Participants

Matthew Batteh; Executive Vice President, Chief Financial Officer, Secretary; Saia Inc

Frederick Holzgrefe; President, Chief Executive Officer, Director; Saia Inc

Christian Wetherbee; Analyst; Wells Fargo

Jonathan Chappell; Analyst; Evercore ISI

Jordan Alliger; Analyst; Goldman Sachs Group, Inc

Fadi Chamoun; Analyst; BMO Capital Markets

Tom Wadewitz; Analyst; UBS Investment Bank

Scott Group; Analyst; Wolfe Research

Jason Seidel; Analyst; TD Cowen

Daniel Imbro; Analyst; Stephens, Inc.

Ravi Shanker; Analyst; Morgan Stanley

Bruce Chan; Analyst; Stifel

Brian Ossenbeck; Analyst; JPMorgan Chase & Co

Brandon Oglenski; Analyst; Barclays

Bascome Majors; Analyst; Susquehanna Financial Group

Ken Hoexter; Analyst; Bank of America Securities

Stephanie Moore; Analyst; Jefferies

Christopher Kuhn; Analyst; The Benchmark Company

Presentation

Operator

Welcome to the Saia, Inc. first quarter 2025 earnings conference call. (Operator instructions) Please note this event is being recorded.
I would now like to turn the conference over to Matt Batteh, Executive Vice President and Chief Financial Officer. Please go ahead.

Matthew Batteh

Thank you, Michael. Good morning, everyone. Welcome to Saia's first quarter 2025 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should note that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
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.

Frederick Holzgrefe

Good morning, and thank you for joining us to discuss Saia's first quarter results. To open the year, we experienced first quarter records of revenue tonnage and shipments on one less workday than in the first quarter of 2024, with growth driven primarily by ramping terminals opened in the last three years.
Our first quarter revenue of $787.6 million increased from last first quarter by 4.3%. The growth we experienced was concentrated in our newer markets where we were pleased with customer acceptance. Going into the year, our business plans for 2025 are focused on execution and leveraging the investments we've made in our network over the last several years.
We expected the macro environment to remain somewhat muted or at least consistent with what we've seen over the last two years. As we approach the end of April, the backdrop is notably different. Historically, we've typically seen seasonal increases in shipments and tonnage of approximately 3% to 4% from February to March and facilities opened less than three years, we saw the 3% sequential improvement and legacy facilities, shipments were actually down slightly fast March.
This year's shipments in total for the company were only modestly improved from March to April, which we attribute primarily to the uncertain macro environment. Customers, although satisfied their service and valuing our network expansion, they appear cautious in the current backdrop and are taking a wait-and-see approach, we estimate the revenue impact of the sub-seasonal trends to be approximately $25 million to $40 million.
While the first quarter is typically impacted by adverse weather events, this year's disruptions proved more challenging in both magnitude and geographic location. Winter weather in the southern part of the country prompted closures and limited operations at some of our most dense and profitable regions.
We experienced significantly more closures and terminals with limited operations in 2025 compared to the first quarter last year, with substantial impacts to our Atlanta, Dallas and Houston markets in 2025. We estimate that the impact of weather to our operating ratio for the quarter was approximately 25 basis points to 75 basis points.
Our first quarter operating ratio of 91.1% deteriorated by 670 basis points compared to our operating ratio of 84.4% posted in the first quarter last year. We remain intently focused on our pricing and mix optimization initiatives. We're encouraged to see wafer shipment trends in a positive direction sequentially.
Additionally, we saw proportionally more growth in our ramping markets or those opened since 2022, which, while great to see can be challenging as they're relatively less profitable compared to the legacy markets. At this stage, it is critically important that we maintain and continue to improve our service levels. Customers value certainty and reliability in their supply chain, and we believe that we're well positioned to provide that service.
Contractual renewals averaged 6.1% in the quarter, reflecting our customers' belief in the high-quality service that we continue to provide. However, as the environment has impacted our performance, we are focused on improving our service levels while also managing controllable costs and productivity.
Moving forward, we'll continue to do our part for customers by providing great quality and differentiated service to justify pricing changes as are necessary to run our business.
Now I'll turn it back to Matt to walk us through some key expense items for the quarter.

Matthew Batteh

Thanks, Fritz. First quarter revenue increased by $32.8 million to $787.6 million, a record for any first quarter in the company's history. Fuel surcharge revenue remained flat, increasing by 0.2% and was 15.1% of total revenue compared to 15.7% a year ago. Revenue per shipment, excluding fuel surcharge, increased 2.3% to $300.76 compared to $293.96 in the first quarter of 2024 and increased 0.5% sequentially from the fourth quarter of 2024.
Yield, excluding fuel surcharge, declined by 5.1% and yield decreased by 5.8%, including fuel surcharge, reflecting the inverse relationship between weight per shipment and yield as a heavier-weighted shipment typically drives a lower yield.
Tonnage increased 11.0% attributable to a 2.9% shipment increase and a 7.8% increase in our average weight per shipment, length of haul increased 1.9% to 905 miles. Shifting to the expense side for a few items to note in the quarter.
Salaries, wages and benefits increased 13.9%, which is primarily driven by a combination of our employee head count growth of approximately 8% year-over-year and the result of our July 2024 wage increase, which averaged approximately 4.1%.
The growth in head count is primarily related to the opening of 21 new facilities in the past 12 months resulting in over 500 new employees, comprising more than $1 million in additional wages and benefits for the first quarter compared to last year, in addition to the increase in volume compared to prior year.
Also impacting this line item was increased employee cost to keep the network fluid and provide service to our customers during the winter weather disruptions. During the quarter, we ran extra linehaul miles and leverage purchase transportation post storms to keep the network running effectively.
We also ran extra dock operations over some weekends to ensure customers' freight was minimally impacted by weather disruption. In addition, other employee-related costs increased, including workers' compensation and health care costs.
Purchase transportation expense, including both non-asset truckload volume and LTL purchased transportation miles increased by 14% compared to last -- compared to the first quarter last year and was 7.6% of total revenue compared to 7% in the first quarter of 2024.
Truck and rail PT miles combined for 12.4% of our total linehaul miles in the quarter. Fuel expense increased by 1.4% in the quarter, while company line haul miles increased 8.6%. The increase in fuel expense was primarily the result of an increase in linehaul miles run partially offset by national average diesel price decreasing by over 8% on a year-over-year basis. Claims and insurance expense increased by 23.4% year-over-year.
The increase compared to the first quarter of 2024 was primarily due to increased claims activity as well as development of open claims and increased cost per claim. Depreciation expense of $59 million in the quarter was 20.9% higher year-over-year primarily due to ongoing investments in revenue equipment, real estate and technology.
Compared to the first quarter of 2024, cost per shipment increased 9.4% and partially due to increased salaries, wages and benefits to support a broader network of terminals in addition to the effect of sub seasonal market impact on volumes.
Additionally, cost per shipment was affected by the impacts from the winter storms on network operations, including increased mileage and associated operating expenses to maintain network fluidity. In addition, a step-up in depreciation from the opening of 21 terminals and the largest equipment investment in company history over the last 12 months also contributed to the increased cost per shipment.
Total operating expenses increased by 12.6% in the quarter and with the year-over-year revenue increase of 4.3%. Our operating ratio deteriorated to 91.1% compared to 84.4% a year ago. Our tax rate for the first quarter was 24% compared to 23.7% in the first quarter last year, and our diluted earnings per share were $1.86 compared to $3.38 in the first quarter a year ago.
I will now turn the call back over to Fritz for some closing comments.

