9% and tonnage up 9.9%. In July month-to-date, with a couple of days remaining, shipments are tracking up about 1% and tonnage up about 7.5% on a per-day basis. Keep in mind, as Fritz mentioned in his commentary, we implemented a GRI at the beginning of July of 7.1%. Anytime you do that, and we have seen this historically, there is always some shipment volatility embedded for a period of time, and that is included in the results. From an operating ratio standpoint, if you look at history—excluding the COVID years and other 1-off items—you typically see about a 150 to 200 basis point degradation from Q2 to Q3. Given where we are now, and assuming fuel hangs around where it is currently, and quarterly shipments perform seasonally, we think we can be around 100 basis points of sequential degradation, so ahead of the typical 150 to 200 basis point range.
The next question is from Jordan Alliger with Goldman Sachs. Please go ahead.
Yes, hi. Just curious if you could give a little more color around your demand comments. Weight per shipment has been pretty positive. I know you are doing a bunch of things with mix, but can some portion of that be ascribed perhaps to better economic or volume-related prospects?
Thanks, Jordan. Good question. We pride ourselves on staying close to the customer, so we typically communicate with customers daily and survey them. If you look at their sentiment, back in April they were expecting improvements in the second half of the year. What is exciting is that as we surveyed again, customers continue to confirm that—they see positive trends for their respective businesses and are positive about the back half of the year. That said, Matt and I and the team remain cautious because we are a 'show us' kind of business; we need to see results. So while sentiment is positive, we have to keep executing and delivering the results.
The next question is from Tom Wadewitz with UBS. Please go ahead.
Yes. Good morning. To see the momentum in the business, you provided some color on June revenue per shipment year over year, which you said was about 4% ex-fuel. How do you think that progresses? You noted contractual renewal was around 10.7% and GRI was 7.1%. Do you think revenue per shipment will continue to move higher over the next quarter or two and converge with some of those headline pricing numbers?
Thanks, Tom. One thing we've discussed consistently over the past year is mix nuances in our business, especially the Los Angeles region. That region was down double digits last year, and while it has shrunk it is still down about 2.5% year over year. As we lap those declines and continue our pricing and mix initiatives, we expect to get back toward our typical revenue per shipment trajectory. We were pleased with the progress inside the quarter: revenue per shipment ex-fuel from April to June was up about 4%, which is good traction. That improvement came largely in 1- and 2-day lanes as the national footprint enables us to solve more problems for customers. A lot depends on the market backdrop, but our view is continued improvement, especially as the mix headwinds abate.
Tom, I would add that you only get to push pricing when service execution is at a high level, and service execution has been strong. As the mix impact normalizes, we feel confident we will continue to drive results and generate appropriate returns on the investments we've made. The revenue per shipment and yield improvements, once you reflect headwinds, look pretty good for us.
Okay, great. As a follow-up on labor productivity: I know you are optimistic about driving productivity with growth, but there is also inflation in that line. How should we think about growth in your compensation and benefits line—productivity versus inflation impact?
We do not take a break on cost and manage it closely. We implemented a company-wide wage increase in the quarter, which is reflected in our results. We expect to offset a fair amount of wage increases with continued productivity improvements. Technology allows us to improve transit times and run the network more efficiently, which benefits cost and service. That efficiency helps drive productivity improvements and supports incremental service as well.
The next question is from Ken Hoexter with Bank of America. Please go ahead.
Hey, great. Good morning, Fritz and Matthew. Can you walk us through the fuel contribution to results in the second quarter and thoughts on the impact to the operating ratio and what is built into expectations? You noted seasonal outperformance Q2 to Q3; maybe talk about what is fuel versus pure pricing.
We do not break out the impact of fuel separately. In LTL, fuel surcharge is a percentage of base rates. When we think about pricing, we consider everything that goes into the rate. Fuel will move, but our investments in fleet and terminals and service are part of the value we provide customers. For Q2, even if you normalize fuel, we still outperformed normal sequential Q1 to Q2 seasonality. What's embedded into our guide is fuel hanging around the current national average; whether it moves is uncertain. We are focused on driving core price because increases to base revenue per bill flow through to fuel surcharges as well.
The stock is down 8% today. Should we be seeing more rate from you if you are catching up? Yield per shipment was down 2.2% and revenue per shipment up 1.5%. How do you think you are tracking versus peers in catching up given you are now nationwide and trying to grow into that? Or is the focus still on filling the network in some of the new service centers?
