Earl Congdon - Executive Chairman David Congdon - Vice Chairman and CEO Adam Satterfield - CFO.

Jason Sidel - Dahlman Rose Scott Group - Wolfe Research Chris Wetherbee - Citi Danny Schuster - Credit Suisse Ravi Shanker - Morgan Stanley Matt Brooklier - Longbow Research Ari Rosa - Bank of America David Ross - Stifel Todd Fowler - KeyBanc Capital Ben Hartford - Baird.

Good morning and welcome to the Third Quarter 2016 Conference Call for Old Dominion Freight Line. Today’s call is being recorded and will be available for replay beginning today and through November 7th by dialing 719-457-0820. The replay passcode is 2072815. The replay may also be accessed through November 27th at the Company’s website.

This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements among other regarding Old Dominion’s expected financial and operating performance.

For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements.

You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion’s filings with the Securities and Exchange Commission, and in this morning’s news release. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements.

The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. As a final note before we begin, we welcome your questions today, but ask, in fairness to all, that you limit yourself to just a couple of questions at a time before returning to the queue.

Thank you for your cooperation. At this time, for opening remarks, I’d like to turn the conference over to the Company’s Executive Chairman, Mr. Earl Congdon. Please go ahead, sir..

Good morning. Thank you for joining us today for our third quarter conference call. With me this morning are David Congdon, Old Dominion’s Vice Chairman and CEO; and Adam Satterfield, our CFO. After some brief remarks, we’ll be glad to take your questions.

We are pleased with the improvements in our overall results of the third quarter, although the environment remains challenging. We produced new company records for quarterly revenue, net income and earnings per share, in addition our 82.4 operating ratio was just 30 basis points short of our best OR ever in the third quarter of last year.

o achieve these results, in a quarter, total tons declined for the second consecutive quarter, and shipments declined for the first time in seven years, it is a real tribute to the hard work innovation and flexibility of our OD family of employees and also highlights the Company's long-term operating strength, which begins and end with our commitment to providing superior customer service at a fair price.

We have also maintained would a steady investment in capacity and technology while most importantly continuing to invest in our people, which include providing the tools and training for them to be successful on their job as well as with 3% wage increase that we awarded to our employees in September.

I've experienced per share of challenging operating environments and have learned the importance of remembering that the economy will eventually get better. As a result, we are a company that focuses on the long-term.

We have built Old Dominion with core operating philosophies that drive long-term success, and we are fortunate to have the financial strength to implement these customer focused strategies throughout the economic cycle.

Since our model has consistently outperformed our peers, in both good and bad environments, we continue to keep focus on executing our strategic plan and remain confident that we can increase our long-term market share, profitability and shareholder value.

So, thanks for joining us this morning, now here is David Congdon to give you more details on the quarter..

Thanks, Earl, and good morning. As Earl mentioned, we did see slight improvement in our financial results for the third quarter and have several reasons to be encouraged, as we enter the fourth quarter.

To start off with, we continue to deliver superior service that our customers value with over 99% on-time deliveries and a cargo claim ratio of 0.28% in the third quarter. Our revenue increased slightly for the quarter primarily due to strong yield performance in a stable pricing environment.

In addition, the headwinds that we faced in the first half of the year from the declining fuel surcharges and non-LTL revenues have moderated. Our non-LTL revenues declined on average of 9.3 million for both the first and second quarters of 2016 as compared to the respective periods of 2015. The third quarter decrease was 6.4 million.

This year-over-year decline should be further reduced in the fourth quarter as we fully cycle through the strategic changes made to our international freight forwarding and container drayage service that began in the second half of 2015. Our LTL revenue per hundredweight excluding fuel surcharge increased 2.7% for both the second and third quarter.

The increase in the third quarter felt stronger to us; however, as the 0.5% increase in weight per shipment and the 0.2% decrease in average length of haul, both put downward pressure on this yield metric. We also saw a good productivity improvement on the platform as tons per hour increased 5.9% and shipments per hour increased 4.7%.