Frederick Holzgrefe

Thanks, Matt. While there are challenges associated with the underlying environment and weather events in the first quarter, there are signs of continued progress being made as a trusted carrier for our customers, as we continue to provide a high level of service across the national network.
As always, we remain intently focused on the long-term opportunity to enhance our service offering and coverage for our customers while delivering significant long-term value to our shareholders. While the 21 terminals opened in 2024, have all been opened less than a year, we're beginning to see the benefit of national network that allows us to serve our customers' needs more immediately than has been the case in the past evidence of our shipment growth in those new markets.
The markets opened in 2024 represented the majority of our shipment growth compared to last year, but these markets operated at roughly break even in Q1 of 2025. We do not open these terminals for growth in the next month or next quarter, rather these are long-term investments that allow us to provide service to our customers nationwide.
As each month passes, we continue to build density in these markets and improve operational efficiencies, which will continue to drive long-term value. As we look forward, we'll continue to manage through macroeconomic environment, looking to adjust our cost structure and adapt to the changing landscape across our network, all while maintaining our focus on the customer.
Through discussions with our customers, no surprise to hear the hesitation and uncertainty around the macroeconomic backdrop. We remain close to our customers and feel strongly we'll be well positioned to provide solutions in changing supply chain.
The first quarter represents certain challenges that are somewhat out of our control. However, we do not see any evidence that would suggest that there's a significant -- that there is not a significant long-term opportunity for Saia.
In this environment, we continue to commit to providing an exceptional product to our customers, while at the same time, continuing to maintain and enhance a very competitive cost structure. Over the long term, we remain confident in our value proposition and the organic growth story that is as well as the benefits that we'll add to our customer and the growth and performance of our company over time.
We're now ready to open the line for questions. Operator?

Question and Answer Session

Operator

(Operator instructions)
Chris Wetherbee, Wells Fargo.

Christian Wetherbee

Hey, thanks. Good morning guys. Maybe first big picture on pricing. I kind of want to get a sense of how you view the current pricing environment. Obviously, some of the yield metrics could be pressured by mix, but I'm kind of curious how you guys are thinking big picture about pricing first.

Matthew Batteh

Hey, Chris, yeah, I mean, important to note the weight per shipment impact on yield. I know we've talked before about our focus on revenue per shipment. So the yield metrics have that weight per shipment component I mean for us, we're focused on pricing, no different than we have been in the past.
Certainly, with the capacity environment, the way that it is, we see customers choosing other options in certain instances when we're taking rate increases. But -- we view the environment the same as it has been before. Everyone is acting as we would expect.
We maintain our focus on it. So nothing different from us in that regard. Of course, customers always challenge the pricing increases that we proposed. And with a looser capacity environment, that gets a little bit later, but no difference in focus from our side.

Christian Wetherbee

And then maybe just a follow-up on that. So if we look at weight per shipment was up sequentially length of haul was up sequentially and then revenue per ship, it was kind of pretty close to flat. It was up a little bit from 4Q to 1Q. So I guess what do you think about what are the drivers within mix there that are kind of offsetting some of those -- what should be fairly positive factors to revenue per shipment ex fuel?

Matthew Batteh

Well, as Fritz noted in his comments, the vast majority of the growth for us is coming from these ramping markets or those that have opened in the past three years. And the vast majority of that growth is coming from existing customers that we already work with. So the rates in place with them. And each month that passes, we're finding out more about the mix that we handle for them and the pricing opportunities that we handle with them.
So as we go into these markets, our lead list is our existing book of customers, and we're winning some heavier weighted share in those markets. And -- we understand where our opportunities are, and we're not going to handle business that doesn't work for us.
But mix in those markets can be a little bit different than what we handle in our legacy, and that's something about the -- going into new markets and learning more about what we handle for customers in different geographical locations.

Christian Wetherbee

It still feels like you have the opportunity to reprice that business after you onboard it see what it is and ultimately address it as we move forward through the rest of this year.

Frederick Holzgrefe

Chris, I think if you just look at our top line metrics, right, we recognize that the entire book of business relative to peers and folks that are have mix of business, weight per shipment, length of haul, similar even different than ours, that there's an opportunity for us to continue to make sure that we get paid for all the services we're providing.
Our service is really good. And we feel like we can -- we should be able to continue to push our let's get this to market, and we look around and we see that there are opportunities for us to continue to push that. We have -- we're unrelenting about that, just this environment right now. People have choices.
So we haven't in for the balance of this year, and I'm sure in the next couple, we still have runway around that, and we're focused on that opportunity.

Christian Wetherbee

Appreciate your time. Thank you.

Operator

John Chappell, Evercore ISI.

Jonathan Chappell

Thank you. Good morning. Matt, trying to put a little bit of a pin on the sub-seasonal trends. So you were expecting 30 basis points to 50 basis points of lower deterioration 4Q to 1Q. Fritz said weather was [25] to [75], so let's call that 50%.
So let's say weather, strip all that other stuff out, it feels like the sub-seasonal trends was about 300 basis points. So as we think about April, 2Q and really going forward for the rest of the year, absent some return to seasonality or even kind of a cut shop is this 1Q OR kind of the starting point and how we think about the OR cadence going forward? Or do you think that this is a very low bar for 1Q, and there's a lot to catch up in 2Q and going forward?

Matthew Batteh

Well, I'll start here, and then Fritz can chime in, too. I mean if you look at we talked about January and February, we've talked long about how March is really the make-or-break month for the quarter. And it historically is, we always have some weather. This year was more challenging just in magnitude and location. But -- there is always weather and typically, March just makes up for it.
And we're planning for a seasonal step up in March. And like Fritz said, we got that in those ramping markets in the new -- but when it doesn't come in the legacy markets, it's just tough to take the cost out in a quick 30-day time period, right?
So we weren't expecting a lack of step up from that seasonal point. Obviously, there's a lot going on in the macro, and that remains uncertain. I wish we had a crystal ball to be able to say what that looks like. I mean April to date, we're seeing sub-seasonal trends as well.
So I don't think anything stands out to us that would say that, that's better right now until we see more of that on the ground. But from our view, March sub-seasonal trends and how they're tracking in April is pretty similar. There's a lot going on from the customer side right now.

Frederick Holzgrefe

Yeah. I think I would clarify 1 point that we're making on the weather. The 25 basis points to 75 basis points is -- it's really about what we would say. We always have weather in the first quarter. The 25 basis points to 75 basis points is the sort of incremental impact of the how much worse than normal impact.
So it's always there. And be quite honest with you, when you're in a freight business and you're running the network across the country, you're always going to have weather. This -- what was unusual about this is when you have -- when our best operating part of the company is shut down, that's an impact for us.
So that's the only reason why we called that out, sort of life in a big city for us. I think the challenge though from, as Matt was pointing out, when we didn't see that sort of seasonal pickup from Feb to March that give us the opportunity to pick that up, right, or to recover, if you will, from the January, February piece.
As we look forward, as we plan and operate the business, we look strictly at sort of what March looked like -- and we said, all right we've got to play in our model around March going forward. We haven't really seen a step-up into April. But I'm not going -- we're not going to predict May or June or frankly, the rest of the year.
So we're very focused on kind of getting this back to sort of some normalcy around this. So obviously, when you look Q1 to Q2 and you take out the weather, we're going to be on a run rate that I think it's not where we want to be, but it's better, right?
So we operated in March sort of sub-90% right around 89% on a sort of with no changes. I think that probably runs into Q2. That's kind of what we're managing. We'd like to get to that kind of a number for the full quarter, but we'll see how that plays out. Certainly, we're taking cost actions where we can. But at the same time, it's important that we maintain the long-term structure and opportunity for the business.