Just to clarify, Ken, revenue per shipment was up in the quarter. If you normalize for mix, April to June revenue per shipment ex-fuel is up about 4%. Yield was up in the quarter as well despite a headwind from weight per shipment. We have mix impacts from new, shorter 1- and 2-day lanes and the Los Angeles region that has been down, but June progress shows where we expect to be and we are pushing harder on pricing. As a national player, we can command higher price points and solve more problems for customers, which supports additional pricing over time.
I focus on the value we create for customers. Customers see the service and national reach and are choosing Saia, which is reflected in shipments and tonnage growth. Our service metrics—on-time performance, claims ratios, pickup completions—all show strong performance. From Q1 to Q2 we outperformed historic operating ratio performance in that period significantly. I focus on value creation for customers and shareholders. When you create value for customers, there's an opportunity to create value for shareholders. I like what we're doing.
Just to add context: when we say we are targeting around 100 basis points of sequential deterioration Q2 to Q3, keep in mind two wage increases are embedded in this period compared to last year's timing, so comp is higher. That timing difference is important when you model the Q3 operating ratio outcome.
The next question is from Brian Ossenbeck with JPMorgan. Please go ahead.
Hey guys, good morning. Thanks for taking the question. To help understand margins or operating leverage with tonnage inflecting and maybe mix headwinds abating, you are still tracking fairly behind where renewals are. Was there additional costs that are not fully absorbed in the new network? Are there pockets of density you still need to fill that would explain the quarter's leverage?
Which costs embedded are you referring to, Brian? If you mean new terminals, our 2023 and 2024 openings improved about 300 basis points year over year and are operating in the low 90s. That’s good progress, but they still have room to mature. We opened five terminals in Q2 and our teams are actively selling in those markets. Over time, as those facilities mature and we build density, we would expect further improvement. So yes, there is opportunity to continue to push those forward.
I would add that this is early innings on the full network value. We deployed significant investments and the opportunity to generate additional returns from the 33 new openings and relocations is still there. We made progress in Q2 and have more to do. We are focused on customer care, which will continue to drive results.
Thanks. A follow-up: labor availability in the expanded network—any pockets tighter than others, and are you managing this through different tools? How confident are you this won't be a problem if volumes continue to improve?
Labor and drivers nationally are competitive and aging on average. We have an advantage in LTL because drivers can be home every day, which helps recruitment. Our Driver Academy program is strong and helps seed drivers. As we expand the network, we will expand the Academy locations and training, offering career tracks in a growing company. We are diligent about matching labor to available hours across drivers and dock workers. There will always be markets where we must add recruiters and hiring, but our recruiting machine, Driver Academy and culture give us confidence to manage labor needs effectively.
The next question is from Stephanie Moore with Jefferies. Please go ahead.
Great. Thank you. Good morning. Since we were talking about labor, I wanted to touch on where your capacity—specifically labor—stands if volumes continue to improve. What incremental hiring actions would you need to see?
Stephanie, I am going to repeat your question because you are echoing a bit.
Yes, Stephanie, I understood. Incremental capacity on labor: we feel pretty good about where we are from a recruiting perspective. There are some markets where we will need to add people. We are diligent about matching labor to the freight environment. As the network scales, we will likely add line haul drivers, but there are trade-offs between purchased transportation and salary, wages and benefits. You should consider those lines together because there's a trade between insourcing and outsourcing. We feel good about headcount with some flexibility for additional utilization or a few incremental hires, but nothing we expect to be a meaningful change at this time.
And then a follow-up on pricing: you have good GRI and contract renewals. Are customers starting to realize your size and service benefits and is it starting to come through on pricing, or are these pricing numbers more a reflection of a tightening market?
I believe customers are recognizing service and network value. We pushed pricing and the realization numbers show improvement—April to June revenue per shipment ex-fuel increased about 4%. The market may be tightening, but customers also want consistent service from a national carrier. Early indications on the July GRI show good acceptance. Sometimes you lose a little bit of volume when you push price, but the mix and profitability are better because you keep the business that values the service. We feel good about continued realization of contractual renewals and GRI.
The next question is from Scott Group with Wolfe Research. Please go ahead.
Hey, thanks. Good morning. I understand the impact of the wage increases, but I am struggling that with positive tons and a GRI, why margin guidance for Q3 still shows some sequential pressure. Many peers are guiding Q2 to Q3 improvements of 100 to 300 basis points, but your Q3 guide looks like margin pressure persists. Why is the margin gap still widened?
