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Forward Air Corp (NASDAQ:FWRD)
Q3 2020 Earnings Call
Oct 30, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you for joining Forward Air Corporation's third quarter 2020 earnings release conference call. Before we begin, I'd like to point out that both the press release and webcast presentation for this call are accessible on the investor relations selection of Forward Air's website. W w w dot forward, er corp dot com. But this morning, we have CEO Tom Schmidt and CFO Mike Morris. By now, you should have received the press release announcing our third quarter twenty twenty results, which was furnished to the SEC and Form 8-K and on the wire yesterday after the market closed.

Please be aware that during this conference call we will be making forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, about the effects of our business efforts and response to covid-19. Including the impacts on each of our businesses, the future plan for our pool business, steps to bolster our liquidity, steps to expand our operations organically and inorganically. The company's outlook for the fourth quarter in fiscal year of Twenty twenty, including expectations for revenues, tonnage and free cash flows. The expected impact of growth and strategic initiatives and those other forward looking statements identified in the presentation.

These statements are based on current information and our current expectation. As such, they are subject to risk and other factors that may cause actual operations and results to differ materially from the results discussed in the forward looking statements. For additional information concerning these risks and factors, please refer to our filings with the Securities and Exchange Commission and the press release and webcast presentation relating to this earnings call. The company undertakes no obligation to update any forward looking statements, whether as a result of new information, future events or otherwise.

And now I'll turn the conference over to Tom Schmidt, the CEO of Forward Air.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Thank you, Tony, and happy Halloween weekend to all of you on the call. Sorry to disappoint. Up front, this call is actually not about scary. It's about precision, execution of commitments we make and commitments we kept. Specifically, I'm going to address six commitments we made on this very call three months ago on the Q2 earnings call and how we kept those commitments and how we're going to take them forward. Number one was, if you remember, we talked about bringing density back, bringing our people back, bringing volumes back to what we call the zero plus same as last year or more. And we did in our flagship LTL business.

We were there in July. In fact, July was one point seven percent tonnage wise ahead of July last year, August, 4.5 percent in September of four point six percent for Q3. Overall, three point six percent up over tonnage from previous year. Final moused, very, very strong growth as well. Same for truckload, especially in the asset light brokerage, business and intermodal. We see a recovery coming also. So zero plus the same or better volumes than last year happening.

That's on the way to our first stop. And we talk about double digit annual revenue growth, our second commitment. Plus, we will not wait to bring all those high speed, high sensitive handling businesses that temporarily went to sleep in March back. We will not wait for that to happen. Whether cruise lines, trade shows, concerts, conferences, airlines, whether we bring them back back next year or the year after, we know we will and we will bring them back strongly and great partnership, but we're not going to wait for that.

In fact, rather than waiting, we are focusing on another leg of the stool and make this business more multipronged, stronger, more essential freight, more medical supplies. We dialed up those as I see coach, as we committed on the call three months ago. And in Q3, our essential freight was up eight percent year over year. Our third commitment was to do a one two punch yes volumes back first, but complemented very closely by what we called a march for margins, meaning taking pricing action so that we can make the investments into our drivers and into the service commitments that we have and that we keep out of all of our customers.

So Q2 zero plus volumes was top priority density restored now in Q3 March margins specifically in LTL in September and October alone, we did implement a California surcharge of five percent, a high class up charge, a class fuel surcharge, mortification, a low class up charge, removal of any volume discounts and a three dollar surcharge for lightweight shipments, less than three hundred pounds, additional class actions to come and in truckload select rate increases also in drayage. We're going to have a fourth quarter coming. So overall, I'm committed to one two punch kept and the impact started showing in our Q3 to take the example of expedited freight, which is our combined LTL title and final mile business in Q2.

Expedited Freight had a five percent margin in July seven point one August, seven point seven in September, 10 percent margin for expired freight. That sounds a bit like the second gasoline double double double digit margins, which is also our medium term commitment to same way as average double digit annual revenue growth is a medium term commitment. We expect that with these measures being implemented in Q3, you will have a full impact of those measures in Q4. Committing number four was we are keeping organic expansion going. If you remember last call, we talked about Savannah, where we opened a brand new LTL terminal, piggy backing on our presence in Final Mile.

We talked about on the call about our investment into the Columbus hub, our biggest hub. And in Q3, we kept going. We opened the LTL facilities in Columbia, Missouri, in Roanoke, Virginia, also benefiting from our final mile presence in those markets. And that's big ones coming within the next few weeks. Allentown, Pennsylvania, conversion from an agent to our own facility. And then the big one in Ontario, California, a greenfield location about to open up, all happening within the next few weeks. Far from done. More coming next year. Commitment number five, we said that's. IPOs in M&A this year, we if you remember at the very beginning of the year, we had a Linkstar close in our final mile business, a significant step up for that business unit.

