Saia (SAIA) 2026 年第三季法說會：營收成長 17%，實施 2.5 億美元股票回購

重點摘要

• Saia 公布 2026 年第三季營收達創紀錄的 9.825 億美元，年增 17%，主要受惠於每個工作日載重量成長 8.9%，以及扣除燃油附加費後每筆貨運營收成長 5.8%。
• 營業利益達 1.223 億美元，較 2025 年第三季調整後數字成長 17.5%。營業費用率為 87.6%，儘管面臨正常的季節性壓力，仍與去年同期調整後結果持平。
• 稀釋後每股盈餘 (EPS) 由調整後的 2.81 美元成長 21.4% 至 3.41 美元。Saia 在今年前三季創造超過 2.4 億美元的自由現金流後，本季結束時擁有 2.03 億美元現金及 1 億美元債務。
• 服務指標有所改善。貨物理賠率降至公司歷史新低的 0.3%，合約續約平均漲幅為 10.8%，且 Saia 的內部淨推薦分數 (NPS) 年增 15%。
• 董事會核准最高 2.5 億美元的股票回購計畫。管理層表示，回購將視市場時機而定，並在成長投資與資產負債表彈性之間取得平衡。
• 針對 2026 年第四季，管理層預計營業費用率將較上一季惡化約 200 個基點，優於歷史上 250 至 300 個基點的惡化幅度，意味著將比去年同期改善超過 200 個基點。

核心財務數據

2025 年第三季調整後的比較數據不包含與處分不動產利益及不動產減損相關的 1,450 萬美元營業費用淨減少額。

業務與營運表現

Saia 的成長主要由單筆貨運重量增加帶動，而非貨運筆數。每個工作日載重量成長 8.9%，而貨運筆數增加 0.8%。每筆貨運重量攀升 8.1%，反映出公司的定價與貨運組合最佳化策略。較重的貨物對年增率角度的單位收益帶來壓力，但創造了更高的每筆貨運營收。

網絡投資持續支援服務與密度。自 2022 年初以來，Saia 已新增 45 個營運據點，並搬遷或擴建了 25 個以上的據點。營運裝卸門數量增加了約 32%，而拖車頭與半掛車運能成長超過 35%。目前該網絡包含 219 個設施。

REV 專案改善了 2,000 多條路線的運輸時間。管理層表示，這些路線正錄得顯著的貨運量成長。以搬運次數衡量的貨物處理效率較第二季改善 1.3%，較 2025 年第三季改善超過 2%。

服務績效也有所增強。貨物理賠率年減超過 40%，降至 0.3% 的歷史新低。目前超過 60% 的郵遞區號區域距離 Saia 據點在 50 英里以內，而 2017 年時這一比例約為 35%。

2023 年和 2024 年開設的營運據點，其營業費用率年增率改善了 40 個基點，而這些設施的營業利益成長了 22%。雖然它們的表現仍低於公司平均水平，營業費用率落在 90% 出頭，但這為未來的密度與獲利能力提升留下了進一步空間。

成本仍面臨通膨壓力。薪資、工資與福利增加 11.6%（即 4,670 萬美元），主因是薪資調升與績效相關薪酬增加。隨著全國平均柴油價格上漲 48.1%，燃油費用攀升 55.2%。受惠於可預防事故減少與良好的理賠紀錄，理賠與保險費用下降了 10%。

管理層指引

10 月份的貨運筆數年增約 2%，而載重量年增約 10%。管理層將這些趨勢描述為符合正常的季節性規律。

展望 2026 年第四季，Saia 預計其營業費用率將較第三季惡化約 200 個基點。相較之下，歷史上的季節性惡化幅度為 250 至 300 個基點，這意味著將比 2025 年第四季改善超過 200 個基點。該展望假設 11 月與 12 月的貨運呈現正常季節性變化，且燃油成本維持在 10 月的平均水準附近。

管理層預計第四季每筆貨運營收與基礎定價指標將持續季增改善。管理層也預期，隨著近期新開設的據點建立營運密度，邊際獲利能力將進一步增強。

展望 2027 年，管理層表示資本支出占營收約 13%–14.5% 為合理的初步區間。長期來看，公司認為資本支出占營收的 12%–15% 是適當的。管理層還表示，視貨運環境而定，2027 年營業費用率每年改善約 200 個基點是可以實現的目標，甚至可能更好。

風險與觀察重點

• Saia 繼續在管理層所描述的好壞參半的貨運環境中營運，這使得貨運量與利潤率進一步改善的步調充滿不確定性。
• 洛杉磯地區的貨運量年減低個位數百分比。由於該地區的每筆貨運營收較高，這產生了不利的貨運組合效應。
• 較重的貨物會增加對拖車空間的需求、搬運複雜度以及網絡成本，因此維持嚴謹的定價至關重要。
• 近期新開設的據點在營運密度與獲利能力上仍不及舊有設施，儘管其業績正在改善。
• 工資、福利、健保、設備與其他營運成本仍面臨通膨壓力。管理層預計這些壓力短期內不會普遍緩解。
• 不含燃油的外包運輸費率上漲約 4%。Saia 計劃根據服務與成本效益，在合約卡車運輸、鐵路與內部司機之間進行彈性調整。

分析師問答焦點

定價與收益：管理層將定價改善歸因於服務品質提升、更廣泛的全國覆蓋率以及 REV 專案。Saia 預期即使在基期已包含去年同期的全面運費調漲後，第四季定價仍將實現季增改善。

網絡密度：在建立足夠的貨運密度之前，新營運據點最初需要管理、銷售與營運人員支援。管理層預期隨著更多貨物直接在目的地之間運輸，從而減少搬運次數並提高取貨效率，獲利能力將會有所改善。

利潤率潛力：Saia 長期目標仍是將營業費用率降至 80 以下。管理層表示定價、組合、密度與利用率是主要驅動因素，同時也承認確切時機部分取決於外部貨運環境。

外包運輸：卡車與鐵路外包運輸占幹線運輸里程的 15.7%，高於一年前的 12%。鐵路占外包運輸里程的近 39%，且在每英里成本上仍具備優勢。如果內部司機具備更好的經濟效益，Saia 可能會將某些路線收回自營。

資本配置：授權最高 2.5 億美元的回購計畫反映了強勁的自由現金流、低槓桿率以及不動產支出的放緩。管理層強調，執行情況將取決於估值、市場狀況以及其他具競爭力的戰略投資機會。

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管理層陳述

Operator

Good morning, and welcome to the Saia, Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Bill Kain, Senior Director of Investor Relations. Please go ahead.

Bill Kain

Thank you, Gary. Good morning, everyone. Welcome to Saia's Third Quarter 2026 Conference Call. With me for today's call Saia's President and Chief Executive Officer, Fritz Holzgrefe; and Saia's Executive Vice President and Chief Financial Officer, Matt Batteh.

Before we begin, you should know that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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.

Also, in the third quarter of 2025, we recorded $14.5 million in net operating expense reduction from a gain on real estate disposal and impairment of real estate. When we discuss adjusted operating expenses, adjusted operating income, adjusted operating ratio or adjusted diluted earnings per share for the third quarter of 2025 in our comments, we were referring to our adjusted results that exclude the gain from that real estate sale and impairment on that property.