P&D metrics were flat for the third quarter and the line haul latent load average declined 1.4%, as we continued to run schedules to meet customer service expectations. We are operating at very efficient levels. We have an opportunity to improve productivity in future period, especially as our LTL weight per shipment increases.

Offsetting these improvements, we have 1.3% decline in LTL tons for the core following a slight decline in the second quarter. We believe the decline in LTL volume continues to be more a function of soft economic environment than anything else.

The decline in volumes caused us the loose freight density, which contributed through the increase in our operating ratio for the quarter, despite otherwise excellent control over our variable cost.

As I have said many times, long-term profitable growth requires four key ingredients improvement in density, yields and productivity, all within a positive economic environment. We can't control the economy. We will continue to focus on the disciplined execution of our strategic plan to provide the service at a fair price.

We will continue to invest in capacity, technology and people. And we will continue to focus on further controlling our cost. Taking care of our customers and employees, our long-term experience shows that we are positioned to keep the promises we made to our customer and reinforced that they make to their customer every day.

We also know from experience that the consistent execution of our strategic plan to help us win additional market share leading to long-term profitable growth and increase share holder value. Thanks for joining us today. And now, Adam will review our financial results for the third quarter in greater detail..

Thank you, David, and good morning. Old Dominion’s revenue was a company record $782.6 million for the third quarter of 2016, which is a 0.4% increase from last year. Our operating ratio was 82.4% which was a 30-basis point increase over the third quarter of 2015.

Earnings per diluted share were $1.03 which was a 4% increase from the $0.99 of earnings per share in the third quarter of last year. Increase in revenue for the third quarter reflects increased LTL revenue that was partially offset by the $6.4 million in non-LTL revenue.

LTL per hundredweight increased 2.5% for the quarter and increased 2.7% when excluding fuel surcharges, as the pricing environment has remained stable.

We implemented our general rate increase on tariff business affective September 26th, and we will continue to target rate increases on our contractual account to average between 3% to 4% to offset our own cost inflation. LTL tons per day decreased 1.3% as compared to third quarter of 2015.

As our LTL shipments per day decreased 1.8%, the first such decrease into the fourth quarter of 09 while our LTL weight per shipment increased 0.5%, the first increase into the fourth quarter of 2014. On a sequential basis, our LTL tons per day for the third quarter increased 1.2% as compared to the second quarter of 2016.

This was slightly below of our 10-year average sequential trend, which is a 1.9% increase. Month-to-date for October, our LTL revenue per day has increased slightly on year-over-year basis as we continue to see good yields performance. This was offset by a 1.8% decrease in LTL tones per day however.

Our operating ratio for the third quarter of 2016 increased 30 basis points as compared to the third quarter of 2015. As we have discussed the past couple of quarters, the increase in our operating ratio was primarily caused by the deleveraging effect on our fixed cost resulting from the flatness in our revenue.

In particular, depreciation and amortization cost increased 90 basis points as a percent of revenue in the third quarter. These costs are the result of the long-term investments we have made in real-estate, equipment and information technology.

On the positive side, we were once again pleased with the improvement in our variable operating cost as a percent of revenue.

While these costs improved in the aggregate, our salaries, wages and benefits did increase for the third quarter, primarily due to increase fringe benefit cost in general wage inflation, as the average number of our full-time employees decreased 1.4% for the quarter.

As anticipated, our fringe benefit cost increased to 34.4% of salaries and wages from 32.0% for the third quarter of 2015, and we expect these costs to remain elevated again in the fourth quarter. Old Dominion’s cash flow from operations totaled 117.9 million for the third quarter and 410.1 million for the first nine months of 2016.

Capital expenditures were 55.6 million for the quarter and 351.1 million for the first nine months of 2016, which is approximately 87% of the 405 million estimate for the year. We repurchased $34.3 million of our common stock during the third quarter and a 190 million in the first nine months of 2016.

These purchases left us with 211.3 million available for purchase under our current $250 million repurchase program. Our effective tax rate for the third quarter was 37.2% compared to 38.4% for the third quarter of last year due to several discrete tax adjustments. We expect the effective tax rate to be 38.4% again in the fourth quarter.

This concludes our prepared remarks this morning. Operator, we’ll be happy to open the floor for questions at this time..