And just this quarter, Q3, we had a close and found Amala Swelbar, CEO, W. in Johnson City, wonderful unit joining us, great teammates and value logistics in Memphis, Tennessee, a very, very important in the moral outrage market that we wanted to make sure we have a stronger presence in. And then commitment number six, we also made very short in everything we do, front office, back office, but certainly in operations, precision execution is happening. We have record service levels right now. And I'm proud to say we are actually delivering those record service levels with drivers who know us well.

Our independent contractors are outside, Miles, even in this tight market, if you exclude Los Angeles, a heavily congested area outside, Miles, are still in the single digit area. It's our drivers that we know very well delivering those types of record service levels. So we kept our commitments. We made last quarter NBC ongoing ramp up of benefits going into the fourth quarter from having kept those commitments. And I want to thank you all of our teammates. I want to thank all of our independent contractors, all of our business partners for truly making each other better. It shows and we're far from done for the final commitment beyond the six I mentioned. We also have a strong commitment to robustness when it comes to liquidity and cash flow.

I'm going to ask my teammates, our CFO, Mike Morris, to address commitment. Number seven, strong liquidity.

Michael Morris -- Chief Financial Officer and Treasurer

Thanks, Tom. Before I give a few quick updates, let me provide some additional clarity on the earnings release we issued last night. First, the six cent charge we called out was recorded in other operations and did not impact expedited freight or intermodal segment results. Second, our fourth quarter twenty twenty guidance relates to continuing operations only. And finally, our EPS guidance range of 71 to 75 cents compares to 79 cents in the fourth quarter of twenty nineteen on a continuing operations basis. We will be sure to provide this measure of clarity in our earnings releases going forward, since we are only guiding to continuing operations. Let me provide a brief outlook for Poole.

As physical retail continues to recover, pool will return to profitability during the fourth quarter of Twenty twenty. We expect Poole's fourth quarter revenue will be between 45 and 50 million dollars, and Paul Poole's fourth quarter operating income will be between one and two million dollars. Before we go to Q&A. Let me close with an update on liquidity and capital allocation. This year is certainly tested, the cash flow capabilities of our asset light business model, although we greatly expanded our liquidity in response to covid-19, we were able to remain free cash flow positive throughout the year by actively managing our operations while continuing to make key investments so we could emerge a stronger competitor.

And if trouble does resurface, we believe we have ample liquidity to support our business and capital needs. So as we signaled on our last earnings call, we began to relax our excess cash position. During the third quarter. We said we would reduce debt and we repaid 20 million dollars on our credit line, bringing our gross leverage down to one turn of EBITDA. We said we would resume share repurchases and we bought back 30 million dollars of stock during the quarter.

We also said we would remain committed to our dividend and we're pleased to announce a sixteen point seven percent increase to our quarterly dividend from 18 cents to 21 cents per share. Our dividend is an important component of our capital allocation philosophy, and between dividends and share repurchases, we have returned over three hundred and fifty million dollars to shareholders over the past five years with that tiny.

Let's open the line for Q&A, please.

Questions and Answers:

Operator

Thank you. The floor is now open for questions and comments. If you wish to ask a question or have a comment today, please press one, then zero on your telephone keypad. You may withdraw your question at any time by repeating the one zero commands. Once again, if you have a question, you may press one and zero at this time. Our first question comes from the line of Todd Fowler with KeyBanc. Go ahead.

Todd Fowler -- KeyBanc -- Analyst

Great, thanks and good morning. And Tom, I'm going to try and refrain from making any Halloween Jekyll and Hyde comments about the second quarter to third quarter, but it's a nice improvement. Thanks. Hey, I guess just to start time, can you talk a little bit more about the pricing actions that you're taking right now? From what I heard in your prepared remarks, it sounds like those are surcharges that were put in place.

That wasn't clear if those were going to be all the way through the fourth quarter, if that was just something that was temporary into October. And then like, I don't know if you have an October tonnage number, but I'm curious if those are having any impact on a little bit of trade off between volume growth and yield.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Let me I thought I'm going to start on both and then Mike and correct me on the second one, on the first first one, there really are two things and they are complementary. There are very specific surcharges that address unique times. So, for instance, if there's a congestion out of the West Coast, as we all know, lots of traffic coming into Long Beach. We, like everybody else, are going above and beyond to make sure we keep the commitments to our customers. That means, in some cases, getting a truck and a driver almost no matter what it costs because of the commitment to our customers, come first. There's a cost to that.