Jonathan Chappell

That leads right to my follow-up, for it. I mean Matt did say when you don't get that seasonal improvement in March, it's kind of too quick for you to make cost adjustments. But here we are now almost through April, it sounds like it sounds like it hasn't gotten any better. Of course, nobody knows where we're going from here, but certainly more concern about the macro than it three months ago.
When do you start taking some of those cost actions and what could they be to maybe manage into a slower demand backdrop beyond just a two-month period?

Frederick Holzgrefe

Yeah. So I mean, we -- those are -- the cost sort of actions are, of course, in flight. And you've got -- one of the things you have to do in the LTL business, you have to match labor with what the available freight is, both in -- frankly, in our legacy markets and new markets, both some of our network planning initiatives, we're pulling those forward and implementing those around how do we optimize now national network.
Those are in flight. We are looking at sort of what can we -- how can we reposition parts of our company to more closely and better serve customers. At the same time, there's a cost benefit that comes out of that. So that's kind of built into what our planning is right now. we feel like we'll see those -- the fruits of those sorts of changes will happen a little bit into this quarter. and into the balance of the year.
So it's just all about matching our cost structure with what our customers need alongside of what we need to do to continue to drive performance in the company.

Jonathan Chappell

Okay. Thanks, Fritz. Thanks, Matt.

Operator

Jordan Alliger, Goldman Sachs.

Jordan Alliger

Yeah, hi, morning. Just two questions. One, how far forward do you have visibility on volume? And what -- based on whatever that visibility is, are your customers telling you? And then second, you still have 13% or so tonnage growth in the quarter, which wasn't enough, obviously. What as an entity kind of volumes on that front how do we think about to get you back on track seasonally from an overall volume perspective. Thanks.

Matthew Batteh

Hey Jordan, I mean, to answer the first part, I mean we have a robust forecasting process. But I think as everybody well knows, the news changes frequently. And so when we hear from our customers, like Fritz said in the script, there's no -- there's hesitancy. I mean I think there's -- they're trying to understand how long the potential changes can be in place for supply chains are years in the making. So it's sometimes hard to flip overnight.
I think it's that wait-and-see approach. So I think remains to be seen. But depending on how long impacts last, I think that's part of it. And we're planning, right? We're understanding that. We're forecasting and doing scenario modeling just like everybody else's.
And then on the tonnage side, it's the tonnage growth and the shipment growth really came from these new markets, those that have been opened over the past three years. So those are operating roughly breakeven. We're not getting that seasonal lift in the growth from the legacy markets, which are our best operating. We've been in those markets for many years, really great density.
So it's -- you can't just take the volume and the tonnage growth in isolation because of where it's coming from, that matters.

Frederick Holzgrefe

And I think I would add, [Jason], is that listen, we'll continue those new markets are going to continue to get better. And I would expect through Q2 that we'd start seeing some of those in the black because we're going to be class kind of going over the one-year mark for them.
So that's great to what you would expect, particularly in a tough environment. I think for the balance of the business, the focus has got to be what's the available freight. What are we hearing from customers making sure that our sort of operating model matches that.
When you don't have seasonal pickup, I mean this may be hard to believe, but when you don't see volumes going from February to March, the ability to adapt to that within a matter of days, it's pretty challenging, right? If you go to a customer and you're expecting three pallets at pickup and you get one well, you have to still the same driver that's there, and you have significantly less revenue.
So you make the adjustment to how do you schedule your pickup and delivery operation to take care of that situation, right? So you're reducing the number of hours and those are all things that we have to do and are doing March into April into the balance of the year. So as we look forward, we hear -- we see what our customers are telling us, but then it's -- this is what they think right now.
They're uncertain. They're making decisions based on a very short-term sort of focus. And then we've got to get ourselves kind of aligned to that as well, which I think we are and just be in a position to meet their expectations when they need it, depending on where it goes.
I'll tell you what is really important to not lose sight of in this situation is when this -- the reason why we invested in the national network when the economy does settle and things go spring the other way, we will be in a position to capitalize on this. And that -- we can't lose sight of that in a tough environment for two months.

Jordan Alliger

Just a real quick follow-up, and I apologize if you said this already. On the legacy terminals, the older terminals -- can you give a sense of what was the year-over-year tonnage or shipment growth in those terminals year-over-year as opposed to seasonal sequential.

Matthew Batteh

On the legacy ones. I mean, the shipments in those markets are down -- I mean, our legacy book of business is looking like the peer set in the macro right now. So year-over-year in February and March, our legacy shipments were down in those markets.

Jordan Alliger

Thank you.

Operator

Fadi Chamoun, BMO Capital Markets.

Fadi Chamoun

Thank you. Good morning. I wanted to get a little bit into the mix because first, last year for most part of it, it was lighter weight shipment mix challenging. And then it feels like in Q4 and Q1, we very quickly switched into kind of very heavier type of weight per shipment which is supposed to be margin accretive, typically, but it wasn't.
And it looks like if I look at the revenue per shipment, the weight, the length of haul, realized pricing in Q1 was negative. And I know you mentioned price renewal was plus 6%. I'm trying to reconcile these things -- what -- how would you describe the characteristics of this freight that is entering the network right now, heavier freight but not accretive freight.
I'm just trying to reconcile all of these things and why we're not really seeing a much better effect overall on growth and profitability?

Frederick Holzgrefe

Yes. So Fadi, it's a good question. I mean there's a variety of factors there, right? So I think it's -- the weight per shipment is a positive trend for sure. but heavier weight per shipment at times does have higher -- more difficult handling characteristics.
So it does attract some additional costs. So it's not a complete flow-through. But it's positive in general. So I think that's good. I think what impacted us probably more significantly in the quarter is that not seeing the step-up in revenue in those legacy facilities.
So we got all the growth came from the new markets, right, which is good. somewhat attractive weight per shipment and margin structure in immature facilities. So you have our line-haul costs associated with those are higher than anything else. So the growth is all there. So the relative contribution of those -- of that new freight mix is not what we'd hope, right?
But that's part of the startup. Meanwhile, the facilities that have been opening for three years or longer, we actually saw declines in March and have been in February, right? And those that's tough to overcome, and that's where we're trying to adjust the cost structure to make that match that more closely and to build the efficiency more generally across the whole network.
So I think there are several factors in there. I think the trends -- the top line trends are important and they're good -- but when you're in -- a big part of our sort of footprint is now in a sort of more start-up mode, that could be challenging to overcome on the margin side.

Matthew Batteh

If you think about those locations Fadi I mean they're -- we're not running as many directs out of those new geographies. So higher weighted shipments, generally, yes, we prefer those. But you also prefer them in the legacy markets because you get more efficiencies out of those are newly opened markets, they're often running back to a break to consolidate freight.
So there's typically more handling involved with them. So where it comes from matters in this instance, we just -- the legacy parts were down. So you see from that.