See our press release announcing third quarter results for a reconciliation of these and other non-GAAP financial measures. That press release is available on the Financial Releases page of Saia's Investor Relations website.

I will turn the call over to Fritz for some opening comments.

Frederick Holzgrefe

Thanks, Bill. Good morning, and everyone, thank you for joining us. We're pleased with our solid third quarter performance, which included record top line revenue incentage. Our results demonstrate that prudent investments in our network, people, equipment and technology are strengthening our customer value proposition and further positioning Saia to deliver sustained, profitable growth and long-term value for stockholders.

Third quarter revenue increased 17% to a record of approximately $982 million, supported by 8.9% tonnage growth, 0.8% shipment growth and a 5.8% increase in revenue per shipment, excluding fuel surcharge. These results reflect broad-based business momentum and the continued execution of our pricing and mix optimization strategy.

Operating income increased to $122.3 million or 17.5% from Q3 2025 adjusted operating income. From a profitability perspective, we've delivered strong operating discipline through execution in both our legacy and ramping terminals. Our operating ratio was 87.6%, consistent with the prior year adjusted result and significantly better than the typical seasonal trends. Notably, we maintained a sequential operating ratio within 70 basis points in the second quarter despite the historical pattern of approximately 150 to 200 basis points of deterioration from the second quarter to the third quarter, reflecting our continued focus on pricing, productivity, cost management and operational execution.

These results reflect continued execution of our long-term strategy to build a leading national LTL carrier by expanding network reach and density, scaling the fleet and increasing our addressable market, leveraging technology and optimizing efficiency, all while delivering superior service and converting scale and customer value into profitable growth and higher returns.

As part of that strategy, we've made continuous investments across our network to strengthen the business. Since the beginning of 2022, we've added 45 terminals and relocated or expanded more than 25 others. Those investments have increased our operational door count by approximately 32%, and tractor and trailer capacity by more than 35%. As our network continues to mature and density builds, we are better positioned to create more solutions for existing customers, attract new customers and further improve network efficiency.

Today, Saia is serving customers with a national solution. Our expanded footprint, combined with technology investments and network optimization, has improved efficiency, reduced freight handling and enhanced service levels across the network. In June, we introduced our REV initiative, which marked another step toward improving the customer experience through faster trended times, expanded capabilities and greater shipment visibility. Among other improvements, REV improved transit times in more than 2,000 lanes across our network. While implementation remains in an early stage, the results of the initial phase of the REV initiative are encouraging, with lanes benefiting from improved transit times expanding -- experiencing outsized volume growth.

As we continue to gain traction with both new and existing customers, density continues to build across our national network. In Q3, handling or touches improved 1.3% compared to the second quarter and improved over 2% compared to the third quarter last year. Our operational improvements continue to be supported by our investments and optimization technology, which helped drive efficiencies as our network scales. Our pricing and mix management efforts continue to gain traction as our broader network strengthens the value we provide to customers. In a changing freight environment, shippers value reliable service, and our expanded network allows us to serve more of their needs.

We continue to see improvements across several key service metrics. Our cargo claims ratio was a company record 0.3% in the quarter, improving more than 40% from the third quarter of last year. Consistent execution on service and claims supported a 10.8% contractual renewal rate in the third quarter. Our network investments have continued to move us closer to the customer, with over 60% of ZIP codes now within a 50-mile radius of a [ sired ] terminal, which compares to about 35% in 2017.

Our proximity to customers supports our ability to exceed their expectations, which is represented by our internal Net Promoter Score improving 15% compared to the third quarter of 2025. Those improvements reflect better scheduling, pick up reliability, delivery quality and effective problem resolution. Our network investments are translating into tangible results, helping us meet customers' evolving needs while supporting market share gains and improved service. The operating benefits of these investments, together with the scale of our network, are contributing to strong free cash flow generation.

We believe we're just beginning to see the benefits of our investments as the network matures and density builds. Year-to-date, we've generated more than $240 million in free cash flow and ended the quarter with over $200 million of cash on hand. With a stronger network and operating platform in place, we are well positioned to continue strengthening Saia's position as a leading national LTL carrier, while improving profitability and delivering returns on our investments.

As part of our ongoing capital allocation strategy, we are pleased to announce that our Board has authorized the repurchase of up to $250 million of Saia common stock. This new authorization provides an additional means of returning capital to stockholders when repurchases represent an attractive use of capital, subject to market conditions and our other investment priorities. With the majority of the foundational network build-out behind us, capital expenditures are beginning to moderate relative to the recent investment cycle. That transition, together with stronger free cash flow and low leverage, provides flexibility to continue funding high-return growth investments while repurchasing shares when valuation and market conditions makes doing so attractive.

Reinvesting in the business to support long-term growth and maintaining a strong balance sheet remain our priorities. Those disciplined execution through the past several years, we have created significant financial flexibility. That flexibility allows us to continue to invest in the opportunities ahead while returning excess capital to stockholders when appropriate.

As part of our long-term strategy to support sustained performance for stockholders, we continue to strengthen the Board's composition and oversight. Earlier today, we announced the appointment of Todd Fowler as an Independent Director. Todd brings extensive expertise to transportation, logistics, supply chain, technology and capital markets, and we are pleased to welcome him to our Board.

Before I hand it over to Matt for more details on the quarter, I'd like to highlight that we remain focused on disciplined execution while navigating a mixed freight environment. We are improving service, deepening customer relationships and converting the scale of our network into greater density, utilization and profitability. These actions position us to deliver profitable growth and stronger returns over time while preserving additional operating leverage as freight conditions improve.

Matt?

Matthew Batteh

Thanks, Fritz. Third quarter revenue increased 17% to $982.5 million. Shipments per workday increased 0.8%. Tonnage per workday increased 8.9%, and average length of haul decreased 1% to 885 miles, all compared to the third quarter of 2025. Revenue per shipment, excluding fuel surcharge, increased 5.8% year-over-year and 2.7% sequentially from the second quarter. Fuel surcharge revenue represented 22.5% of total revenue compared with 15.2% a year ago. Including fuel surcharge, revenue per shipment increased 16.1%.

Weight per shipment increased 8.1% year-over-year and 1.2% sequentially from the second quarter, reflecting our continued efforts around mix optimization. As a reminder, higher weight per shipment typically reduces yield. As a result, yield, excluding fuel surcharge, declined 2.2% compared with the third quarter of 2025, while yield including fuel surcharge increased 7.4%. Importantly, yield, excluding fuel surcharge, increased 1.5% sequentially from the second quarter despite the increase in weight per shipment.

We continue to see progress across recently opened terminals. Compared to the third quarter of 2025, the operating ratio in terminals opened in 2023 and 2024 improved by 40 basis points, while operating income from these terminals improved 22%. Notably, these terminals revenue per shipment, excluding fuel surcharge, improved year-over-year at a higher pace than our legacy terminals. We are pleased with the continued improvement across these facilities. While they remain early in their ramp towards greater scale and density, they are already delivering tangible results, including enhancing our ability to provide better service to customers.