Thank you. [Operator Instructions] We have a question from Jason Sidel. Your line is open..

Quick question about the weight per shipment, I mean, I think, it's a good sign right that we've seen it, pickup for the first time since the fourth quarter of 2004. But I think in our own comments, you mentioned that we're still seeing a very challenging market.

Is it challenging, but getting slightly better? I am trying to figure out why the weight per shipment would have picked up because you one other competitor that reported thus far had good results, but there way per shipment trended down again as well?.

Sequentially, it's staying about the same, it's just that we're' finally lapping over a period last year where, if you recall, it was coming down throughout the year and then stabilized in back half of the year. So, the weight per shipment in the third quarter was £1,551. In the second quarter of this year, it was £1,559.

So, we've kind of seen it stabilized around this sort of £1,550 range, and it's been sort of plus or minus £10. But it did drop a little bit in August and then sort of came back in September, and it's trending well in October thus far as well.

So, I think, we still continue to see the economy is stable with prior periods, not really improving, not really getting worst, but we're at least happy to see that the weight per shipment has stabilized..

And my follow-up is going to be around the new overtime law that's coming into effect here, what kind of an impact might that have on your business, if any?.

The total number is not big deal for us. I think we had somewhere in the neighborhood a 150 may be affected people..

Our next question comes from Scott Group. Your line is open..

Adam, just on the October tonnage, do you have like the sequential change versus the 10-year history on that?.

Yes, in October or September?.

I guess we'll take both?.

Yes, in September, we were up 3.6% over August versus the 10-year average above 2.8%, but recall that August was below trend. And then thus far in October, on a weight per day basis, we are trending down about 4.5%, and that is compared to the 10-year average was down 3.5%.

So, it's kind of back to this choppiness and our volumes are little bit lighter in October than perhaps what we thought we might see, but our yield performance is good, and as I mentioned, the revenue per day October this year versus last year is better..

Scott, I would like to add, this is David. A little commentary on our sequential averages, our 10-year in particular, you might recall that in the early 2000s, we were expanding geography year-after-year. Our last acquisition was in Montana in 2008, which is -- so, we’ve got some geographic expansion in our 10-year history.

And then you might also consider YRC in 2007, 2008, I believe had about $10 billion in sales, and they went to 5 billion or less in sales. And even as their economy has come back, they have not -- and the overall tonnage in LTL has come back.

They didn’t get that freight back, so what freight they lost I think has probably shifted around amongst the various carriers. But right now, we don’t have the effect of a $5 billion worth of YRC revenue hitting the market by now because they're stable. So, when we talk about our sequential trends versus a 10-year average, it's a tough comparison..

Yes, that actually makes a lot of sense. So, I guess just to follow up on that point, David.

Is it fair then to think that the pace of share gains going forward realistically, it's just not going to be the same as what we saw in the past, if you're not expanding geographies and YRC shares more stable?.

We will continue to expand geographies to it well -- I mean, we are in the 48 states, but we have a plan for 35 or 40 more service centers, which will increase help us increase our density and share of the outbound freight in the markets where we will be putting a service centers.

But we've got that that ahead of us, and the fact that we continue to invest in future capacity for growth, and we have the capacity for growth, and we have had the capacity for growth over the last decades. We think that that strategy will allow us to keep winning market share.

In the soft economy, our rate of gain of market share has gone down because frankly shippers are economizing. And all those 90,000 active shippers we have every month probably 95% of them have the other LTL carriers and they're stable as well.

Pricing that might be cheaper than ours and perhaps they are choosing to ship certain shipments for a lower price. But we believe, we are the best disposition carrier as the economy turns around with most capacity to absorb the growth..

If I could just ask one last one.

So, we typically think about higher fuel as a positive for your and just broader LTL earnings, is that start to play out in the fourth quarter? Is anything to keep in mind might not be the case, right now?.

Yes, fuel prices are certainly moving north. We still, in terms of, where prices are today that to the average deal rate price was $2.50 in the fourth quarter of last year. So, we're starting to approach that number the last couple of week, but we are still sort of even or slightly below what the average price was last year.