We do not expect that not to be to happen on a sustained basis forever. So that's a temporary surcharge. There's a time limit to it. Some of these temporary surcharges have a time limit until the end of this year. That's an example of that. That's eight more weeks. Now, if for some reason, unexpectedly, this type of temporary spike goes on, we have the same commitment to our customers. We needed to make the same investment in securing transportation. And we will. And then that that may be an extension. A lot of the other measures is us becoming, frankly, as a company, more disciplined and better, getting compensated fairly and fully for the service that we provide when there was revenue leakage in the past, when we are making very certain to step up and revenue capture Scotch era, our new CEO has a ton of experience, pun intended in that space.

We have a pricing department that we actually fortifying. We brought in people with significant free experience, with significant LTL pricing experience. So you see that whole machine of surgical precision, execution and pricing being stepped up. So roughly speaking, two thirds of what I mentioned are us becoming better on a permanent pricing perspective. One third of what I mentioned is temporary to address peaks that we expect to last for weeks in a couple of cases, perhaps a couple of months, but not forever. On the second point, just very, very briefly, I think we've got to this that sweet spot. Very, very, very right. The October volumes. And you can actually get as specific as you want to get and can get. I like the October volumes the same way like the September volumes are just like the pricing will be better yet.

Michael Morris -- Chief Financial Officer and Treasurer

The so far quarter today, you know, 30 days into October, our daily tonnage in LTL is up around six percent. It is a fair question, though. I think some of the pricing actions will take might drive a bit of that tonnage out of the network as we go through the balance of the quarter. But it really gets to how tight the truckload market remains and how robust consumer demand is. And that's one of the more challenging things that we're trying to address in our outlook for the fourth quarter is the uncertainty that's created by the covid situation or perhaps better put the volatility around this potential future scenarios. But six percent so far, we'll see how the balance of the quarter goes.

Todd Fowler -- KeyBanc -- Analyst

Ok, great that all of that's really helpful, I appreciate the detail there and then I guess to the mix of phrase that you've got in the network, I mean, obviously the team has done a great job of, you know, back filling some of the dormant freight that's out there. You can you speak a little bit to the characteristics of this freight? I mean, is this stuff that you would have in your in your network, you know, consistently going forward or some of this kind of a temporary spill until some of your core customer, your core and markets come back?

Michael Morris -- Chief Financial Officer and Treasurer

So maybe I'll go first and you can chime in. So, Todd, this is the stuff that is really kind of driving the bus right now is organic growth in the new verticals we've been talking about for a long time, four quarters. We're making a lot of headway in, you know, call up the industrial side of the LTL market, growing and growing through other avenues beyond our legacy, continue to serve the legacy very well. That is still in a bit of a recovery mode coming out of the covid situation.

The growth that we're bringing in from a from a from an end market perspective is where we want to be for a while. Some of the stuff that came in early on when we were building tonnage was perhaps, you know, a little light or going a little too far or needed to be recalibrated. But once we stood up density, then we pivot to being more selective. And that's kind of what took place in the back half of the quarter. But regardless, what I'm saying is, regardless of whether a piece of freight stays or goes, it's in the markets where we want to be for a while.

Thomas Schmitt -- Chairman, President and Chief Executive Office

And and that capability of steering the way, Mike, you just talked about, we really stood up as a company over the last 12 to 18 months. And we're not done standing about even more precisely. We know by, as I said, coat kind of which industries heavy e-commerce was commerce one category of medical supplies that's heavier than another category. We know, which, as I said, coats tend to have which types of qualities.

And then from a sales call perspective, from customer call seeking perspective, we dialed up those types of industries. So there is it's not coincidental that heavy commercial medical supplies make up more of our total mix today than did a year ago. It's a consequence of us dialing up those SAIC coats.

Todd Fowler -- KeyBanc -- Analyst

Ok, yeah, that makes sense. And I guess when we look at the yields to it speaks to the fact that you're getting compensated the right way for the freight that you've got in the network. So I'll ask one more, then I'll turn it over. But as we think about kind of the mix with an expedited upgrade at this point between Final Mile, you know, truckload, do you have a view on where the oh. Are for that? That segment should be kind of on a normalized basis, not really thinking about guidance for twenty one, but just when we think about the mix and kind of the growth rates, where should the normalized margin for that segment shake out that, hey, that's the that's the second double.

Michael Morris -- Chief Financial Officer and Treasurer

That's right. I mean it's, it's a it's a straight forward two segments and we need, you know, both in a double to get the whole thing to a double. That's that's where we're driving. You have you have a lot of inorganic growth in Final Mile as we lap the Landstar acquisition. So one more quarter of that and then we will have that. But we are seeing good organic growth and final mile.So we that is a strong contributor to the overall margin.