Turning to expenses. Salaries, wages and benefits increased $46.7 million or 11.6% compared to the third quarter of 2025. The increase primarily reflected wage increases and higher compensation associated with improved company performance. Total head count increased 0.4% year-over-year, while head count, excluding linehaul drivers, decreased 0.6%. Removing the impacts from the 5 terminals opened in the second quarter, head count is down 0.5% compared to the third quarter last year. Group health insurance costs also increased $2.3 million from the third quarter last year, reflecting the continued impact of the inflationary cost of claims.

Truck and rail purchase transportation miles represented 15.7% of total linehaul miles compared to 12% a year ago. Compared to 2025, our usage of rail as a percent of purchase transportation increased, now representing nearly 39% of our total purchase transportation miles. Our usage of rail remains cost advantage on a per mile basis, and we will continue to leverage our growing scale and technology investments to optimize our network.

Across the entire purchase transportation spend, the underlying rate per mile, excluding fuel surcharge, increased about 4% compared to the third quarter of 2025. Fuel expense increased 55.2% compared to the prior year, reflecting a 48.1% year-over-year increase in the national average diesel price. Company linehaul miles increased 2.4%.

Claims and insurance expense decreased 10% year-over-year, reflecting a decline in preventable accidents and favorable claims experience. Depreciation expense was $64.1 million, essentially flat with the prior year. Higher depreciation from ongoing investments in revenue equipment, real estate and technology was offset by owned assets becoming fully depreciated during the year.

Total operating expenses increased 16.9% compared with the adjusted operating expenses in the third quarter last year. With revenue growth of 17%, our operating ratio was 87.6%, unchanged from the adjusted operating ratio in the third quarter of 2025. Order tax rate was 24.7% compared to 24.8% in the third quarter last year. Diluted earnings per share were $3.41, up from -- up 21.4% from adjusted diluted earnings per share of $2.81 in the third quarter of 2025. We ended the quarter with $203 million of cash on hand and $100 million of total debt outstanding.

I will now turn the call back to Fritz for some closing comments.

Frederick Holzgrefe

Thanks, Matt. As we begin the fourth quarter, the momentum exiting September gives us confidence in the business while we remain focused on navigating the broader freight environment. I'm proud of our team's continued focus on servicing our customers through daily execution, and pleased with the progress we're seeing across the business. We're seeing stronger service performance, including a company record low cargo claims ratio, improved time delivery and continued progress in customer satisfaction.

The early results from the REV initiative also reinforced the opportunity to use faster transit time to greater visibility to serve more customers and build density across the network. Broader network is improving our ability to support existing customers, attract new customers and compete nationally. As the network matures, we remain focused on pricing and mix optimization, productivity, utilization and cost discipline. These priorities are helping us convert national scale of the strong operating performance while preserving additional opportunities as freight conditions improve.

We also remain committed to executing our disciplined capital allocation approach. There are significant opportunities ahead, and reinvesting in the business and maintaining a strong balance sheet remain our top priorities, while a newly authorized share repurchase program provides additional flexibility to return excess capital to stockholders. We have strengthened the business, improved our operating platform and created a clear path for further growth. While there's still work ahead, we continue to focus on the factors within our control and executing consistently for our customers, employees and stockholders.

With that said, we're now ready to open the line for questions, operator.

Operator

[Operator Instructions] Our first question today is from Scott Group with Wolfe Research.

分析師問答

Scott Group

Can we just start with the tonnage update? And then maybe -- I know you always give the color on Q4 OR.

Matthew Batteh

Sure, Scott. And first of all, just to kick off, we apologize for the -- getting disconnected. If anyone has any items that need clarification, certainly, just let us know.

Scott, to your question, I'll go ahead and give the full slate of the months. I know the mid-quarter update was out there, but just to recap. For July, shipments per day were up 0.8%, tonnage per day was up 7.8%. August shipments per day were up 1.1%, tonnage per day was up 8.7%. And September shipments per day were up 0.4%, and tonnage per day, up 10.3%. If I look at where we are, month to date of October, still a few days left, obviously, shipments are up about 2% year-over-year, tonnage is up about 10% year-over-year, which is -- well, it's in line with seasonal expectations.

When I think about the OR, typically, what you'd see in history from Q2 to -- excuse me, Q3 to Q4 sequentially is an increase of about 250 to 300 basis points. Based on what we're seeing so far with October trending seasonally, we feel like we can keep that in the 200 basis points or so range, which would represent OR improvement year-over-year of over 200 basis points. So we feel good about where that's tracking right now, but obviously, a long way to go. But we feel pretty good about being able to outperform what we typically see on the Q3 to Q4 sequential.

Scott Group

Okay. That's helpful. And then I know you don't tend to give lots of mid-quarter update color on sort of yields and pricing, but maybe -- I think pricing trajectory is pretty important right now. So I don't know, maybe some color you can give on what you're seeing and what you're expecting on yield trends for Q4?

Matthew Batteh

Sure. We've -- we put a GRI in place in July, as you know, and we continue to see great results from that. Obviously, there's always a lot of business that moves around in the early stages of that. But when I look at our take on the rate on that, over the past couple of years and even this year, that's gotten even better, which, in our view, is directly correlated to the ability to service more customers and do things for them in different lanes, the REV initiative that Fritz talked about is certainly part of that.

We implemented the GRI last year in October, so you lap that at this point, but we've been working hard on pricing mix optimization. I think you see that in our weight per shipment trends. We're very focused on driving rate and finding the customers that value the service that we provide. So we're pleased with the progress, but we've got to keep pushing on that.

Frederick Holzgrefe

Yes. We were pleased with what we've seen in Q3. I should point out that kind of that L.A. region, which historically has been a really important region for us, really is kind of bouncing around, kind of we haven't seen that recover yet. So that 5.8% revenue per shipment improvement includes kind of a headwind from that region not being where we'd like it to be. So we're particularly pleased with what we saw in the third quarter.

Scott Group

I guess what I'm trying to figure out is like revenue per shipment is up 5.8% in Q3, yields down [ 2 2 ]. Do you think that we see sequential improvement on those metrics in Q4? Do we stay static, take a step back? Any just sort of directional thought?

Matthew Batteh

No. Sequential increase, certainly our approach. We've got to keep driving that forward. The year-over-year number, Scott, that you're talking through on the yield side, certainly has the impact from that heavier weighted shipment. Even with heavier weighted shipments Q2 to Q3, yield was still up. So that gives a view of the core pricing approach, the metrics in there. But no, we expect to continue to drive that improvement sequentially. We're critically focused on it.

Operator

The next question is from Jordan Alliger with Goldman Sachs.

Jordan Alliger

Kind of good color on the new terminals. I'm just curious, is there -- can you maybe talk a little bit more color around sort of the density fill that you're experiencing on those new terminals? I'm assuming it's probably accelerating given you're seeing that year-over-year OR improvement and good EBIT lift off. So maybe talk a little bit about some of the key -- maybe some key metrics or so that -- to ascertain perhaps as that excess capacity been diminishing, how much, versus, let's say, last year or even at the start of this year?

