What happened

Shares of Old Dominion Freight Line (ODFL 11.19%) were up more than 13% for the week as of midday Thursday, after the trucking company reported better-than-expected earnings. Demand for trucking is strong, and Old Dominion was able to take advantage.

So what

Old Dominion earned $2.41 per share in the fourth quarter on revenue of $1.41 billion, surpassing expectations for $2.26 per share in earnings on sales of $1.38 billion. Revenue was up 31.4% year over year, and operating income of $372.5 million came in 46.5% above the same three months of 2020.

An Old Dominion truck on a city street.

Image source: Old Dominion.

The company saw volumes surge in the quarter, reporting less-than-truckload tons per day up 14.3% and revenue per hundredweight (an industry measure that approximately translates to revenue per hundred pounds of freight) up 16.1%. The strong pricing power helped Old Dominion to be more efficient, with the company's operating ratio improving by 270 basis points to 73.6%.

"Our ability to consistently deliver this high-quality service and capacity, coupled with a positive domestic economy, has driven strong customer demand for our service offerings," CEO Greg C. Gantt said in a statement. "We do not expect any near-term changes in our customer demand trends and believe our service and capacity advantages will continue to support our ability to win additional market share throughout 2022."

Old Dominion also raised its dividend by 50% to $0.30 per share, a strong indication that management believes the strong performance can be sustained in 2022.

Now what

Old Dominion has long been one of the best names in transportation, and the company appears to be successfully navigating what has been a tricky cost environment for others. The dividend boost should likely help Old Dominion attract and retain income-focused investors ahead of expected higher interest rates.

Not all quarters will come in as strong as this past one did, but Old Dominion gave a clear indication that it's set up well to be a strong performer in 2022.