But certainly, it helps leverage all of our other fixed cost, if revenues are increasing. And we saw a little bit of that play out in the third quarter. As prices started to rise, it helped the top line and we did have as much of headwind on top line basis from the decrease in fuel that we've seen in the past two quarters..

Thank you. We will move next to Chris Wetherbee. Your line is open..

I want to get a sense of -- I apology, if I missed it.

But did you give September tonnage on a year-over-year basis just want to make sure I got that?.

On a year-over-year basis, it was down 1.2%..

Okay, that’s helpful.

And so when you think about sort of the dynamic of September versus October, is this sort of indicative of kind of bounce along a bottom or trough in terms of the tonnage dynamic? Just wanted to get a sense, I want to overplay sort of month-to-month comparisons, but just want to get a sense with what's going on the weight per shipment, if you do feel like there is anything different or changed and customers are giving any indication to that respect?.

I don't think so. Last October was a little bit of an odd months for us. Our weight for shipment dipped down. Weight for shipment in October last year was only 1,529 pounds, and it came back stronger in November and December, but things feel normal.

We do have one last workday in this October than last year and sometime that call some slight change with the metrics. But things feel about same to us, and certainly, we're pleased with the way September closed out.

We felt good about those trends, but when you look through the economic numbers whether it's industrial production or whatever, we've kind of had some months of up and down. And I think that's what we're kind of seeing in our volume trend..

Okay..

Our yield continues to perform very well, so our revenue per day is hanging in there pretty good..

Okay. Yes, that makes sense and that was I want to follow up on -- it seems like you might have some headwinds to the reported yields numbers despite that you had sort of flattish on a sequential basis.

When you think going forward, can you maintain sort of the pricing dynamic that we're seeing, revenue per hundredweight ex-fuel, is that type of dynamic you've talked about.

I think renewals in the three to four range, but just kind of get a sense of maybe how you see that tending out in your next couple of quarters?.

We certainly are going to stick to our guns and our pricing philosophies that it worked for us in the past. And when you look at it, the absolute revenue per hundredweight number ex-fuel was higher in third quarter than it was in the second.

We continue to deliver a value proposition we think and are going to continue to deliver the very best service in as per fair price and return than allows us to continue to make the investments in our company. But we see things as fairly stable in the market, and we'll continue to target increases that we need offset our cost inflation..

Our next question comes from Allison Landry. Your line is open..

Hi. Good morning. This is Danny Schuster for Allison.

I was wondering if you can share with us your updated 10-year average sequential trends for November and December?.

Sure. In your average in November is a 3.2% increase and the 10-year average for December is a 9.2% decrease..

Okay.

And based on your previous commentary with respect to just YRC and geographic expansion not being and there should we expect sequential trends to be a little bit light of those trends? Or were you just making that comment in reference to the October trends?.

I think that was just the general comment. I mean, those are obviously based in the numbers. This year, our volume trends have been lower than what the 10-year average when you just look at on a quarterly basis. And I think a lot of that as a reflection of the economy, but for the third quarter you certainly have your normal seasonality played out.

And from a weight per day stand point, we were up 1.2% over the second quarter. And as I mentioned that from a quarterly standpoint, that average was at 1.9%.

Fortunately getting back to the yield from just overall revenue per day standpoint, the 10-year average increase in revenue per day, over the second quarter is 3.3%, and that's where we're for the quarter. So, we had a little bit softer volume performance than longer term trends.

But our yield performance was a little bit better, so our revenue per day was right in line with sort of our long-term average to seasonality trends..

And then just from modeling purposes, would you mind sharing the quarterly workdays for 2017?.

Yes, for 2017, we do have one less workday overall. There will be 64 days in the first quarter, 64 days in the second quarter, 63 days in the third quarter which we had 64 this year, and then 62 days in the fourth quarter of 2017..

Our next question is from Ravi Shanker. Your line is open..

Are you surprised to see the pricing or stability at the levels you're seeing right now? And does that bode well for bigger GRIs as the market improves?.