Frederick Holzgrefe

Jordan, that's something that we pay particularly close attention to, the performance of the new facilities. And to date, we've been pleased with it. I think based on our historical experience with openings, frankly, the environment that we open these facilities, it has been a little bit softer than it was historically in terms of what the performance we've seen.

Now although they improved year-over-year, they're still below the company average in total, but we're continuing to make progress there. So I think that, that is part of what you're going to see in the, frankly into Q4 and into next year is the continued improvement in those markets. As we develop maturity, develop those customer relationships, customers experience the kind of service we'll provide out of the newer facilities. So I think that I would -- from here, we continue to expect that to accelerate. We're pleased with the growing profitability in those terminals for sure. It -- there's still runway there for us. So they're not where they need to be.

Matthew Batteh

The other thing we track with that, Jordan, is on the revenue, the way that we're able to improve those 2,000 transit lanes and those -- that's just the first batch. We're going to continue to do that. But that's density build in the network.

At the beginning, when you open these facilities, you often don't have enough freight to move direct and to a destination. So it's got to go back to a break, get offloaded and aggregated with more freight. When you've got density and that starts to build, you're able to run that more directly. So you see that in the handling in the touches. You see that in the revenue per shipment, we're able to charge more because part of it is being applicable or faster on the transit time. So it's all encompassing. And like Fritz said, those aren't where they need to be yet. They're not where our legacy markets are, but that's part of the journey. We're pleased to see it.

Operator

The next question is from Stephanie Moore with Jefferies.

Stephanie Benjamin Moore

Great. Maybe just turning to the pricing question here. I'd love to get your update here on how we should think about the opportunity for you guys to further just narrow the pricing gap versus peers. And then obviously, with contractual renewals accelerating here that you called out, I think you said double-digit renewal. How much of that is being driven by your own specific actions? And if so, what are you guys doing behind the scenes? And then also, how much of this is just being driven by just a more supportive pricing environment?

Frederick Holzgrefe

So we -- our internal organization focus is strictly around the customer, right? So our -- it's all about service. Service is about improving. If you look at our claims number that we highlighted, 40% improvement year-over-year. You see the new terminals, the introduction of the improved transit times and 2,000 lanes. All of those give us an opportunity to provide better service and a better experience to our customers. Those things all lead to supportive pricing opportunities.

Certainly, the environment that's out there, I think, is positive, but customers are also more demanding than ever because they're dealing with inflationary costs, they're dealing with their own supply chain challenges and those sorts of things. So they need somebody that's got higher levels of reliability, and we -- I think we can deliver that for them. And that puts us in a position that when our team gets in front of the customer, they've got something that they can sell. They can sell a network that is much closer to the customer than it's ever been performing at a very high level, record low claims, all those things add up to supporting the pricing thesis.

And if I look across the landscape, and you can see what -- kind of where the national market is for all the national players, and you can see that size is doing a great job and -- but there's an opportunity for us to continue to push the pricing. And frankly, the service levels that we've been providing, I think, support that.

Operator

The next question is from Chris Wetherbee with Wells Fargo.

Christian Wetherbee

I guess maybe I wanted to talk a little bit about optimizing sort of the mix and as we think about it, the weight per shipment. So you guys obviously had been bringing that up quite a bit. It looks like it's also trending up well in the fourth quarter, at least in October so far. So can you talk about where you are? And I don't know if that -- maybe you're sort of talking about the new terminals versus the old terminals and just get a sense of kind of bringing that mix to where it needs to be. Just wondering a sense in how much more you might need to see weight per shipment move up before you guys feel like you've got the right balance?

Frederick Holzgrefe

Yes. That's a good question, Chris. I mean when we think about it, our focus is really on -- there isn't the ideal shipments. Certainly, a higher weight per shipment, as we all know, delivers greater demands on our network in terms of greater space utilization, fill-up trailers, greater difficulty around handling it. So it's really critical that we find the customers. We know there are increased costs that comes along with all those things.

But it's critically important that we find customers and say, look, we need to have an LTL partner that is going to be able to deliver on time with -- damage-free. And those customers are the ones that are really going to support our value proposition. Now certainly, that can be a higher weight per shipment customer. It can also be customers that have very, very high demands and have low weight per shipment, maybe 1- and 2-day service. But it's critically important in those businesses that they have a partner that delivers on time damage free, right? So those things are, in that scenario, that customer values that.

So I don't know that there is a perfect mix of business in the sense of what's the length of haul or what the weight per shipment is. It's the customer that says, "Saia is doing a great job." That's the partner we need to have and that's who they -- that's the customer that is willing to pay for that service.

So it can come from a range of customers. And I point that out because I think that's critically important. As we have been able to shift and evolve this network, and we're adding the improving transit times for 2,000 lengths, certainly, that benefits the higher weight per shipment customer, but that also benefits the 1- and 2-day service customer who absolutely needs to have something done on time. And maybe their weight per shipment's only 500 or 700 pounds weight per shipment, but they say, I value that investment in network because we can provide performance for them, and that is a customer who's willing to pay for that service.

So there isn't a perfect mix, sort of case study around what it's going to look like. It's more about once the customers say, "Hey, I need to partner with somebody that's providing a very high level of service."

Christian Wetherbee

Okay. That's super helpful color. I appreciate that. And maybe a big picture, if we just zoom out a little bit. Now that you feel like you're making some progress on the yield front. As we look at '27 or maybe just bigger picture longer term, what do you think the sort of greater -- the incremental margins of this business will be assuming we're in a positive tonnage environment like you guys are putting off? What can we expect the sort of incremental profitability to look like?

Frederick Holzgrefe

Well, I mean, our expectation is that it continues to improve. I mean, if you think about even just the guide we just gave for the fourth quarter, we're looking at -- we think there's an opportunity to grow OR year-over-year by over 200 basis points, and I think that continues. And I think that opportunity for us to drive profitability in the business is pretty compelling, right? And as we have the opportunity to scale the network, the incremental margins in the facilities that are, what we call ramping, the incrementals there should continue to improve. Those are all beneficial.

I think this is all the path to sort of that sort of sub-80 OR. Timing, the external markets, all those things are -- those are some things that we can't control, but I do know that as I look at close in, our execution is pretty high. The service is very high, and we're getting some traction around pricing. So that leads to what looks like a pretty good fourth quarter for us and into next year.

Operator

Next question is from Ken Hoexter with Bank of America.

Ken Hoexter

Fritz, sorry about the BYU loss and good luck in Miami.

I know you're looking to fill out density. Is that the phase post the Northeast? Is this like the phase post the Northeast expansion where you've made upfront commitments and now you should look for CapEx to fill in density on a nationwide basis? I'm just wondering how we should think about CapEx on a -- is it going to be lumpy? What your needs are going forward?

Frederick Holzgrefe

Thanks for the support, Ken. Keep in mind, Miami has got to go to South Bend, and it's going to be cold.

With respect to our total network, I mean, I think what you think about from here is that if you go back to the days of the Northeast expansion, we built out, put terminal leadership, regional leadership in place. And as we develop those markets, we were able to drive some really strong robust returns. I think the environment that we've been operating in with the facilities that we've opened, we haven't had the sort of the stronger backdrop to drive those returns. But nonetheless, we had to put in leadership in these new facilities, the appropriate driver and support teams in place to take care of the customer because that's part of it.