Truckload is making a lot of progress toward getting to, you know, call it a five to six percent type margin. And then inside, you know, the old LTL. We need that humming along and mid teens. Right, in order to kind of make all that work together. That's what we said and I today. And that remains.

Todd Fowler -- KeyBanc -- Analyst

Got it. OK. Hey, guys, thanks for the time, have a really good weekend.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Thanks, Todd.

Todd Fowler -- KeyBanc -- Analyst

Thanks, Tom.

Operator

Thank you. Next, we go to the line of Jack Atkins with Stephens. Please go ahead.

Jack Atkins -- Stephens -- Analyst

Hey, Tom. Hey, Mike. Good morning. Thank you for taking my questions.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Morning, Jack.

Jack Atkins -- Stephens -- Analyst

So I wanted to go to this announcement, I guess it was in late September about the service that, you know, the LTL service that you guys are rolling out in in Missouri and Virginia. You know, it I guess it from what it from what it seems like and you guys correct me if I'm wrong, you're utilizing, you know, final mile facilities to sort of expand the reach of your LTL network. You know, is there sort of a target over the next call it 12 months of additional markets that you are looking to to expand into across the country? And, you know, maybe I guess more broadly, how many how many places or markets do you have? A final mile location, but not in existing, you know, that LTL facility.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Ok, so it's always hard to act like a series of three questions in one, but I can break it. No, I'll let me let me try and I probably will hit them all. So I'm on the first one of the like. The decision to open up new terminal again is it's not exactly an exact science, but it's close to a science.

So we do know the origins and destinations of freight flows. We do know what our customer base actually is asking us to do more. I mean, this is a working with the best in terms of both the best data but also the best customers, like which origins and destinations should be serving that we're not serving right now. That's how Savannah, for instance, popped up and go straight. Flo's, as you know, check out publicly available data. So between the data and our customers speaking and us listening, that's a fairly obvious kind of lineup of locations. And then there's a certain level of ease. If we have an agent already in those locations, it's a fairly simple exercise as we dial up to the volumes to then switch it over from an agent to our own location. Also, when you have a five mile presence, it also is somewhat easier.

We have 80 plus locations right now. We have ninety three LTL terminals. I actually now not ninety five at the latest two. There's still quite a few in the low teens locations where we have a final mile presence and optimality also we can actually piggyback a bit more that something a pure play LTL or Final Mile company cannot do as efficiently as we can possibly cause also we have no problem when we see the demand from our current customer base, plus trade flows for potential future customers, indicating that another location in Greenfield is a good one.

Then we put a flag down there. That's what's going to happen in Ontario, California. That's Greenfield, and it's a location that our current customer base and future customers want us to be. And that's where we're going to be. So I expect us in the combination of conversion from agent piggybacking on a few more locations as well as some more greenfields, what you see us do this year with a handful of LTL terminal openings. You should expect that to last on into next year, Mike.

Michael Morris -- Chief Financial Officer and Treasurer

Yeah, what I would add to that is there's actually a couple of situations where Final Mile launched out of LTL to markets is not to make it sound, Jack, like some overly complicated Rubik's Cube, but we do have a very kind of healthy dialog, has a leadership team, and with the operations and sales around, you know, which which of these approaches makes sense? Where is it? Let's sell some LTL zips out of a final mile terminal and they can, you know, handle the pun, is it? Hey, let's launch by a mile out of and LTL terminal because there is an award that we're bidding for there sometimes both are so big they actually cohabitate at the same time.

Our always split the rent. Is there an organic growth opportunity? Should we flip an agent? It sounds complicated, but there's really only six type of, you know, flavors here. And then we have a very active dialog throughout the course of the quarter in the year from a planning perspective as to which flavor can we use? What's the most logical next step? Sure. So it's it's a nice degree of freedom that we have. And one of the things that I think is important to consider in this is the people that run the operations in this respect. They're all LTL people by their origin, in their career.

So the final mile people that we've acquired work with LTL, people who are also final mile people from our from our kind of legacy workforce, if you will. So we've got a really good blend where a final mile person can think LTL and LTL person can think final mile in terms of this high level planning. I know it's very different freight on the ground, but when you look at Chris and Tim and Scott and kind of the whole team, they've really got experience in both. And that really helps decide which flavor is going to fit where in the in the country.