Frederick Holzgrefe

So -- and when you expand that further, so if you take that -- you run that through a legacy break operation. So that legacy brake operation is its core sort of local business is down year-on-year. You don't have the opportunity to optimize cost a bit because you've got to keep your labor in place to be able to handle freight that goes -- actually passes through the facility rather than us pick up or delivered from that facility.

Fadi Chamoun

Okay. And maybe you've answered it partially. But specifically, how should we interpret this the realized pricing seems negative when in reality of saying pricing renewal is quite strong.

Frederick Holzgrefe

Well, keeping there's a really important point is that the contractual rules, that's a great sort of metric that's out there, but that assumes that, that mix of business that came along with those contractual renewals is exactly what we get. And I think right now, what you see is customers have options. So we don't necessarily -- a realization of what we're getting on contractual renewals is it's not one for one.
It's obviously less. So it's -- that's -- we provide that just to give you an indicative sort of view of what the pricing environment looks like, but our actual realization will likely always be different.

Operator

Tom Wadewitz, UBS.

Tom Wadewitz

Yeah, good morning. I want to try to get a sense of -- I'm sure it's just hard to do, but how much of the path to improvement in OR, I mean, I'm sure you're not satisfied with the go forward of an 89 OR and we want to focus on improving that -- there are other factors like service you want to maintain.
But how much is the path to improvement off of what you talked about with, I think, March is purely driven by freight market improvement and beyond your control. Obviously, you don't control tariffs and freight economy and uncertainty all that. And how much do you think is in your control that it's like, hey, we just need a bit more time to rightsize the resources?
Because I think you guys are good at that historically managing your cost structure and pickup and delivery routes. And that would be something that could be in your control. Maybe there are some other things on mix management that are in your control. So I just wanted to see if you could offer some thoughts on OR and what you're just waiting for freight and what maybe you can work on?

Frederick Holzgrefe

So Tom, that's a great question. I mean, internally, the way we think about this, and this is an important we're very, very focused on the things that we can control inside the company. So that's things like on time for the customer claims ratios, all those things. Those are things that we can deal with. Cost structure are things that we can deal with.
Do we get to a market in which we think the long-term opportunity in business is a 75% OR better perhaps, right? -- we're going to need market help for that, right? In the environment that we're in right now, that's going to be a long -- there's not a path on the cost side that gets us there.
Yeah, can we see continued OR improvement on a modest level from here into the balance of the year. Yes, there's going to be some cost levers that we're going to take advantage of, and they are ones that we'll hopefully be able to improve service at the same time that we reduce costs.
Those are things that we can deal with, but they're not sequential. If you look at our cost structure relative to the competition or the public peers, this is a top line opportunity for us. And yes, there's some cost things that we're going to deal with. But I don't think that, that's going to be the path to the low OR that we would -- that we want and think we can achieve. In the short term, there's certainly things we're going to do.
We're not quite ready to identify kind of what the magnitude of that is largely because I think there's a fair amount of certainty around what we think the market is going to do even through the quarter. We're focused right now and saying, listen, there's not a change from today around the market.
We're not expecting some big step up in this second half of this quarter or the next 90 days or anything. We're just saying, Listen, we got to manage from this point and focus on the things that we can control.

Tom Wadewitz

Okay. Yeah Great. That makes a lot of sense. I think further follow-up, I know you've asked on pricing a bit. But just one -- I guess, it seems to me like the kind of construct, you could say, hey, LTL pricing discipline, but it's -- obviously, it is cyclical.
So if you thought market pricing was going to be 4% to 5% this year and a weaker freight backdrop, maybe it's lower than that. Maybe it's 2 to 3, maybe it's flat. I don't know. How do you think about that? I mean, it does seem like the market that you compete in market pricing is probably softer, but do you think that's the right way to look at it? Do you think it goes negative? Or do you think it's just kind of you can't get as much price, but still positive.

Frederick Holzgrefe

I think it's positive. Listen, the fundamentals, even in the fact that the tonnage profile across the industry right now is soft, right? I mean just look at what's been reported. The cost structures are all still inflationary, right? And I think that there's not really a path that makes a lot of sense where you cut rates to try to fill up volume and all that sort of these businesses require -- they're capital intensive, they require a return.
So I would expect to see the pricing environment to remain stable people will be rational around it. Now is that going to maybe be kind of the stronger end of that? I think it's probably less likely just by the nature that folks have options right now. But I don't see a situation where that turns negative by any stretch. It just may not be what it has been at the same rates in the last number of years.

Tom Wadewitz

Right, okay, great. Thank you for the time.

Operator

Scott Group, Wolfe Research.

Scott Group

Hey, thanks. Good morning, guys. So I didn't hear yet the March and April tonnage. And then maybe -- I know you don't typically do this, but 1 of the other LTLs does. And I think it's helpful that 89 sort of OR you're talking about for Q2, like what's the revenue assumption embedded within that?

Matthew Batteh

Scott. So I'll give the update on the shipments and tonnage for the month. So March was up on shipments 2.8% and tonnage up 12.3%. And -- and then month-to-date in April, and this is not a good Friday adjustment, just overall, shipments are tracking down about 2%, tonnage up 5%. And then on the second piece of it, I mean we don't give a revenue guide.
But what our assumption is right now is that we're not really seeing anything in April that would tell us the seasonality is back in check or anything like that. So our modeling assumptions right now are what we're seeing in April and what we saw in March, just continues on until we see otherwise on the ground floor.
And we talked about -- we're staying very close to our customers and conversations with them reflect that understanding what the environment looks like, how to plan their supply chain. So that's what we think about right now, and we remain close to them. And to the extent that it changes up or down, obviously, we manage to that. But we're not seeing anything right now that would tell us to model anything substantially better.

Scott Group

Okay. And Matt, you had a comment, a lot of this new business is coming on from existing customers, and we already have contracts in place with them. But -- and maybe I'm not understanding this right, but like is it every terminal and every shipment have different characteristics in terms of costs. And so don't they all need to be priced differently rather than more of like a blanket price.

Matthew Batteh

Absolutely. And don't take my comments, Scott, as a blanket price. My comment around that was when we price out a customer's business, we are providing rates in the new markets, and we have been. It doesn't mean that we get that volume right away or have handled it historically.
So sometimes, when it comes on board, characteristics may be different than what we assumed or different than what we handle for them in a different market. And we absolutely have the opportunities to go back and have different conversations.
So my point around that is that our lead list, when we open new markets is to go to our customers and say, Hey, we're doing a great job for you in our legacy Texas market -- can we provide a solution for your freight needs in some of these other markets, and they turn us on.
But sometimes we find out that the characteristics are different. And what we view is across our total book, and that's publicly available data, we know that there's a pricing opportunity. So that was what my comment was around that.

Scott Group

And then maybe just first, if I can just take a step back, big picture. I know we're talking about March tonnage wasn't as good as we thought, but like if you look at it in cost per shipment is up 9% and revenue per shipment is up 2%, right? That's really big spread. When -- what is the fix getting cost down? Or is it getting rev per setting up?
And realistically, like how is this -- does this take quarters? Or does this take years to start getting back to a positive spread on revenue per shipment versus cost per shipment.