Now I think what you're seeing, and Matt pointed it out in his remarks, about the improvements in those facilities, and I think we see the incrementals on the facilities start to approach what we saw in the Northeast. And then I think, frankly, over time, that the rate of improvement in those should accelerate. And we like what we've been able to -- the performance is there. We think the customer experience has been good and continues to improve. So I think all those things portend to improve incremental performance out of those facilities.

Ken Hoexter

Great. I was talking -- maybe a little adjustment, but I was talking more about the thoughts on CapEx needs, right, given you're driving free cash flow for buyback, but...

Frederick Holzgrefe

Yes. No problem, Ken. I left that part out. Yes. Listen, at this stage, as we continue to drive profitability in the business, we're going to generate cash flow. And I think anybody who's run the model around where Saia is, understands that there's the ability for us to generate cash flow is really positive. I think that we've done a good job managing the balance sheet.

There are investments that we're going to have to make in the business. But we're in a position now where the appropriate utilization of the shareholders' capital here is we got to make decisions around, right, it's an attractive market. Those are ones that get us incremental returns that help us filling the network from here. Certainly, we're going to make those investments. But as we drive profitability, we're generating cash, and there's an opportunity where appropriate that we can make the necessary returns to shareholders.

So we think that's part of the sort of developing profitability of the business. And I think that is something that we knew that was a big potential of the business for a while now. And we just feel like at this point, we're in a position we can make the announcement we did. That's not to say we don't have investment opportunities, but I think we've got the opportunity now where we're better positioned to make all the choices to allocate the capital appropriately.

Ken Hoexter

And then, Fritz, just a follow-up on kind of -- you got some mixed questions before on pricing and impacts and talked about weight per shipment, but how about the customer type, whether you -- from your peers, we hear a lot about going after SMBs or local customers, maybe different end markets. Can you talk about that and if that's having an impact on your pricing or if that's part of the process at this point? Or just still focus on national accounts as you enter new markets?

Frederick Holzgrefe

I think we're focusing broadly across the entire network -- across the national network now. And I think that's important. That can be a regional account. That can be a national account, can be a partner in a [ 3PL ]. But most importantly, these are all customers that say, understand the value of that 219 terminal network. And that's really important. And it's -- they understand the value of the service they're getting, what we can provide for them.

And so that can sort of agnostic to industry. Certainly, there are industries that we have benefited from, I mean, you see the data center business, I think we're exposed there a bit. We've got -- that's helped drive some profitability. But frankly, the one consistency when you go across all industries is that people that really value an LTL partner that can provide a high level of service. And that can be any number of industries. But we're pleased to see that it's been kind of a national sort of success.

Matthew Batteh

Being in the market is critical. And I think it might have been Chris's question earlier where we talked about that. At 219 facilities today, we get more seats at the table with customers. We get the opportunity to solve more problems in the conversation around, well, you can't do this for me, but that's less now than it's ever been. So every day it's, Saia has an opportunity to have a better discussion with the customer about what problems we can solve for them.

And that's why Fritz gave the stats in his comments about the door capacity and the terminals that we've opened, not just opened, but relocated and expanded over the past number of years. That's capacity for a customer. That's our ability to service them. So being in the market really matters, and we're getting the chance to be on equal footing with everybody else, which we're really excited about.

Operator

The next question is from Richa Harnain with Deutsche Bank.

Richa Talwar

So first, I just wanted to get some clarification on the OR outlook, just curious what you've assumed for kind of November, December, is it normal seasonality? And from a year-over-year perspective, would that mean something similar to the 10% in October or maybe lower? I know your comp gets tougher. And then I would love to understand kind of what's also -- assume for fuel and that sort of thing.

Matthew Batteh

Sure. From a seasonality standpoint on the shipment side, from here, we're expecting normal seasonality. Typically, what you'd see is obviously, as you get into the holiday months, things slow into November and then again into December. But the guide implies and expects normal seasonality.

On the fuel side, where the guide embeds fuel that's sort of on October average is how I'd frame that. So fuel hanging into October average shipment levels at seasonality. You're right on the comps, they move around a little bit into November and December, but broadly from a sequential basis, what we're expecting in the guidance seasonality -- normal seasonality.

Richa Talwar

Okay. On headcount, I wanted to clarify. So I think you said it was down, tonnage is up a lot, very impressive. I guess how are you doing that? How much excess capacity do you have? How long does that kind of algo work that way before you probably need to start adding more headcount? And then longer term, I guess this plays into -- Fritz, I think you said over 200 basis points of margin expansion. I know that's the guide for Q4, but it was also implied that this could be something that occurs for 2027. Is that a preliminary view? Or what were you trying to say there?

Matthew Batteh

I'll start with the head count part. So that's right. If you -- we've made a lot of investments in our network and linehaul drivers. So if you exclude that, the head count number's down a little bit. Same thing if you exclude the impact from the 5 new terminals that we opened in Q2.

But part of building a network in density is scale opportunity. So you have the people in the new markets before the volume comes, what you -- you have to be in the market and you have to provide great service. But a new market is not as dense on the pickup side as a legacy facility would be. So over time, you get the opportunity to scale and leverage those investments that you always have to make when you open a facility. You can't open them without people, you have to provide service for our customers.

So we're making strategic investments depending on what the volume environment looks like as we get into next year. There's probably going to be some adds. We've got more opportunities to continue to optimize our network. But we are very diligent on what that looks like. We've been pretty restrictive on that for the number of quarters. But service is important, and we're going to continue to make those investments. But we'll see what the environment deals in the early part of next year to see where head count goes.

Frederick Holzgrefe

And I would just add just on the comments about next year. I mean, look, I think we're going to see continued improved performance in Q4. I think the incrementals will be good year-over-year. I'm expecting that to continue into next year. Can we hit that sort of our long-held goal of 200 OR improvement -- point OR improvement on an annual basis. Depending on what the environment deals is, I think we could, frankly, I think we could do better than that.

But at the same time, I think there's a fair amount, let's see how it develops. I know close in, I like what we're seeing from a core execution perspective for the customer. I like the trends that we're seeing around kind of our revenue per shipment. That's important. And put those things together and I look at these facilities that we've invested in, we're able to generate returns and we're seeing growing operating income and improving OR there. Those all portend to next year kind of OR expansion. So I think I like the trends that we're on right now. I think those are all positive.

Operator

The next question is from Tom Wadewitz with UBS.

Thomas Wadewitz

So I wanted to ask you a little bit on the cost side. I know you've got, obviously, with capacity expansion, you're going to add cost and add capacity. But I guess if you look at a kind of like-for-like basis, how -- what does inflation look like in terms of -- I guess you got probably some wage inflation, some group health, that type of thing, but maybe some incentive comp that's stepping up as well. So just if you have some thoughts on that? And then would you expect that level of inflation to decrease when you go to next year?