Jack Atkins -- Stephens -- Analyst

Ok, that's that's that's great. That's exciting to year. Maybe maybe a couple other quick, quick questions. You know, I guess when we think about it and Tommy referenced it in your prepared comments, but, you know, the the outside mail usage historically at this point in the freight cycle, we've seen that go. As owner operators have left the network to operate in the spot market, are you seeing that at all show up so far this cycle? And, you know, I guess how are you thinking about the percentage of outside Miles as we sort of move forward over the next couple of quarters here?

Thomas Schmitt -- Chairman, President and Chief Executive Office

Jack, let me take that one. So this has been an interesting evolution over the past couple of months. The truckload market began to tighten and the speed at which it began to tighten was was aggressive. And I think perhaps that's a characteristic of our cyclical swings in this industry going forward. It seems to turn and it seems to turn pretty fast.

We were ready. We didn't move as quickly as we should have, perhaps last time. And so we've been preparing for this as a team. If you exclude California and I'm going to come back to California, but if you exclude California, Broecker power was around seven and a half percent of miles in the third quarter. That's pretty good.

It compares to about three and a half and the prior quarter. But three and a half is almost a bit on natural given the normal imbalance in the network. So a five to 10 percent type of outside miles is operating pretty well. And that is the case, you know, seven and a half percent network wide except California. If you bring in the California fact that seven and a half goes up to 14 and a half, and with all the inbound freight coming into California, coming into the port of L.A., there's just an intense amount of congestion that we saw happening.

We respond to. But also that led to our first, you know, pricing action, which was a Calfo increase to our California California outbound surcharge so that we could get compensated and get the kind of power that we need to get to to give our customers the service we promised.

So this one's really unique. You know, one node in the network is driving half of the half of the outside. Miles, you look outside of California, you know, right now we're in the zone that that we'd like to be in.

Michael Morris -- Chief Financial Officer and Treasurer

And let me just add to the first part very briefly. You said we were we were prepared. I mean, I do want to say between Prince Rupert's operations team, colleges, recruiting team, Matt Casey, safety team, what we did consciously over the last two years to maximize the odds that four drivers solos and teams forward air remains the most desirable professional home has been nothing short of outstanding, whether it's driver boards, whether we listen to them, we prioritize the needs, predictable home times, short lines when they call dispatch having a driver app, which we just launched now where they can run their business off of an app that's literally twenty first century in a very advanced eight. So they can run their own business the same way anyone else in a progressive state would run their own business.

We've done a lot to make these very, very attractive for people to choose just to become their home. Our classes right now, our classrooms are full and retention rates are still phenomenal. So I do want to give a big shout out to our operations, recruiting safety teams to really, really work with our drivers who are the best in the industry, but also make this a very hard place for them to leave. I mean, there's lots of incentives out there for them to leave. I mean, we all read the same articles and we all see the same reality. Some of the largest companies on Earth are putting tremendous incentives out. But we do have an operating system here that makes us a very attractive place. And so that less than double digits outside California is a result of a lot of very focused effort and not coincidental.

Todd Fowler -- KeyBanc -- Analyst

Ok, now that that's that's helpful. Maybe just a quick follow up on that point. You know, Mike, from earlier, I mean, do you feel like that to the degree that you have some creep higher in the percentage of outside miles, you're going to be able to get the rate that you need, you know, at the same time from from your customers so that it's not going to be the type of margin erosion, you know, issue that we've seen in prior cycles. It's. Sounds like you're pretty confident that that's the case.

Michael Morris -- Chief Financial Officer and Treasurer

Well, yeah, I mean, but it's it's interrelated right here where you need more rain so you can recruit and retain the power, so you can provide the service that just as the race. I mean, that's that's the ecosystem here. So we have to be able to recruit and retain the driver so that we can give the the service level that we promised.

Thomas Schmitt -- Chairman, President and Chief Executive Office

And I think I mentioned that also in the last call. Now, it's been, I guess, seven or eight months since the middle of March. The impact to all of us. I've never talked more with customers than I have in the last eight months in my career. And these are very, very supportive, collaborative conversations. But they also straight talk conversations. We keep our service commitments to our customers and we expect to get compensated fully. And the second part is equally non-negotiable as the first partners.

Jack Atkins -- Stephens -- Analyst

Ok, now that all makes sense, thanks, thanks for the time, guys.

Operator

Thank you. Our next question comes from the line of Scott Group with Wolfe Research. Please go ahead.

Scott Group -- Wolfe Research -- Analyst

This is a time for Scott. Thanks for taking my questions.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Good morning.

Scott Group -- Wolfe Research -- Analyst

It's been a few quarters since you announced LTL in Seattle, combining to create the expedited freight segment. And clearly, there have been a lot of challenges out of your control over this period. But can you provide an update on sort of what operationally has been accomplished in that time and what's still to go?