We haven’t been surprised. We talked all year that we thought that LTL pricing would remain stable for a few key reasons, and it's the consolidation of the market. And then, when you look at where average industry margins are and basically where capacity is, we felt like those three scenarios would be supportive of better LTL pricing.

Truckload pricing has obviously suffered a little bit this year and there may have been some volume swap from LTL into truckload for that very reason, on some of the higher weighted LTL shipments. But we felt like the industry needed to continue to push price because we feel like the other industry participants need to continue.

When you look at some of the density metric, about every carrier has made improvements from the revenue per service standpoint. But it's the improvement that needs to come from the yield that can lead to better margins, and a margin that can support reinvestment..

Is there room for upside as the market improves or do you think it's going to stabilize at these levels?.

That's hard to say. Our pricing philosophy is, we ask for rate increases to really offset what cost inflation and what the profitability on each customer account is. And so we feel like, we can sit across the table and have those conversations and that's what we'll continue to do.

And we've mentioned in our prepared remarks, we are going to continue to target contractual increases in that 3% to 4% range that we've been able to get the last couple of years..

Great. And just a last one.

How do you think about CapEx in the lower term and clearly step down this year? Again, is this the right level to think off on an ongoing basis?.

Broadly, from equipment standpoint, we overinflated a bit this year for our expected volume. Look and the economy didn’t come through, and so as we look -- we are not giving out the CapEx number yet today. But we are looking more at our equipment number that would be for our replacement program.

And then if the economy turns and gets better, we could up that number during the year and start adding some equipment for growth. But right now, we are just looking at our replacement program and equipment for next year. Our real-estate is still fairly substantial and maybe a little bit more than last year.

And technology is all a little bit from 2016. So, we do anticipate a lower CapEx, but still substantial CapEx when we finalize our numbers and see how the fourth quarter goes and report to you in January. And we will give that number after then..

Thank you. Our next question is from Matt Brooklier. Your line is open..

So just a question around the truckload market, we've seen improvement on a truckload side of things. So let's call since June-ish directionally, it's been kind of moderate, but there has been some improvement there.

So I was just curious to hear, if the change in the truckload market, if it had any impact on your business whether be from a volume or price perspective?.

Not, any material way. I think that some of that movement just sort of happens on the fringe and I don’t know that we are really only other LTL carriers have seen any significant movement because I still think that there is probably oversupply right now in the truckload area..

Okay.

And then Adam, do you have the service center count for 3Q?.

It was 226 service centers..

226 okay, appreciate the time..

Our next question comes from Ari Rosa. Your line is open..

So, first question I wanted to start on the operating ratio. You mentioned the economy continues to be a bit tepid, but wondering what kind of OR levels you think you might be able to reach, if some volume growth returns.

Obviously, there is descent amount of operating leverage embedded in your business and you're hitting at operating levels that are pretty impressive right now.

I think you said close to record, so I just wanted to hear your thoughts on what kind of improvements we might see as volume growth returns?.

We believe that if the economy return and get more positive that -- and we continue improving density yield and productivity that there is more leverage to continue bringing our operating ratio down. How low can it go? We don’t give a number on that.

But we do believe that there is more margin improvement ahead, if we have all four key ingredients in the stars aligned, if you will..

Okay, that’s helpful. And just, I am thinking about the competitor dynamics, one of your competitors noted in intention to expand their geographic footprint. Obviously, some of your the other competitors talking about being aggressive in terms of growth.

Just wanted to hear your thoughts on what the state of the competitive landscape looks like, and if it changed versus say 12 months ago?.

That hasn't exactly changed because they haven't opened up those service centers up north yet. I know who you're referring to. But I’ll tell you that I think, they got their work cutoff for it. It's a difficult environment and they are up again and extremely strong service competition.

We would be number one in that category of strong service competition. And then, you have a couple of other private carriers that are really strong in the East South markets. And if they don't give the service, they're going to have a hard time building the density in the lanes.

And if they resort to reducing prices to get density then the profitability won't be there, and they're going to have a tough time with their operating ratio. So, it's not going to be easy..

And then if I can just speak one more in, I want to understand you mentioned obviously YRC, some of the challenges that they've experienced over the past several years.