And then I think the second question, another important element would be, you talked a little bit about purchase transportation and outsourced linehaul miles. That's something where -- it seems like that's been reasonably well controlled, but obviously, truckload rates are going up a lot or have gone up a lot. And I'm just wondering, timing of your reprice of that or your contracts, is that something we ought to -- we should contemplate in terms of there might be a step change for you in the future? Or is that different? So a couple of things there, but also just kind of like rail versus truck in PT, it sounded like there were some nuance there. So yes, kind of overall inflation, how we ought to look at it? And then just kind of more impacting on PT.

Matthew Batteh

Sure. I'll start with the inflation aspect of it. I mean, look, every line in this business is expensive. If you had to provide great service, you got to have a best-in-class team. You've got to have equipment facilities, have best-in-class benefits. All of those are expensive. So we're going to continue to work hard on efficiency, productivity, optimization, every single piece of that, in the hopes that we can mitigate the cost inflation.

But the nature of this business is inflationary. It is a high asset-intensive business that requires investment. So I'd expect cost inflation to continue. I don't see a reprieve on things like health insurance and benefits. Those are part of our strategic investments in our people to provide great service. So we're going to continue to work hard on that, but I'd expect cost inflation, wage increases, those are just part of part of the ongoing nature of the LTL business.

From a purchased transportation side, so the underlying rate per mile increase ex fuel, if I just look across the entire base, was about 4%. So obviously, that's really well controlled compared to what you're hearing out in the environment. The way that we use PT is strategically. We are not in the spot market. The way that we use it as an extension of our network. We won't use it if it doesn't make service. That's the #1 gating factor for us.

And we do use rail. We held very cost advantage. And over the years, if you look, we've had the opportunity to use more of that with a wider network. As a percentage of the PT miles, that's approaching 40% of miles.

As the network builds density and we get the opportunity, if you look at our map, we have double-digit market share in our Houston markets in Texas, where we've been the longest. As that expands and we build more density, we'll have opportunities to in-source some of that. But we believe that we use it effectively, and PT is part of how we operate our network. But I like to use rail where we can. We've been able to use that more over the past several years, and you saw that in this quarter as well.

Frederick Holzgrefe

And I would just add on top of that, Tom, is that the optimization model you're running, Matt walked through exactly kind of how we think about this. But in our prepared remarks, we noted that we actually increased the number of head count in our linehaul team. And the reality, what that is, is the optimization model said that basis external using truck PT or rail, we found it was cost optimal in some lengths to actually hire more people internally to insource that.

So that equation around, all right, is the service match and then what's the optimal cost structure, that will continue to evolve over time, and that's an important part of how we manage the cost structure. We don't -- when we look at our cost structure, and I think we're pleased with how we performed on managing cost in the quarter. If you look at our weight per shipments up, handling the complexity of the freight that we're handling has increased, all those things would lead to higher levels of cost. And I think we've managed it pretty well, in part because we know how to use PT and run the optimization models around that.

Thomas Wadewitz

So just -- I guess, just to make sure I understand that. So there's not an intention really to vary meaningfully the outsourced linehaul miles from where you are? You're kind of comfortable with that. And then I guess on the contractual piece, if your truckload is contractual and well controlled to 4%, would also imply contracts would expire at some point? So I don't know if they're just kind of mixed through the year. So you don't really see a bigger impact or if there is kind of a time frame that they tend to expire that you might see a little greater step up?

Frederick Holzgrefe

They're mixed through the year, Tom, but I would tell you that our focus, and it always has been, is that we need to get the OR in this business below 80, so we're going to take the cost optimal way to get us there, and that's going to require us to figure out ways to best manage our network cost, moving freight between the 219 facilities. So if we find that the contractual environment for PT partners is increasing at a rate that doesn't make sense for us, our solution to that or the way we would manage that is we probably in-source with more of our own drivers in certain markets, maybe tap rail in certain markets we can. And that's all part of the equation.

So if I look at the opportunity around what Saia has is it's continued to use -- leverage that cost structure to do a great job servicing customers. But the real value driver in the business is really getting the pricing and mix where it needs to be. And I think that's what gets us to the low 80s OR and beyond.

Thomas Wadewitz

Okay. Yes. Great. And nice to see the share buyback program too and the capital discipline.

Operator

The next question is from Brian Ossenbeck with JPMorgan.

Brian Ossenbeck

Maybe you can put a little finer point on the difference in the performance of the legacy and the ramping terminals, how that gap has changed throughout the year, where we expect it to be in the fourth quarter? But it still seems like there's quite a bit of improvement there. And I don't know if that's going to be something that improves ratably. And I guess, frankly, how big that gap is right now between the 2?

Matthew Batteh

Yes. We're certainly pleased to see the progress. Year-over-year, those newer or ramping facilities, they improved 40 basis points year-over-year. They're operating in the low 90s and they're making progress. But importantly, they're starting to build density. A uplift helps those a lot. Like I mentioned before, you've got the natural cost, and that's part of opening a facility. You have to have a terminal manager. You have to have a sales stack. You have to have people that can service the customer. And those facilities are generally not as dense. They're generally not as efficient in their pickups early on because they're in newer markets. So there's still a bit of a gap to be expected, but they're going to continue to march themselves forward.

I would point to a few things that are extremely important for us. Those are going to continue to march their way. But those facilities also benefit the legacy facilities. We've seen countless examples. Number one, we're getting more seats at the table, but we've seen countless examples of a customer being willing to give us business in a legacy market, areas that we've covered for years, because we can also cover a new market.

So that's eased to the customer. That's the ability to say, "You know what, Saia, you can handle all these locations for me. I'm going to give you a shot at this business. So we look at them and we measure them independently and they're going to continue to drive strong incrementals. But the opportunity is in the remainder of the business as well. And I think you're seeing that in the outsized revenue per shipment growth, the volume growth and the lanes that we improve transit times. The more that we get like-for-like and have the ability to compete on a real basis, that's critical. So they're going to continue to march their way, but they also impact the legacy facilities as well.

Brian Ossenbeck

So would that be more of a step change when you hit, I don't know, a critical mass or critical density. Just trying to figure out how that could look in the future?

And then maybe just a follow-up on, Fritz, you mentioned, I guess kind of relatedly, there's still some mix shift bouncing around in the West Coast area. Just wanted to understand what that was because it feels like it's been out there for quite some time and still seems like it had been...

Frederick Holzgrefe

Yes. What I would just point out is, Brian, with the West Coast, it was just still down. L.A. region was still down a bit year-over-year, kind of low single digits. So that's a higher revenue per shipment for us. So that's a bit of a mix headwind. I think it's just kind of the nature of that market right now, at least as it relates to what freight that we think makes sense in our network and the customers that we're -- that might be interested in working with us. So that's probably part of it there. So I think that over time, what I'm excited about is that the rest of the business is doing pretty well. So that's a continued opportunity for us.

Matthew Batteh

That's right. On the other piece, Brian, on a step change, a stronger backdrop certainly helps those, right? Where you've got a driver in a new market that may be going out and getting 7 or 8 shipments every time he goes out on a route, a legacy facility may be 12 to 15 and very market dependent. So an uplift certainly helps that, but we're going to continue to push our way there. There's -- it's just work, right? It's execution. It's the opportunity to get in front of a customer and get the opportunity to do a great job, handle their freight and get a second shipment the next day. So it's execution that's really going to drive that.