Frederick Holzgrefe

Yeah. It's not years. I mean, certainly, I think you have to think about -- (inaudible) for everybody what the costs increases were year-over-year. And if you disaggregate that, you would see there's a big chunk of head count that got added that is related to facilities that have been opened in the last year.
So you're going to -- as you mature those facilities, that -- the returns on that investment, unfortunately, we can't calibrate down salaries and wages for in new markets to match kind of what that growth looks like necessarily. So you have to -- there's a start-up period there.
So that's going to -- the other big element that's in there is that you have a big step-up in depreciation. If you look at over the last couple of years, our increases in the size of our fleet to be able to match all the growth that we have. That's an important step. So I think we'll see over the -- as we continue to maybe get in a more certain environment.
I think we're in a position where in a matter of quarters, we're seeing that relationship grow back to where we feel a little bit better about it. I don't know that Q1 portends to trend for forever. I mean if you just seasonally look at our sort of cost structure, we know that if we get any kind of lift there, we know how to leverage that pretty quickly. So Yeah, I think it's a matter of time. I don't think this is a year sort of on exercise.
In the environment that we're in right now, I'm not willing to kind of predict that with certainty. And I'm certain you're not in a position to be able to predict with certainty either what the market is going to look like over the next three, six, nine months.
So if we return back a little bit more normally, maybe this speeds up.

Matthew Batteh

And on cost per shipment basis, I mean, obviously, like we talked about, it's tough to pull the cost out that quickly when the seasonal step-up doesn't come. But if we go back to sort of the '22 time period, our cost per shipment is only up a little bit from that period.
So -- we certainly have opportunity there, but it's -- when the growth -- shipments and tonnage were still up in Q1. So we have to handle that freight and do a great job for our customers, but our cost structure is still really good and our opportunity remains on the pricing side.

Scott Group

Okay. All right. I think I understand. Thank you guys.

Operator

Jason Seidl, TD Cowen.
(inaudible)

Jason Seidel

Morning, Fritz and team going to follow up on Tom's pricing questions. What was the last time you saw flat pricing. And then as a follow-up, can you walk us through the percent of your business that's going to reprice on the contractual side in 2Q?

Matthew Batteh

Hey Jason, pricing was flat. I mean, on the Q1 versus Q1 basis, revenue per shipment ex fuel is up 2.3%.

Jason Seidel

No. I'm aware I'm looking for the last time in your business that you saw flat LTL prices. I don't know if we have to go back and -- look at the retail way back, I would imagine.

Matthew Batteh

Yes. I mean -- so Fritz's point earlier, the underlying nature of this business is inflation expensive to run an LTL network. And then on the second part of that in terms of the contractual renewals, I mean, our contracts renew pretty ratably throughout the year. There's no one bid season. at times, maybe you see a customer go out to bid more when the environment is a little bit looser, but our contracts renew pretty ratably throughout the year.

Jason Seidel

Okay. That makes sense. And then I wanted to clarify, you talked about shipments were down in March. And then I think you said that April is sub seasonal as well. Is that implying that you're seeing shipments down in April?

Matthew Batteh

That's right. Month-to-date shipments year-over-year are tracking down about 2%. Now that does have good Friday and so if you adjust it maybe comes back a little bit. But yes, that's right.

Jason Seidel

Right. It's still down with a good part of (inaudible)

Matthew Batteh

Yeah, it's down overall, if you don't adjust for it. And if you adjust for -- good Friday, you get it back to flattish, but similar trends to what we were seeing.

Jason Seidel

Okay. That makes sense. And maybe if you can -- just you or me on the CapEx side. I know you -- I wonder if you could bucket where you made the big cuts in --

Matthew Batteh

Sure. I mean revenue equipment and equipment overall is mostly in. I mean we brought revenue equipment in earlier in the year to prepare for peak. And that really on the depreciation side, hits more of the legacy markets. That is an investment to support the legacy markets and the new, but it's mostly in the legacy side.
So most of the equipment is already delivered and in service level a little bit that still comes through. The changes were more on the real estate side and we closely look at projects and evaluate them, make sure that we understand the market dynamics and the return. And it's not that we're not going to (inaudible)

Jason Seidel

All right, I appreciate it. Thank you guys.

Operator

Daniel Imbro, Stephens.

Daniel Imbro

Hey, good morning. Thanks for taking our questions. Maybe -- for follow-up on the sub-seasonal volume commentary. I think you said March shipments were down in legacy shipments month-over-month. That is weaker than some of the peers have talked about.
So even in a weak macro, it feels like maybe you guys underperformed a little bit from February to March. I guess you talk about why you think that shipment growth underperformed Were there service issues in March that you would point to? Just curious and if there were service issues for it, is how do you fix that wall controlling costs?

Frederick Holzgrefe

Yeah. I don't -- not aware of any service issues. I think we've done a pretty good job through this time. I think one of the things that's really important in this business, there are a lot of variables that kind of puts and takes around monthly, daily, weekly volume. So I don't know that I have a specific call out to explain why we might be slightly below what somebody else is doing.
I look more at kind of what the broader trend was is that legacy markets, yeah, they were down. It could be as simple as we have a little bit of weather again in March. But fact the matter is we got to get the -- continue to serve customers, and we've got to make sure we have the cost structure in line with it. So as much as there may be an underlying trend in there to explain that, I don't have a call out for you. I just know what we're focused on.

Daniel Imbro

Okay. And then maybe on the cost side, I guess, Matt, digging into it, I'm trying to understand the magnitude of salary wages and benefits deleverage you called out like head count was added in the back half or added mostly for new facilities, but that was there in the back half of last year. In the back half of last year, I guess, SWB only delivered like 200 basis points. That doubled in the first quarter. So could you unpack maybe the drivers of that?

Frederick Holzgrefe

Just remember, what we also just told you is that shipments in our legacy facilities went down or down year-over-year, right? So that -- the ramping markets, yes, we added the heads. They got a little bit better in the Q1, but when you don't have the same growth in the legacy markets, that's you're inefficient just by -- in a short-term period of time where you can't delever the cost structure to match shipments down in those markets, right? So that's really more of the story there (inaudible)

Matthew Batteh

Yeah, the same as the other piece, right, geography matters. And those markets you don't have a dense of a customer base, you're not necessarily getting 10 shipments to pick up in some of the locations. It's a brand-building exercise. It's important to keep in mind, I mean, the 2024 openings they didn't start until April last year. So they haven't even been opening a year through the first quarter.
So that's where the growth comes from. It's -- they're going to continue to grow market share and continue to be more efficient and improve. But when you don't have that same pickup and a little bit of that divergence between the ramping markets and the legacy, that's where that comes from. And first, I understand your cost comment there.
So the fix here is just we wait for volumes to improve, you're not looking at adjusting the cost structure down, I guess, to matter --

Frederick Holzgrefe

No, let's be 100% clear. We never said we're not looking at adjusted cost structure. We absolutely look to make sure the cost structure matches what -- kind of what's available in the market. And you've got to reduce the number of hours, you got to make sure your load averages are good. you got to make sure your dock operations are scaled appropriately to match. So yeah, please do not infer that I said that there was any situation that we would not be considering costs. Great, thanks for the call.

Operator

Ravi Shanker, Morgan Stanley.

Ravi Shanker

Great, thanks morning everyone. If I can ask a previously asked question another way, -- how confident are you that the industry volume weakness you're seeing is purely cyclical or macro related versus maybe share shift away from larger carriers to smaller private ones or maybe volumes leaving LTL going to the TL market.