Michael Morris -- Chief Financial Officer and Treasurer

Sure. And, you know, out of your control is is a good phrase, because we've been focused intensely on what we can control and what we can control is the strategy on the ground from an ops perspective to bring these things together. So think of truckload and LTL as one fleet and the real benefit of there is on the line haul and the efficiencies that we get a linehaul. But also there is a retention element in that we offer other opportunities for revenue to our drivers if a linehaul run isn't available. And that really made a big difference during the covid crisis, many of those owner operators perhaps would have gone out of business, frankly, and we were able to find truckload moves again. We don't run pumps in our network.

We're a fifty three floater LTL. So these are truckload line hauls and that really fits together well. So we've made a lot of progress in terms of thinking of this as one fleet and then growing outside opportunities, be they through truckload or through our growing brokerage operation and truckload. The other the other main integration point has been on the in the terminal and in the pickup and delivery.

With respect to Final Mile, again, from an asset perspective, this is a straight truck with a liftgate, and that is the type of asset that can deliver pallets, that can deliver dishwashers. So we do have I think it's up to nine comingled HUD markets where the pickup and delivery for Final Mile can support linehaul. I mean, support LTL. And the timing of the freight flows between these two modes marries up nicely in our LTL business.

We tend to get busy on a Friday. We linehaul over the weekend and Monday and Tuesday are busy pub days in Final Mile. Wednesday through Friday tend to be the busy pub days that lets us level load revenue for the owner operators that provide our final mile service. It just gives us a recruiting angle that we can give them more opportunities to maintain their revenue and have predictability around their cash flows. And we actually use that, you know, almost competitively in these markets to help really drive outstanding levels of customer service and Final Mile. And in LTL, we with some of the announcements like Savannah and the others that we talked about earlier, you know, you have the early stages of commingling on the dock.

And, you know, that's an example of a synergy that happens from a dock perspective. We almost have a very, very cheap call option on a market if LTL or final. Miles says, hey, I want to get in there. You know, we can work together at a piece rate basis internally and sell into those zips or bid on that market for the big box retailer freight. And, you know, the goal in those is that they get big enough that they got to get kicked out and get their own building. But it's a great way to get started. And I think that's another example of the synergy that that we've really been able to extract that expedited freight and then just.

Thomas Schmitt -- Chairman, President and Chief Executive Office

To put it this way, to recap and summarize what you just talked about, I calling this an expedited freight segment is not a reporting exercise. It's a operational synergy, articulation and activity. So over the road between two and LTL, Chris Rubell pointed out early on that the back calls that may be Telvin LTL was the move was like five x 10 next early on when we put that segment together.

And Mike, you just talked also to the local synergies, which clearly with the LTL and final mile terminal openings, routing from one building, using the same drivers in some cases on a light installation day to do pick up for LTL. So again, there's a lot of underlying activity that drove this one segment. So this is not a reporting exercise. This is actually an operational synergy reality.

Scott Group -- Wolfe Research -- Analyst

And then I guess turning to the inter-modal segment, trade volumes were down 12 percent in the quarter. What do you think driving that? Because I look at in volume and the Transpacific in particular, and very strong rail intermodal volume. Pretty good. Why do you think you're seeing a pretty significant decline there?

Thomas Schmitt -- Chairman, President and Chief Executive Office

Yeah, my strong expectation in the last few weeks would actually confirm that is that this is primarily a time delay issue and depends on whether you deal with followers of a superstar directly and depends on how much forward stalking by customer and by industry. You still had you deplete your inventory first and then you replenish in some cases. So literally when you so I would expect what you just described to show up. But what you typically have is, is that there's a four to six week delay just based on the ocean move itself and then it making its way from the coast, oftentimes the West Coast over to the Midwest and the East Coast.

So there's a travel kind of a component that takes days, in some cases weeks. And then on top of that, especially with the uncertainty that, Mike, you talked about, a lot of our customers had forward to stocking up inventories that they depleted first. So if you take the whatever you call it, four to six weeks of depleting inventory, then you add the the ocean vessel move time and the over the country time that can add up to a two month or even three month time delay between what you describe and what you see. And that's real. And what shows up in the model drayage on a rail yard on the East Coast or in Chicago. So but we are we have been seeing the consequences of that pickup in the most recent weeks.

So when I talked about zero plus like having the same volume as we had had a year ago, Intermodal just started having zero plus weeks and everybody described what we had in the quarter was not that yet, but it is now.

Scott Group -- Wolfe Research -- Analyst

That's helpful. Thanks for taking my questions.

Michael Morris -- Chief Financial Officer and Treasurer

Thank you.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Thank you.