Scott, a few points. The two wage increases are impactful and compounding since the second wage increase is off a higher starting point. Shipment and tonnage have some volatility due to the GRI; we historically implemented GRIs at different times. The vast majority of purchased transportation is contracted, and some of the increase was usage and fuel. For Q2 and Q3, the wage timing and magnitude are sizable, and that's part of the guide. We remain committed to pricing and improving core rate realization. Historically our Q2 to Q3 OR typically deteriorates 150 to 200 basis points; we are guiding to roughly 100 basis points of deterioration—so we are ahead of typical seasonality. If we see strong volume ramp, outcomes could improve further, but the wage timing is real and impacts near-term OR.
A quick follow-up on realized price: revenue per shipment has been flat-to-down the last several quarters on a year-over-year basis despite the actions. Historically you had several percent of positive price. When do you expect to get back to more normalized price performance? Would more disclosure on yield be helpful?
Inside the quarter we saw revenue per shipment up about 4% from April to June. Yield was up in the quarter despite weight headwinds. We expanded the network significantly, which adds lighter, shorter lanes in the 1- and 2-day range. We are making progress and expect continued improvement as mix normalizes and LA recovers. We are pushing on price and feel like the quarter demonstrated traction.
The next question is from Christian Wetherbee with Wells Fargo. Please go ahead.
Hey, thanks. Good morning. Matthew, you mentioned weight per shipment accelerating through 2Q into July. Can you give a sense of how you think about that in 3Q and what specific mix dynamics are pushing it? Which verticals or initiatives are driving that?
A good chunk is our initiatives. When we set GRIs, we do it granularly by lane and weight profile and have pushed hard on getting paid correctly on lighter shipments. We pushed across all segments but emphasized lighter-weight shipments. A component is modest strengthening in the backdrop, but we are not seeing major truckload spillover into LTL. The national footprint allows pursuing different verticals, which helps us improve mix over time.
Christian, in addition to Matthew's comments, customer sentiment is consistent and broadly positive across verticals. We don't see a single industry outperforming or underperforming materially. The mix improvements are broadly based, and we're focused on customers that value our service and network; we have been pushing rates where customers are not focused on service value. The positive trend is fairly uniform and customer acceptance is encouraging.
And thinking bigger picture, you are making network and mix changes and seeing early results. How should we think about the margin algorithm longer term—beyond this year—if the network matures and you continue to push pricing and mix?
That is exciting to consider. We are just scratching the surface of our network's potential. With 118 facilities and a national footprint, we have proven high service levels and can scale. I believe we can operate this business below an 80 operating ratio over time; it should start with a 7. The pace depends on the macro backdrop—stronger demand would accelerate OR improvement. Some regions and facilities already operate in the low 80s, and we have others in the low 90s that, once matured, can perform at the 70s. We generate strong cash flow to support additional investment from operations, which is key to driving long-term returns.
The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.
Just to piggyback on the LA region, what exactly is the issue there? Is it Saia-specific because of a concentration of terminals or is it a broader regional customer issue?
In the LA region we had some major customers, and over a year ago we exited certain customers. We did not see other business in that market to fully backfill that volume, which created a top-line headwind. The revenue-per-shipment profile coming out of the LA region is generally high for us, so double-digit declines there year over year earlier were a meaningful headwind. That headwind has shrunk and we feel like we have likely reached steady state there and can grow from this point.
So that exit happened last year and has been a drag for multiple quarters, and you are now lapped and it should be less of a drag going forward?
Yes, that headwind has been present for more than a year, and in June we began to lap it. We think we're past the worst of it and expect to grow in the region.
One other quick question: autonomous trucking and EVs—how are you thinking about those technologies and any updates?
We always evaluate available technology—diesel, LP, electric. We've been an early electric vehicle customer and stay close to development. If autonomous technology is viable, we would consider it. More importantly, many autonomous technologies provide collision avoidance and safety benefits even today with a driver on board. Safety-enhancing technology is very attractive to us and we are active investors in solutions that improve our safety profile.
The next question is from Eric Morgan with Barclays. Please go ahead.
Hey, good morning. Thanks. On purchase transportation: most of that is contracted, so it should be insulated from spot volatility, and fuel is a big driver. Do you have a sense for where you are landing on core contract renewals with carriers? And is there an opportunity to insource more given you're adding line haul drivers? Do you have a target for moving the PT percentage?
The vast majority of our purchased transportation is contracted—well over 95%—so we are relatively insulated from spot-rate volatility. We view PT as an optimization decision—insource where it makes sense, outsource where cost and service align. Blended PT cost per mile excluding fuel was up about 3% year over year; the increase was a combination of usage and fuel and greater rail utilization. At some point, carriers may seek higher rates, but the current year-over-year base blended rate increase was about 3%. We continue to evaluate the optimal mix between insourcing and outsourcing based on cost and service.