Looking forward, where do you see market share gains coming from? Is there a singular source or where can market share go from here, I guess, and what would be the source of that growth?.

We are continually bringing on new accounts that we've never done business with. And we usually start with a lane or a couple of states maybe for an account. And as you build our relationship and prove yourself, you can then grow into additional states for those accounts.

The accounts that we do business with to-date, we have a lot of additional market share gains that we can achieve just within our existing account basis well. So, it's just a matter of serving the customer, building your relationships, giving them the premium service at a fair price. And we think that formula, it has worked well for us.

We think it will continue to work..

Our next question is from David Ross. Your line is open..

Adam, can you talk about the insurance market right now? We first-term some other carriers that premiums are going up significantly, but you seem to be holding line flat on the insurance and claim side. Are you not seeing that or is your contract up for renewal later this year? And comments you have there will be great..

We've dealt with that earlier this year really in the first quarter and we were right frankly on the bleeding edge of when some of those carriers exited the market and had to go out and get replacement coverage. We've got good insurance programs. We've got good safety records. And that helped us find some replacement carriers.

And fortunately, we didn't have to take too much of a premium increase like may be some of our competitors did. But that's already baked in to, we go through our insurance renewal process in the first quarter and so we live through that earlier this year..

Is that an annual process or multiyear process?.

It's an annual process..

Okay.

And then David, anything you're seeing on the regulatory sides are floating around DCs being talked about that concerns you or excites you about the business?.

Yes, I think we have a pretty good chance of getting the hours of service back where they ought to be, where we want them with the 34 -- with unrestricted 34 hour restart. I think we also have a pretty good chance of getting the F4A legislation passed again that cause us for.

The states not to be able to create their own laws that affect us when we go into this state or that state with our interstate drivers. So, I think those are two wins ahead, are also going to put a plug in for ATA and Chris Spear. I think he is going to do a heck of good job and he has a heck of good plan for the leadership of ATA.

He's built a super team. And I think where we have probably the -- we have and will have the strongest ATA on Capitol Hill that we never had before..

Our next question is from Todd Fowler. Your line is open..

Can you talk about how much residential or home delivery you are doing and I'm not talking about home moving, but actual delivery to homes probably from B2C type environments? And how you view that market either for you or for the LTL space going forward?.

You hit a very-very small piece of our customer base delivering to homes. We do have the capability of delivering to homes because we have liftgate trailers in every single one of our service centers, not just one that multiple liftgates. So, we can't go into the neighborhoods and we do.

But I guess it will be a growth as projected to be a continuing growing market. The problem is going to be when Amazon and others sell it based on free delivery. There is nothing free about making a home delivery and the numbers have to work out.

We have accessorial charges and so forth now for our residential deliveries that work for us but it's not -- we certainly can do it for free..

So, it sounds like a capability that you have, but it's not an area that you are aggressively focused on or at least you're kind of maybe the margin or the price point right now?.

Talk about strategically and have for the last several years, but we are not actively focused on it at this point..

Okay. That helps. Just two expense of cost ones.

Adam is the depreciation run rate here in the third quarter is that caught up given the investment and rolling stock in the first half of the year, does that continue to move up? And then just the second one, you mentioned the fringe cost being elevated, can you talk a little bit more about what that's related to and does that remain into 2017 or is that just something from our cost during the back half of the year?.

First, on the depreciation, there might be a little slight uptick as we go into the fourth quarter. Most of that is in at this point as we've got primarily the revenue equipment that is delivered through the quarter, but still some of that was coming online late in the quarter.

And we still got a few some replacement trailers that will be coming in the fourth quarter as well. So that will take up sequentially a little bit, not that much, and then on the fringe side something that we've struggled with really it started its fight in the fourth quarter of last year.

And it was related primarily -- there is a lot of movement in those categories, but it's primarily related to our group health and dental and those have just been in unfavorable position for us really back to again the fourth quarter. So, it's something we are working at.

I would expect and to be to continue into the fourth quarter, and if you recall last quarter, it was better. But that was really on some retirement benefit plan caused time tied to stock price. So, the health should or likely will continue whether or not, it continues in the 2017 is a question. We are focus on it.