Operator

Thank you. Our next question comes from the line of Tyler Brown with Raymond James. Please go ahead.

Tyler Brown -- Raymond James -- Analyst

Hey, good morning, guys.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Morning, Tyler.

Tyler Brown -- Raymond James -- Analyst

Hey, Tom. So I really appreciate the comments on diversifying the base. I think you mentioned that those essential SAIC codes were up eight percent. But I'm just broadly curious just what what is the mix of that essential freight in the book today?

Michael Morris -- Chief Financial Officer and Treasurer

So you got to come around, Mike, you got to come around to a definition of essential right to the bulk of it is call it consumer and medical type of SIAC codes. That that's the meat of it.

Tyler Brown -- Raymond James -- Analyst

Ok, but is it is it a quarter of the book or as you defined it, as as essential?

Michael Morris -- Chief Financial Officer and Treasurer

Yeah, it's around a quarter of the book. Yeah, look, as you know, you know, especially as a wholesaler, it's really hard for us to know what's inside that box unless it's obvious. What's inside the box? Right, right, right. And so we're we're doing our best with some of the good intel. We stood up from an IT perspective to get a little more clarity here. But that's that's our best estimate.

Tyler Brown -- Raymond James -- Analyst

Ok, and then if I come back to phreak characteristics a little bit. So one thing I noticed was that weight per shipment was up sequentially. It's still flattish year over year. But as you have more success in that traditional LTL market, should we really be thinking about weight and the rising into 21 22? And is that really a strong KPI of your success there?

Michael Morris -- Chief Financial Officer and Treasurer

Yeah, I would I would say yes, one of the things I mean, when you look at our door to door business and we could talk about the corridor or, you know, step back on the whole here, you know, door to door basis, we're pushing on 800 pounds, 750, 800 pounds type stuff.

And that's the type of weights that we really want to grow in to capture the density benefits and the network. But the the legacy business, which is, you know, was hit pretty hard by covid and had some absolute declines. Volume has had some declines in weight as they have grown in the e-commerce space more broadly, kind of part of the effect of covid.

So what you have is you have medium term progress on the objectives for door to door, but that is still a smaller percentage of the overall shipments in the network. And so the impacts on airport to airport have been suppressing the weight mass, but inside the door to door, which speaks to Class-Based shipments through another door to door applications. Yeah, we are pushing, you know, seven hundred fifty eight hundred pound type freight.

Tyler Brown -- Raymond James -- Analyst

Ok, ok, that's helpful. And then maybe quickly, I know you have some larger investments queued up with Columbus, but how do we think about twenty one capex at a broad stroke. Is it 30 40 million bucks or is it more than that.

Michael Morris -- Chief Financial Officer and Treasurer

We don't think it's actually going to be all that big of a blip and we're still finishing off our planning here now.

But one of the things that's been happening in our capex over the years I've worked here past four years is there's been a bit of a rotation. So we had some heavy capex when I joined, which was really churning through the town fleet and getting the average age of our trailers down to where we wanted them. And that abated. We've had some heavier and we filled it in with some heavier capex on it as we had to catch up on some technical issues there and build a platform for for our beyond our double double approach.

So as that starts to slow, we'll feather in the CMH. It's a big investment. It's going to take a couple of years. And so, you know, we'll be able to spread that over the course of twenty one and into twenty two. So it shouldn't have a material blip outside of the normal standard fluctuations of our of our nominal capex.

Tyler Brown -- Raymond James -- Analyst

Ok, yeah, that's helpful. And then maybe my last one. So Tom, maybe what is the longer term vision in Intermodal. So I think at this point you've completed something like 11 intermodal transactions. You've probably paid low to mid single digits, multiples of EBITDA of them. So very attractive and accretive uses of capital. It feels like you've got a very well oiled integration program. You've got a great platform to work from. So should we still be thinking about a couple of tuck ins a year? Do you think you could go faster? Are there some bigger maybe central states or Atlantic trucking type opportunities out there, but just some some big picture thoughts on intermodal.

Thomas Schmitt -- Chairman, President and Chief Executive Office

So to to your last kind of a question or set of questions, the answer is yes, yes and yes. So, yes, we've this whole talking model of like buying two that fit our model and our grading sheet from the operating system compatibility to kind of the geographic distribution extremely well. We will keep doing that. So you should be expecting us doing what exactly what we did last few years on average that were to tuck into a year. We also secondly and this is this is why it's an and not an offer we are challenging ourselves.