Operator

The next question is from David Vernon with Bernstein.

David Vernon

I wanted to ask about the rev per bill focus. I mean, obviously -- I mean, I think I understand the more revenue you get per stop and cost, kind of the same to make a stop. You should be getting some leverage out of that. But I'm just wondering whether the heavier freight is priced for the extra work it's adding. The lack of sort of margin leverage, I guess, to the tonnage number is really what I'm trying to get at, whether there were any sort of temporary or transitory things getting in between the tonnage growth and actual margins in the quarter? Or how we should think about that relationship maybe for 2027?

Matthew Batteh

Well, like Fritz talked about earlier, we're interested in finding the customers that are willing to pay for the service that we provide. The tonnage shift and the heavier-weighted shipments, they often come with more handling units and having to do different things to service that for our customer. But over time, we feel like finding the right mix of business in our network is going to drive the incremental margin opportunity, the OR opportunity for us.

All else equal, on a heavier weighted shipment, you get paid more for it. But keep in mind that a heavier-weighted shipment that's in a 1- and 2-day market is different than one that may have been coming out of the LA market that Fritz just talked about that's still down a little bit. So there is extra costs associated with handling them, but it's also an opportunity for us to be more embedded with a customer and have the message of, we're willing to continue to do this for you, but we also want an opportunity to handle your heavier weighted shipments as well. So there's increased costs associated with it, but we're finding the right mix of business that works best in our network.

Frederick Holzgrefe

I think there is opportunity to continue to drive sort of the incrementals even on the higher -- heavier-weighted shipments. Part of that is getting additional density with the customers. That's -- part of it is there. I think in the third quarter, the cost headwinds that we highlighted in there, and that sort of the discrete period, that was a bit of -- that was -- those were all headwinds to us into the incrementals there.

If you look at what we're thinking about or what we've guided to in the fourth quarter, we really haven't -- we're expecting kind of the mix of business that we have presently to kind of continue on a sort of seasonal basis. And with the sort of OR improvements that we're expecting in Q4, that's going to drive -- those are reflective of incrementals there. So I think you're going to see some better sort of leverage performance out of that in the fourth quarter and into next year. So that's something we're very monitoring closely and closely attuned to because that -- certainly, heavier weighted shipments, although there are a lot of things you like about that, that also adds network complexity, and you got to make sure that you've got that priced accordingly. So we like how it lays out for us in Q4 and beyond.

David Vernon

All right. And then I guess, with hiring, the labor market is obviously very tight right now. Is that maybe adding to incremental cost pressure? I'm sure it is in purchase trends. I was just wondering as far as kind of the expansion that you're having, the marginal costs that you're adding, is that coming in at a higher rate that's also maybe kind of contributing in the short term here?

Frederick Holzgrefe

I think that's pretty minor in the whole scheme of things where we are having added hiring costs. I think that the one nice thing about the -- some of these newer markets, we are scaling in some -- in those markets as we're adding volume. But we've got to continue to drive the incrementals in those in the newer facilities. I think that's probably going to really deal -- help us address with the incrementals over time as we continue to leverage those facilities.

Operator

The next question is from Eric Morgan with Barclays.

Eric Morgan

I just had one on service. Great to see the tangible improvements in claims ratio over the last couple of quarters. And I think you saw lower claims in insurance expense in the P&L as well. So I was just wondering, with the [ Mastio ] results coming out recently, if you have any new insights into where you have further opportunities to make progress or just where you think it should be focused to kind of take that next leg up on service outcomes?

Frederick Holzgrefe

Yes. I think all the investments that we're focused on right now, whether it be the REV initiative that we talked about -- and the REV initiative certainly provides -- it's an interesting opportunity for us because improving transit times and predictability are all things that customers really value. As you build density, you're able to do that, which also has a cost benefit as well. So also a little bit helping -- highlighting some of the leverage opportunity from the last question. As we continue to develop those, it does 2 things, right? It certainly provides great value to the customer because they have got a more predictable service that they like to see. They also -- on the cost side, that's a benefit.

We track very, very closely our internal service performance. Our Net Promoter Score is up 15%. And those are with customers that we do a lot of business with, right? So that -- I feel like that's great feedback. And I also think we look at kind of the markets where we'll be able to grow and grow both volume and our shipments and tonnage, and that's reflective of customer acceptance, which I think is also an important measure of what customers think about what they're getting for us.

Now with all that said, we're very, very intentional about how do we continue to drive our claims performance, drive that lower. I think there certainly are opportunities to continue to improve in those areas. We want to make sure we're easy to do business with. Part of that is getting -- establishing and getting the appropriate pricing in place. You do that, and then that becomes less of a conversation with customers. They kind of understand where we are.

So those are kind of all part of the experience. I mean how can we -- any sort of interaction with the customers make that a positive experience. In the last year alone, we've redeployed all of our customer service sort of functions to our field organization. And the chief benefit of that are the people that need -- that may tap in and want to understand what's going on at their freight. Well now they can talk to people actually in the field. So we've made those investments over time, and it just takes time for us to kind of develop that, continue to develop that with the customer. They understand the value in all that. So it's an ongoing opportunity, but really pleased with the success that we've had, not only this quarter but this year.

Eric Morgan

Appreciate that. And just a quick follow-up on the buyback program. I know you mentioned still needing to make investments. So I was just wondering if you had any early thoughts on where CapEx could shake out for '27 and also just how you're thinking about any debt on the balance sheet?

Matthew Batteh

Yes. Obviously, a great opportunity for us to announce that and -- really driven by all the work and execution over the past number of years. On the CapEx side, we're still working through the final pieces of our plan in the next month or so, but probably a 13% to 14.5% of revenue type number is fair. The -- like Fritz said in the comments, I mean, the big investment years from a real estate standpoint are behind us. There's obviously still some strategic investments that we need to make and the flexibility and the opportunities ahead of us are still there. So that's probably a fair number. Longer term in the business, we feel like it's a 12% to 15% of revenue type number.

Obviously, very little debt on the balance sheet right now. We've got -- we want to make sure that we have flexibility to take advantage of strategic investments that may come our way. But we feel like we're in a really good spot to be able to execute on both, and that's the main driver of the announcement or one of the main drivers of the announcement. But we feel like we're in a great spot.

Operator

The next question is from Bascome Majors with Stephens.

Bascome Majors

Fritz, 2 big board level announcements with the buyback and adding Todd Fowler to the Board. Can you talk a little bit about how long you've been deep in discussions of both those moves? And what brought them over the finish line today?

Frederick Holzgrefe

Sure. The capital allocation conversation is one that, that good fiduciary sort of view of that, that's something is an ongoing conversation. I mean if you go back to -- all the way back to 2017, when we decided to do the organic expansion in the Northeast, that was a capital allocation decision. Do you look for an opportunity to buy a business and bolt it on or you do it organically? And then we got into that, felt like that was a pretty efficient use of capital to develop our skills around organic expansion, and we've done that.