Frederick Holzgrefe

Yeah. I like you or maybe you have access to this. I don't necessarily see the private company data anywhere. So I can't really opine on what their business looks like. I'm sure they're getting some of this as it moves back around across the LTL space.
I think if you are looking to different modes either be too I guess, conceivably to parcel or to truckload. I mean that's going to be on the fringes that could be going on. And I think on the truckload side as people look at different consolidation opportunities, certainly, that goes on.
But I think as the market tightens up, I think you'll see freight return to the traditional modes -- but I don't have a crystal ball or ability to say with 100% certainty, I think those are the factors you see that are probably not too dissimilar to what we see.

Matthew Batteh

Ravi, that highlights our -- the importance of having a national network. I mean history says that when the market tightens and eventually it will bounce back that shippers flow back to quality national providers. There's certainly instances where shippers are taking a chance and maybe trying a regional or trying someone different in this environment, but having a national footprint matters and its ability to provide a solution to a customer throughout every geography. And that's an opportunity that we have now and that we'll continue to have when the market gets better.

Ravi Shanker

Understood. That's helpful. And maybe a follow-up enter the weight spectrum. I think you've said in the past that a lot of the new facilities are opened in markets that are lighter weight, freight, maybe more consumer exposed -- we have seen some competitive dynamics there as well. I think UPS just launched a new product like Amazon has entered the inbound LTL business at least.
Can you just talk about what you're seeing there? And maybe like if it's the high end, there is potential of some freight leading from LTL to TL, at the low end, is there some risk of freight bleeding from LTL to parcel?

Frederick Holzgrefe

I suppose those factors could happen. Just speaking from our own experience, what we're seeing is actually the new markets that we're opening ones we've opened in the last three years, we actually see higher weight per shipment, maybe more, say, industrial sort of freight. So that's -- we're pleased with that, and customers seem to appreciate it as well.

Operator

Bruce Chan, Stifel.

Bruce Chan

Hey, good morning. This is Matt Milask on for Bruce. Just a follow-up here on CapEx. I know -- the change was primarily related to the real estate side. We were curious what you might be able to perhaps scale it back even further should trends, I guess, deteriorate from here? Thanks.

Matthew Batteh

Well, the equipment portion, like I mentioned, is already mostly delivered and mostly in place. And we look at the real estate projects very critically and what's the market dynamics and how does that fit into our investment platform.
So I mean, there's -- the real estate market can change. We don't want to miss on an opportunity to move into a facility or get a property that really fits our network and fits our long-term strategy. So we're going to be opportunistic around that.
But we closely evaluate the projects. And to the extent that the environment deteriorates, we're going to have a pretty critical eye on this.

Bruce Chan

Great. And then curious to see your view from the overall state of the industry capacity across LTL and perhaps how much excess capacity you guys currently have in your network?

Frederick Holzgrefe

Yeah. I mean I think that if you look at the -- across kind of what you see around trends across the group, I mean, I think there's capacity. We feel for us, because we're in a for a good part of our network, it's in sort of a start-up phase or near start-up phase. We have a lot of capacity. We're not interested in filling it this week or next.
Those are long-term investments. So for us, we have some legacy facilities that are -- have less capacity, largely because the company has grown quite a bit in the last number of years. So I think for us, on average, we probably got 25% to 30% capacity and depends on which markets could be higher or lower than that.
But I think it's important -- we think it's important to have capacity to make sure it's available for customers to utilize the as their businesses grow, we are not -- let's as a stress, we are not in the business of trying to fill the capacity. So we will over time.
But for us, it's more about being disciplined, making sure we get a return on a lot of capacity. I think across the network or across the industry, if you watch how others are kind of managing their business. I think they understand it's an inflationary business.
So they're continuing to try to provide a good product -- competitive product and focus on being disciplined around managing that business in an inflationary environment with kind of softer top line. So I think you see that going on. I think there's a fair amount of capacity across the industry right now.

Bruce Chan

Thanks for your time.

Operator

Brian Ossenbeck, JPMorgan.

Brian Ossenbeck

Hey, good morning guys. Thanks for taking the question. Fritz, there's no shortage of uncertainty out there in the end markets and with some of your customers. But any call-outs that you would provide in terms of we've seen some negative lines on the machinery agriculture, maybe some auto stuff, but anything that you're seeing in your network from those perspectives and also anything that's maybe a little bit more positive and durable than you would have thought?

Frederick Holzgrefe

I would say, Brian, across the board, I think that the message around maybe the caution or the let's take time here. Let's consider kind of what the macro is. I think it's been -- one of the interesting about this is it's pretty unique or consistent across all industries. I think you would Naturally, as you watch what's going on with sort of import volumes and such. Certainly, anything that is sort of coastal for us is probably a little bit softer than it has been.
But I say that and then you look across other sort of more heartland area. You also see in the legacy markets, you don't see a real strength there. And I think maybe that's people holding back on sort of capital investments or and that's kind of having a trickle-down effect or impacting us in the LTL market more broadly. But I don't know that there's a specific industry call out that is either positive or negative in the customer sets that we serve.

Brian Ossenbeck

And just a follow-up on the coastal commentary. Obviously, no shortage of headlines about volumes falling off cliffs in the back half of this year. But is that something that you're you got any visibility into at this point?

Frederick Holzgrefe

Not really, Bryan. I think we're just watching the trends there. We're watching kind of some of our best-performing facilities and there are those legacy markets, and those are California and through Florida, those have been some pretty good operating areas for us as well as Texas, Louisiana, all those places, which have some impacts there.
And so we're -- we don't have sort of that growth in those markets. I think you have to point to at least some of that.

Brian Ossenbeck

Right. Well, then just to touch on the startup stuff a little bit. Matt, can you give us maybe a little bit of context in terms of how these will ramp up through the rest of the year? Obviously, breakeven right now, you called out depreciation is a big headwind. I'm assuming labor productivity is a bit challenging right now, but maybe things stay where they are in April, do you have visibility to when these might turn profitable or maybe quantify sort of the headwind you expect a little bit more temporary here given what seems to be a little bit muted.

Matthew Batteh

Sure. With -- if you think about the difference in a new market, and we've talked about [Garland] before, and we wish they were all like that. You go into a market, you've already got several terminals in the market, good density. But a lot of these new facilities, they're brand-building exercises. We're going in and talking to customers about tie in those local markets.
So -- when we look at the 2024 openings, they've all been open less than a year. And even those ramping once '22 onward, we don't open facilities with the expectation that they're going to be at market share company average operating ratio in the first year or two years, sometimes even longer than that. So each market is a little bit different, but I think very important is every conversation we have with customers is an opportunity for us to sell a nationwide network.
And when you do that, you can handle more business for them. You can provide solutions for them. There's opportunities for us where even in a legacy market, we have not been able to handle our customers' business because they ship to one location we handle and another that maybe we would have handed off in the past.
Now that we have a national network, we get opportunity to both the new market and the legacy market because the customer may have wanted to route that entire location. So both in the existing markets in the newer markets, you have opportunity to build density. Over time, you're going to be able to build enough schedule to run direct rather than having to run a break.
So all of that's just part of the natural opening. And years subsequent to that of really improving operations. And that takes time. It's something that we're very focused on, but we don't expect that to happen in the first nine months, and we work hard at it and our teams work hard at it, but it takes time.

Brian Ossenbeck

Okay, understood thanks guys.