How can we actually increase the amount of deals that we look at at any given point in time and how can we speed up the process? So our leadership team there, Michael, hands choleric and they've done a tremendous job, kind of just getting more people on the forward team into the process of that and shortening the process itself. We still we will be pushing to can we actually get more prange arms and legs looking at more opportunities so that we can actually get more deals? So there's something about. Yes. Talking to we'll continue doing. Yes, we will look for ways to get more. Then at the same time and into the last one, to be very, very clear, I've been challenging the team and the team has lived up to the challenge.

We are looking at larger ones, too, not gigantic ones, and frankly, always within the discipline of the current model. So a larger one still has to grade out positively on the exact same criteria that we have. But over the last couple of years, we had more than one that we were very close to. And we won't confuse efforts with results that was in the three digit revenue category. And as long as they fulfill the same discipline criteria, we'd love to do that. So we have strong growth expectations into that segment. There's also a very, very good interplay between the trucking industry and in the motor industry.

You could even see ourselves kind of thinking about can we augmenting the moral outrage by adding a brokerage leg to that where in some cases actually we use outside providers to do that. So this is an important part. And Mike, you mentioned before, this is our second rock star segment. I'd like to find a way where we keep the talkings going. We have more of them going and we have larger deals going also that fulfill the same discipline criteria.

Tyler Brown -- Raymond James -- Analyst

What about geography? Because going back to the question about Trans-Pacific, I mean, I guess the problem is you're not really on the West Coast. Is that something that you categorically want to stay away from or would you look out west?

Thomas Schmitt -- Chairman, President and Chief Executive Office

We are so sorry. That's an incomplete answer. No. Yes, we are looking at the West. We have several opportunities in the pipeline, Pacific Northwest, because everybody we talk West Coast thinks about L.A. and California and Long Beach first. The West Coast is fairly long. There's several opportunities in our pipeline and we'd love to have a footprint that includes their presence on the West Coast.

Tyler Brown -- Raymond James -- Analyst

All right, thanks, guys, appreciate Ton, thank you.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Thanks to all our thank you.

Operator

And our last question on line comes from Bruce Channe with Stifel. Please go ahead.

Bruce Channe -- Stifel -- Analyst

Good morning, Timelike. Appreciate the time.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Morning.

Bruce Channe -- Stifel -- Analyst

It was just another M&A question here at the risk of beating a dead horse. You all obviously haven't been shy about driving, you know, growth through Final Mile and Intermodal. But is there anything philosophically that would prevent you from looking at M&A in LTL or does it just really come down to the opportunity?

Thomas Schmitt -- Chairman, President and Chief Executive Office

So, again, this is something about where we are, and I use sometimes labels or imperatives to kind of characterize the type of leadership imperatives that we as a company live. We did remove ceilings or I mean by that is in the past we looked at this model over the last five, six years to either being the model drayage or being final model. Those two still that they worked wonderfully. We keep doing those, but we are looking left and right.

We are looking left and right. From a vertical integration perspective. We could go further upstream in the supply chain. From a moat perspective, there's nothing wrong about truck brokerage. And from even from a geographical perspective, there's a lot of opportunities in our pipeline right now north of the border. So the answer is we are keeping the current success model going and we're very open minded augmenting it by looking left and right.

Bruce Channe -- Stifel -- Analyst

Ok, great. That's really helpful. And then just another question here. It's been a while since we've talked about the legacy DUI business. But, you know, as we kind of think through a potential vaccine scenario, what's the setup there for that? You know, farm life sciences, business and how are you all positioning?

Thomas Schmitt -- Chairman, President and Chief Executive Office

So clearly, I mean, like like probably every transportation company, whether it's surface transportation or forwarding, we are talking to our customers. We are in direct negotiations in some cases about where we can help. So we are part of those supply chains of domestic and international forwarders are part of those supply chains and we're working with them on it.

And the same is true actually with airlines also. So a lot of our customer base, international for us, domestic forwarders, airlines and in some cases as directly with some of our customers, this is playing right into the conversation we had 10, 20 minutes ago or essential medical supplies. And these things don't just happen to us. We have to earn them by working with our business partners, which is what we're doing. So we should we should be expecting to be part of that.

Bruce Channe -- Stifel -- Analyst

Ok, great. Well, I appreciate the time, thank you. Thank you.

Thomas Schmitt -- Chairman, President and Chief Executive Office

Thanks, Bruce.

Operator

[Operator Closing Remarks]

Duration: 54 minutes

Call participants:

Thomas Schmitt -- Chairman, President and Chief Executive Office

Michael Morris -- Chief Financial Officer and Treasurer

Todd Fowler -- KeyBanc -- Analyst

Jack Atkins -- Stephens -- Analyst

Scott Group -- Wolfe Research -- Analyst

Tyler Brown -- Raymond James -- Analyst

Bruce Channe -- Stifel -- Analyst

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