We are meeting internally and talking about ways that we can make changes to our programs and put preventative measures in place to help our people get healthier. Really, the increase has been driven, it's not by severity, it's just been a frequency of claims filed this year.

So, it's something we've just got to stay after and try to see some improvement..

Thank you. Our next question is from Ben Hartford..

Adam, just I wonder you can give an update on the ongoing IT initiatives you have?.

Sure, we continue to work at it. And obviously, it's a big multiyear effort. I think that we have got some little pieces and applications that have gone live and are performing well.

A lot of these, the upfront work in this first couple of years was really building our new data center, getting the new boxes in place, and really setting the platform up to start converting our system. So, we are getting into the mid of this thing where more applications, the coding is done and returning them live in pilot programs.

But we are certainly going slow with it. I think that it could be detrimental. And we have had competitors to put systems in whether it's a billing system or whatever to their detriment. So, we are going about in a flow in a methodical way and hopefully driving some improvement as we turn any of these applications live..

Did you disclose the percent of your shipments handle through third-party brokers this quarter, if not, could you give that number? And then, any plans to meaningfully change that number over the next 12 month?.

It's continues to trend at around 35% somewhere in that ballpark. And it's increased overtime. And it likely will continue to increases as more and more business continues to be handled by the third party logistic carriers.

And as they're using their TMS systems and so forth and trying to add value to customer supply chain, we obviously would like to have those customer relationships direct.

So, it's not anything that we are targeting, but certainly those strategic third-party logistics companies that we have good relationships with, we will continue to build on those relationships. And that can be a source of market share for us; if they're bringing freight to us, it's being handled by another carrier.

If they go out and they are selling our value proposition on our behalf, then that can be an area of growth for us..

We have a questions form Taylor Brown. Your line is open..

Just want to go back to the LTL dynamic here. And David, I appreciate this is a bit of an odd question, but do you guys track something like a nose load percentage and are you seeing that percentage fall maybe indicating some of those bigger loads or making the way into LT.

I guess at high level you've seen anything funny in that 10,000 pound market?.

Honestly, we don’t track of with a nose load or head load percentage. I've never seen a number on that..

Is anything they'll funny in that 10,000 pound market?.

I think that our weight per shipment is staying for the same. We saw a little bit of that in going back all of way to 2014, where we saw some you know increases in some of those really heavy weight LTL shipments that where we were handing.

But right now, we look at sort of less than 10,000 pounds shipments or 10,000 and greater, and those are very few there in that greater than 10,000..

Okay..

Probably a lot of that is they can better -- it's easy to find supply. Truckload carrier that will deliver at a much lower rate from miles than what we would..

Typically when a customer has a 9,000 or 10,000 pound shipment available, they go out and shop it. And that would show up in our stock quote systems and stock loads and that kind of things. Because I think the average weight of our stock loads was 9,000 pounds last time I saw it..

Then, I'm just curious of the comments about adding more service centers. So you guys are running let's call it 99% on-time, it indicates that you P&D service is already really good.

So, I am curious like why would adding more service center is really help with saturation in any given market, and my guess is, adding those centers would help lower your pedal times.

But would that be more of a cost benefits than a revenue driver or how should we think about that?.

It's both because especially in large markets like Atlanta, Georgia or Chicago or New York Metro even the Dallas or the Metropolis or even in Huston, yes, big market Southern California. When we first started in those markets, we had one service center. And we grew as much as we could and we had a lot of the P&D, cost was really high.

We had a lot of what we call, windshield time. The drivers were having the drive out and have freight and then come back. And the cost of that was fairly high. And what we have found is that our market shares on outbound from outline markets as not as good as it is close to the service center.

So, when we opened up service centers in those large markets multiple centers, we get closer to the customers and we can increase our share the outbound from those market..

And there are no further questions at this time. I'll be happy to return the call to Mr. Earl Congdon for any conclusion remarks..

As always, thank you very much for your participation. We appreciate your questions and your support of OD. And please feel free to give us a call, if you have any further questions. Thanks again and good day..

This does conclude today's conference. You may now disconnect your lines and everyone have a great day..