Operator

Brandon Oglenski, Barclays.

Brandon Oglenski

Hey, good morning and thanks for taking the question. I know it's been a long call. But first, I guess, strategically, I mean, we're listening to you here. This has been a multiyear nationwide network investment for you guys and there's going to be a multiyear process, too, to build it out.
And when you talk about that excess capacity, I mean, there's always the balance between scope and scale in the network. So if you're going to continue to serve those customers, I thought you brought up a great example like where in a better times, you'll be picking up three pallets, but now you're picking up one and you'll try to manage pickup and delivery labor hours against that.
But at some point, network scope will dictate that you're going to serve that customer. So do you look at that a little bit differently if we're heading into a downturn commercially, do you manage a little bit more towards variable cost thinking if the capacity is going to be there, why not try to take some incremental revenue? Or is that the wrong way to think here?

Frederick Holzgrefe

Listen, if there's an opportunity for us to drive some incremental revenue the right way, meaning that, hey, we're in a position that if we schedule our operation or our pickup in delivery that we can get that second or third pallet from a customer because we've got a national reach now or making sure that they understand that we have a national reach.
I mean you think about if you had an if you got a manufacturer somewhere. And if our sales rep can go into that manufacturer and say, listen, hey, you know what, I know we're picking up on (inaudible) and it's going to Dallas right now because that's what we've been doing for a long time. But by the way, I've got 21 new facilities we've opened in the last year, and you know what a great job we do for it and going to Dallas. How about it gets you at the next two pallets and we'll go to the other 21 facilities.
And that's an opportunity for our folks to be able to that's a sales opportunity for them, right? And that's the right way to grow the business. And you might say, listen, you know what, we get there's an efficiency that comes along with that pickup I just described.
Give us all three pallets and we can provide that service through. And that's kind of in this sort of environment, that's what you have to be willing to do is to go into the customer and make sure they understand what it is, what value we can provide to them.
And I think our team -- we're doing that, but it takes time, too, and that customer has got to say, Well, I'm not familiar with you in these new markets. maybe it's one pallet at a time. All right, you get one, now you give me two. I'm going to need three. So that's kind of -- it's a part of building scale and density into a network.
And I think that's a bit of our opportunity. That remains, but in an environment right now where customers are not -- they're being cautious. That's a tough sell. But that doesn't mean we don't give -- we give up on.

Brandon Oglenski

I appreciate that. And then just thinking from a linehaul perspective, how do you optimize when you were thinking shipments are going to be up and now we're just not getting that growth?

Frederick Holzgrefe

Yeah. So the biggest thing that we're working on around line haul is figuring out how do we -- our load average is we're actually pretty pleased with. But as you build density, you want to be able to build more what we call directs. So rather than having freight that moves through two or three brake operations or hubs to get, say, coast to coast or even across more regionally.
If you can figure out ways to go drive a little bit of volume get those customers, consolidate that freight and build a direct route from, say, Atlanta, all the way to California without having a break the freight through Dallas or Phoenix.
That's actually a way for you to build scale. You take out a handle out of that, meaning you don't have to touch that freight quite as often. That's the way to build efficiency. So that's something that we're working on. And as we've scaled the network, there are more and more opportunities for us to do that, which we'll continue to do. And those are -- that's a core execution sort of program for us.

Brandon Oglenski

Thank you for it.

Operator

Richard Hanan, Deutsche Bank.

Hey, thanks. Just wanted to follow up on a couple of points. So on the share shift question, from a public LTL standpoint, at least, you guys still have very attractive pricing, I would say, relative to competition. So I guess I'm just surprised, I would think that as customers get maybe price more price sensitive in an environment like this, you would have more opportunity to take share.
So maybe you can just elaborate on why the not happening or transpiring, especially now that you have a national network to market. And number two, I think skeptics say, Saia maybe just added too much capacity and miss is now really coming to bite.
Just wonder how you would push back against that? And is it just cycle turn to get that mix headwind to abate? Or will it just happen naturally as you build density that you've talked about at this low point in the cycle. Thanks.

Frederick Holzgrefe

Yeah. Those are good questions. I think I look at -- although we're not real pleased with -- we were expecting more of an uptick into March. I think in total, if you look at our performance for the first quarter, we reported growth. So -- and I think others haven't reported that.
So I think we are taking some share there, but it's on the margin. At the end of the day, to be quite honest with you, we're really focus less maybe on market share and more on driving value. So we think value comes from being able to provide that national footprint and provide consistent service across that. Now we'll get our fair share as a result of that. We'll also get a fair return out of that.
As we look at running this business over the long term, we've launched said this is all about an organic long-term investment to build a national network. And -- that's what we've done. We've got an asset now that is pretty significant that when the market does turn, and I think it will. I can't tell you when, but we'll be in a position to leverage a 213, 214 facility network that we couldn't have. Had we sat on the sidelines and set our hands, that would -- there wouldn't be that value that we could provide to the customers.
So I think it's -- those are important investments to make. I think the opportunity for us to scale out of this on a recovery in maybe a macro or strengthening macro. I mean I think there's a lot of value that we can provide to customers, and I think we can provide the shareholders. So I think about these things on a long-term basis and less on happened in March of 2025. I think about what the long-term value is.

All right, thank you.

Operator

Bascome Majors, Susquehanna.

Bascome Majors

Thanks for taking my questions. You can't control what the market gives you. And I guess you only have a little control of mix and some other factors that are impacting the business here. But I think you can manage expectations and -- what's the right way to think about maybe the rest of the year starting from kind of the 89-ish OR that we're tracking at today?
I mean, typically, an LTL in a normal seasonal period would have some margin degradation in the third quarter and the fourth quarter, and you frame what that looks like renewed before. But how do we level set expectations to a place where maybe expect the worse and go for better. I mean can you help us with that framing, even if it's not your base case expectation for how the year goes. Thank you.

Frederick Holzgrefe

Listen, I'm not in a position where I feel comfortable of giving sort of a long-term view or free and fourth quarter view on this. What I'll tell you is that I'm going to. We're going to focus on maintaining very high levels of service, maintaining what we have right now on the sort of runway that we're on right now and making sure that we have the appropriate organization cost structure to match this and continue to drive what productivity we can in the business and be in a position most significantly that when the recovery or strengthening macro happens that we can take advantage of.
That's where the value is created. Value isn't going to be created about what happens next month or the month after that or frankly, third quarter in all likelihood, it's going to be all about what we can do to scale out of this. And I think that's -- we can't lose sight of that. So I think about that -- and I know that -- I don't know what the catalyst will be for the macro one way or the other. I just -- we just lived through the first quarter into April, and we know what that is. So we're going to manage around that sort of level. And then if things get better from here. Great. We'll be in a position to take advantage of it.

Bascome Majors

I appreciate that in the long-term focus. Just a housekeeping, Matt, you had talked about last quarter about interest expense. Any way to frame maybe some of the fixed costs you have visibility into whether -- where you're shaking out on interest for the year and maybe depreciation as well so we can level set that piece. Thanks.

Matthew Batteh

Yes. Depreciation, obviously, pretty substantially in Q1. I'd expect that sort of year-over-year run rate to continue. We got the equipment in service earlier than what we typically would in the year past the $1 billion worth of investments is going to continue to flow through in the P&L. So continue to run that out.
And then on the interest line, we had talked about that we'd be into our credit facilities and we are. And I'd expect that to continue through the year and maybe it peaks in the Q2, Q3-ish time frame and then it starts to come back down. A lot of that really just depends on timing of real estate transactions and things like that. But those fixed items will stay relatively consistent in terms of the impact. Thank you both.