We think the -- leading into the sort of generational real estate opportunity that the bankruptcy -- industry bankruptcy presented with us, at that point in time, certainly, we were looking at potential, how do we allocate capital because if you look at the balance sheet at that point in time, we were performing very well at ample liquidity. We had a position that probably a shareholder return made sense then.

But the industry bankruptcy got there and that was a generational opportunity so the appropriate deployment of capital clearly was there. And since then, it's been about how do we get the industry or get our balance sheet back to where it has plenty of flexibility, high-quality balance sheet. And when we look at our performance right now, and you've assessed that, and now is a good time for a buyback -- introduce the buyback program as we look at kind of what the capital deployment opportunities are and kind of where the profitability of the business is. So I think that this is a long been a Saia sort of kind of how we approach these -- our deployment of capital.

With respect to the Board, I mean, listen, I think part of any good business over time, you're going to look for opportunities to continue to refresh the Board or refresh the leadership of the company, either developing people internally or whatever it might be. I mean we all operate in a very dynamic environment. So having the opportunity to bring somebody of Todd's skill and background and kind of add that to a strong Board, that only seem to make sense for us. And over time, you're always looking for opportunities as you think about where the Board needs to be and kind of how you refresh the Board. And people aren't going to be on the Board forever, right? So you want to be in a position to have a good transition. And for us, these are things that don't come up in a matter of days. These are things that you look at over a period of time as part of your planning.

Bascome Majors

And Matt, if you could maybe add -- we've talked about funding the buyback and how you have capacity to do that and meet your capital needs. But do you look at this as opportunistic, valuation-based or excess cash flow based? Will there be a matrix? Just any thoughts on like how you deploy that tactically would be helpful.

Matthew Batteh

Sure. Yes. I mean it's a combination of both. We're going to be opportunistic with this and do it where it makes sense. I mean, number one, I think it's a signal of the long-term potential that we see in the business that we've long discussed and the execution over a number of years, but it certainly is our view of what the long-term potential in the business is. But we're going to be disciplined. We're going to be opportunistic around this. We've still got strategic investments to make in the business, and we want to have flexibility to do that. So we're going to be disciplined around this and do it where it makes sense and provide ourselves the opportunity to where there's good real estate investments to make. We want to be able to take advantage of those to build out our network and keep the balance sheet in a good spot to be able to do that. So it's really a combination of all those that you mentioned.

Operator

The next question is from Ravi Shanker with Morgan Stanley.

Ravi Shanker

Just a quick one here. Obviously, we are now lapping the cycle inflection and kind of going into the second year of big rate increase on the PL side. I'm just trying to get a sense of where you have a better idea of how much that correlates to LTL pricing as well? And given that some PLs are talking about double digits and double, double digits kind of, do you feel like you should see a little more traction with LTL yields here, just given the rising type?

Frederick Holzgrefe

Yes. I mean, certainly, I think if you look at the overall structure of the TL market and kind of what's going on there, those businesses, industries are focused on TL. So I think the downstream impact of the significantly smaller LTL space is that the players in the business that are handling freight in this mode of distribution are all LTL players. So I think that, that makes us a competitive LTL environment, so focused LTL players in the space. So you don't see the truckload sort of carrier participation. So I think that's one factor that's out there.

The underlying business in LTL is inflationary. Nothing that -- put fuel aside just for a second. I mean, we all know that's inflationary. But everything else that we touch is inflationary. Asset capital deployment is significant in this business. So I think that, that bodes well for this sector of the transportation business. So I think that, that structurally, is sound. I still think it's -- over time, we're going to see it develop as the freight market continues to improve broadly. So we like where Saia is positioned and we like where -- kind of what our opportunity and runway is.

Operator

The next question is from Ari Rosa with Citigroup.

Ariel Rosa

So maybe continuing on that line of questioning. I think the last time we spoke, Matt, you mentioned that customers have been a little bit more receptive to pricing actions. Correct me if I'm mistaken on that, but I believe that was kind of what you said. Just wanted to get confirmation on that and understand how much of that you think is kind of unique to Saia and some of the better service levels that you're providing? And how much of that is just a reflection of the broader industry environment? And maybe capacity being hard to find, and especially high service levels being difficult to find?

Matthew Batteh

Sure. Well, I don't know that any customer ever loves a price increase, certainly. But it's -- as we look at the investments that we've made in our business and our ability to provide service to customers, we are able to have better discussions with them about the value that we're providing. And we're able to cover every market. We're able to provide part of that REV initiative as an automated guaranteed 10 a.m. delivery. The first in the industry. We're able to provide solutions for them to meet their needs. And so the discussions, while always challenging and back and forth is all about the value that we're providing and the ability to provide service to them like-for-like with everyone else that's national.

So customers want service reliability, they want consistency. And the more that we're able to do that, it puts us on equal foot. Now truckload markets tightened certainly. There's probably some modal switch where things are going into rail as the overall driver capacity tightens, that has an impact and the ability to move LTL. No one is typically moving something LTL because it's the most cost-effective way to move freight, obviously, but it provides a very important role in the supply chain, and we're able to provide more solutions for customers in markets that we haven't always been in. So customers, I would say, are more receptive because we're able to provide more problem-solving aspects to it, but we've got to continue to drive that.

Part of the growth strategy in having more terminals is that we're able to build density with customers. And there's a power of incumbency there. When you're handling a bigger portion of a customer's business, a larger share of their wallet, you're harder to change out if you're doing a great job. And we've got that opportunity ahead of us with the more customers that we can be in front of, the more problems we can solve. That's just more value, and it gives us a better chance to be able to drive rates. The good news is everyone's focused on that. And that bar continues to climb, and we feel like we've got a lot of runway to continue to do that.

Ariel Rosa

Do you feel like customers have become more receptive kind of at an industry-wide level though to -- you mentioned several times, the inflationary cost pressures that everyone is experiencing. Do you think customers have understood that better? And as a consequence, it's maybe perhaps a bit easier to kind of have those conversations?

Frederick Holzgrefe

I think the conversations go a lot better when you can come in and say, hey, our claims ratio is down 40% year-over-year. We've added improved transit times in 2,000 lanes. We have invested in customer service in the field to support your -- the customers' initiatives and their programs. I think all those things make for a more palatable conversation.

But as Matt pointed out, no one is really excited about a rate increase. But if you're delivering a very high level of service, you have an opportunity to be in that conversation. I mean, listen, if you can be reliable and a customer can count on you in their supply chain to really make money in their business, to drive the returns in their business, you have a shot to participate in that, right? And that -- the customer that comes to you and says, "Look, the only way we're going to be profitable is we have cheap LTL." That's probably not a customer that's going to make a lot of sense for Saia.

Somebody is going to be very demanding. And last week, we had a big national account that awarded us Carrier of the Year. And when they came in and they talked to us and they explained why we won that, they didn't talk about low rates. They talked about we know that we're incredibly demanding and you achieved and exceeded our expectations. That is an opportunity for us to make sure we're compensated for that significant investment we made to support that customer success. So that conversation is stronger when you've got a national footprint, high level of service, those all help that conversation.

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 that have called in. At Saia, we believe that our value proposition to the customer continues to be significant, and we look forward to talking about the success we will achieve in the quarters and years to come. Thank you for your interest.

Operator

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