Whether we run our own line haul or use PT, fuel expense remains. The goal is cost optimization. If insourcing makes sense we will do it; if PT or rail provides better cost and service, we will use it. Rail service for long cross-country moves can be cost effective if it meets customer expectations. We model these trade-offs and will act to optimize overall cost and service.
The next question is from Bascome Majors with Stephens. Please go ahead.
To follow up on the inflection point comment: what gives you the feeling that this quarter is an inflection from investing in the network to earning returns? Why now and do you have confidence that you can see periods where you get price and volume together to drive returns and margin higher?
We are encouraged by several months of positive volumes and customer sentiment—stringing those months together suggests a pattern. The market dynamics appear firmer and our execution is strong. As facilities mature from low-90s operating ratios toward our best-performing facilities, there's clear opportunity to drive incremental margins. Customer surveys remain net positive, and Q2 performance was gratifying. We believe these trends, combined with continued focus on service and pricing, support the view that we're beginning to see returns on network investments.
The next question is from Bruce Chan with Stifel. Please go ahead.
Hey, good morning. Good to see OR progress in some newer terminals. You mentioned leaning into local account density. Any changes to your salesforce structure or incentives to drive that? And timeline for terminals to come up to parity with the rest of the network?
As those facilities mature, we've increased sales resources in those markets and aligned incentives appropriately. Building a new market takes time and a methodical approach; we will not intro pricing concessions to seed volume. We stay disciplined to ensure the capital invested generates returns. Some markets ramp faster than others, and we've seen long sales cycles convert to meaningful new business when our teams remain engaged. We expect continued improvement as the environment improves and as our sales teams keep working opportunities.
The next question is from Richa Harnain with Deutsche Bank. Please go ahead.
Hey guys, thanks. To ease some consternation around the margin guide and the wage increase: Matthew, can you triangulate what the OR progression would have looked like without the July wage increase? In other words, what is the impact of that wage increase on the operating ratio? Also, July tonnage is up 7.5% month-to-date—is that better than seasonality and what do you assume for August and September?
We don't typically break out individual wage increase impacts, but historically the magnitude of a wage increase lands around a point of operating ratio impact. That is larger now on a dollar basis as the company is bigger. There are two wage increases in this period compared to last year when timing differs, so that's a meaningful timing effect. On volume: shipments are a little behind seasonality in July, but tonnage is up strongly; the GRI in July introduces some shipment volatility. For the quarter overall, we are projecting normal shipment seasonality Q2 to Q3, which is how we have guided.
And one more: you mentioned product upgrades—Saia REV, transit time improvements, 10:00 a.m. guaranteed service, claims improvement. Given these service improvements and price progress in Q2, should we expect continuation of revenue per shipment and yield acceleration in Q3 and Q4, or was this mainly a Q2 phenomenon?
We expect these service enhancements to support both contractual renewals and GRI realization. The mix impacts aside, core yield excluding fuel was up about 3% and that is encouraging. We expect the enhancements—faster transit times, enhanced visibility, improved service—to continue to support revenue per shipment and yield improvements over time. Those investments were made to drive such results and we expect to be rewarded for them.
The next question is from Jason Seidl with TD Cowen. Please go ahead.
Thanks, operator. Hey guys. Thanks for squeezing me in here at the end. On GRIs, you mentioned there is noise around tonnage and shipments when you implement them. Is the shipment noise you are seeing this July at the higher end or lower end of what you've historically experienced after a GRI?
The magnitude of GRIs has increased over the years as we've expanded the footprint. We take GRIs at a more granular lane and weight level now. The acceptance rate has been better than normal and the shipment volatility in the first 30 to 45 days after a GRI is normal relative to our past GRIs. The timing differs year to year—some years we've done October or January—but the short-term volatility is not outside our historical experience.
And on truckload-to-LTL spillover: longer-term, if truckload partially moves back to LTL, what kind of incremental opportunity in tonnage do you think that represents for you? Is it a percent or a few percentage points long term?
It's still uncertain how much truckload-to-LTL spillover there would be. Historically, a high point of spillover might have been a few percentage points industry-wide, but we'll need to see how patterns settle. If there is spillover into LTL, we must ensure proper pricing and service to handle that freight. At the moment, we are focused on executing in LTL and maintaining service and pricing discipline if volumes increase.
This concludes our question and answer session. I would like to turn the conference back over to Fritz Holzgrefe, Saia's President and Chief Executive Officer, for closing remarks.
Thanks everyone for joining to hear about our record second quarter, which we are excited about, and how it sets us up for continued long-term value creation for our shareholders. We are excited about the opportunity and are certainly just scratching the surface of the business's potential. We look forward to giving you an update next quarter. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.