Operator

Ken Hoexter, Bank of America.

Ken Hoexter

Hey, great, good morning. I know you've run over pricing a lot, but stock's down, I guess, almost 30% right now, very unlike 91 OR. But I want to talk maybe a bit more on pricing. You mentioned that customers have choices, something we haven't heard from you before versus kind of normal disciplined pricing when you talk about pricing. I noted that they're lowering GRIs to keep some customers ArcBest is taking some transactional business.
Help us understand if you've got 30% excess capacity in the industry, how are we not seeing the beginning of chasing on price, certainly at the lower end, it seems like that you've been asked about customers at the bottom and top end moving to different modes. So how are we not seeing the bid being kind of an example of really pricing competition kicking in.

Matthew Batteh

Yeah. And just to be very clear, when we say that customers have options, it doesn't necessarily mean that someone who's coming in and using rate to grow the business or anything like that. means that there's shippers in an environment like this are willing to try things that they may not have tried before. Maybe they're moving it and splitting it into a regional move.
And the cost structure and density of a regional carrier spits out a different price than what a national carrier can provide. So it's not that someone is coming in necessarily and driving it with rates. It's just there's different cost structures out there, different densities, different plays like that.
And in an environment where people have capacity and shippers are challenged and they're trying to save money. They're just more willing to take that chance on something different. So that's doesn't change the fundamentals of this business that is very inflationary.
Capacity has come out of this industry continuously over the past number of years, and that's not changing from that regard. And the national network to us is really an opportunity as we continue to build share with customers. And when the market turns, we're going to benefit even more from that. So there's just -- you see it and you hear it from shippers in their supply chains. They're in an environment where they're pressed, they're willing to try something different. So that's our comment around that.

Ken Hoexter

Okay. And then can you talk a bit about service levels. I don't think we've had, I don't know, claims ratio on-time performance. Have you given those numbers? And then I think just in response to the last answer, you cut CapEx, but you took out more debt.
Which happened actually after your massive CapEx program was done. So maybe what drove that? Is there something going on in working cap or anything else we need to know about (inaudible)

Matthew Batteh

From a claims ratio standpoint, claims ratio for the quarter, 0.50%, which is an improvement, and we've still got room to work on that, but 0.5% from a claims ratio standpoint. On standpoint. I mean, keep in mind, that's timing. We had a lot of deliveries in in-service and equipment in Q1. So a big chunk of CapEx in Q1 that drove the need for the revolver.

Operator

Stephanie Moore, Jefferies.

Stephanie Moore

Hi, good morning. Maybe just to continue on the last question and conversation. So a high-level question here. look, whether it's due to whatever reason it increased technology or better inventory management or ability to use a broker in multiple modes of transportation.
Is there a potential overarching industry dynamic that's simply less volumes need to move via an LTL network. -- to the point where when this environment does eventually turn, is there a potential for less volumes to return to the LTL industry versus maybe prior recoveries? Thanks.

Frederick Holzgrefe

Stephanie, thanks for the question. I suppose there's some set of facts that you could see some of that. But I think that what you see though, potentially, I mean you consider that potentially is reshoring, near shoring in the LTL or in the sort of broader industrial space. I think that plays well for I think the characteristics of freight may change over time.
But the fundamentals of it still where we fit in the supply chain are pretty important, right? So the fact -- the characteristics of freight that goes into a home improvement store, a coffee shop or residential delivery to a manufacturer. Those characteristics over time may change, but -- the fundamentals might say that each one of those destinations, they don't require a truckload of anything, right?
They require pallets of whatever it might be, maybe lower weight, it may have a different profile. But that's the unique part about LTL, right? We're servicing all those customers with the same assets. And I think that, that's an important characteristic of it.
And I think the other thing about it is that those assets, underlying assets and the people will do it, that's inflationary. So I think that's not something that's easily replaced by other things. What are business and what the freight we handle, the characteristics of it certainly may change over time. But I do think the industry broadly in in particular, I think we have a unique place in the supply chain that I think that it has a sort of a permanent place.
It just may look different over time, much like it looked different 20 years ago.

Stephanie Moore

Great. Appreciate the time.

Matthew Batteh

Thank you.

Operator

(Operator instructions)
Christopher Kuhn, Benchmark.

Christopher Kuhn

Hey, Fritz. Hey, Matt. thanks for taking my question. How reshow are you feeling about the long-term profitability of some of these new facilities? Is there something structural we should think about in terms of the long-term law of some of the new facilities. I know each one is different, but some of them smaller and just aren't going to get to the OR level that some of the legacy ones are? Or maybe just help me out with the long-term OI that we should be thinking about.

Frederick Holzgrefe

Yeah. Chris, that's a great question because I think it speaks to the long-term potential of Saia. And when we have the last couple of years, we've spent a lot of time talking about how important the -- and what the opportunity is for the organic sort of growth story of our company.
And I haven't seen anything that would tell me that the organic growth story has changed. It maybe has slowed because of what we just saw in the quarter, but I still remain very, very adequately believe the potential is still there.
It's just -- it's delayed, unfortunately, but what we see. The facilities that we've opened, I haven't seen anything that would suggest that they're not value or contributors to our sort of drive to get the business into the 70s OR. I still see that. I think it's the potential absolutes there. Yeah, some of those facilities, and we know this.
We've long done this. Some of those facilities are not going to get to the company average are, that's okay because what it's going to do is we can facilitate some of our leading facilities getting well below the company average OR. And that's important. And in a network business, the value of the network is every single point in that network. And I think that I haven't seen anything in this quarter or any recent time that would suggest that the -- our ability to get there in time has been impacted. It's just -- it's been drawn out a bit.

Christopher Kuhn

Okay. Helpful. And then, Matt, just shorter term. I know salaries and where will be a headwind year-on-year. I mean how should we think about head count as we go forward here? Just given the hiring you've already done and the facilities you've already opened and the fact that they're not going to be that many open this year.

Matthew Batteh

Yes. I mean, we'd expect it to trend down from here. We're Again, keep in mind, the first quarter we're still up in volume. But with the trends we're seeing right now, I wouldn't expect that moving forward unless something changes. So we evaluate that closely, and we'll be looking at that as we continue to move forward, but I would expect it to trend down from here.

Christopher Kuhn

So just to clarify, some of these new facilities then don't -- I mean, if the volume went up, you would still need to add employees who haven't fully -- I mean they're not fully (inaudible)

Frederick Holzgrefe

Absolutely not. But that if I have to -- we have to add people in -- but Montana, that means we probably are humming in Dallas, and you want us to do that.

Christopher Kuhn

Got it. Thank you guys appreciate it.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Fritz Holzgrefe for any closing remarks.

Frederick Holzgrefe

Thank you, operator, and thanks to all of the called in. Q1 marked a challenging quarter for Saia. And -- but we remain very, very committed to the long-term value proposition that I can provide to our customers and to our shareholders. And it's not a -- I would consider Q1 perhaps as a speed bump or a delay.
But ultimately, long term, the value of the business is remains to be significant. And I think we look forward to talking about the success in quarters and years to come. Thank you.

Operator

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.