In This Article:
Participants
James Todd; Chief Financial Officer, Vice President; Landstar System Inc
Frank Lonegro; President, Chief Executive Officer, Director; Landstar System Inc
Joseph Beacom; Vice President, Chief Safety and Operations Officer; Landstar System Inc
Jim Applegate; Vice President and Chief Corporate Sales, Strategy and Specialized Freight Officer; Landstar System Inc
Matthew Dannegger; Chief Field Sales Officer; Landstar System Inc
Brian Ossenbeck; Analyst; JP Morgan
Tom Wadewitz; Analyst; UBS Investment Bank
Jordan Alliger; Analyst; Goldman Sachs
John Chappell; Analyst; Evercore ISI
Scott Group; Analyst; Wolf research
Daniel Imbro; Analyst; Stephens, Inc.
Elliot Alper; Analyst; TD Cowen
Stephanie Moore; Analyst; Jefferies
David Hicks; Analyst; Raymond James Financial.
Presentation
Operator
Good afternoon, and welcome to Landstar Systems Inc Third-Quarter Earnings Release Conference Call. (Operator Instructions) Today's call is being recorded. If you have any objections, you may disconnect at this time.
Joining us today from Landstar are Frank Lonegro, President and CEO; Jim Todd, Vice President and CFO; Joe Beacom, Vice President and Chief Safety and Operations Officer; Jim Applegate, Vice President and Chief Corporate Sales, Strategy and Specialized Freight Officer; and Matt Dannegger, Vice President and Chief Field Sales Officer.
Now I would like to turn the call over to Mr. Frank Lonegro. Sir, you may begin.
James Todd
Thank you, Bill. Good afternoon, and welcome to Landstar's 2024 Third Quarter Earnings Conference Call. Before we begin, let me read the following statement. The following is a safe harbor statement under the Private Securities Litigation Reform Act of 1995. Statements made during this conference call that are not based on historical facts are forward-looking statements.
During this conference call, we may make statements that contain forward-looking information that relates to Landstar's business objectives, plans, strategies and expectations. Such information is by nature subject to uncertainties and risks, including, but not limited to, the operational, financial and legal risks detailed in Landstar's Form 10-K from the 2023 fiscal year described in the section Risk Factors and other SEC filings from time to time.
These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking information, and Landstar undertakes no obligation to publicly update or revise any forward-looking information. I'll now pass it to Landstar's CEO, Frank Lonegro, for his opening remarks.
Frank Lonegro
Thanks, JT, and good afternoon, everyone. First, I want to thank our BCOs and agents and the Landstar employees who support them every day. It is unbelievably energizing to engage with our network of entrepreneurial agents and capacity providers as we work together to align Landstar for future growth and continued success.
As I've traveled the country meeting with agents this year, I've been thoroughly impressed with the capability, the uniqueness and the resiliency of each agency, as well as their collective commitment to Landstar's success.
In the third quarter, I also had the opportunity to meet with hundreds of BCOs at our July All-Star event and September appreciation days, where we celebrate the accomplishments and professionalism of our BCOs. They are the best in the industry and help drive the success of Landstar's business model.
As we move towards the end of the 2024 fiscal year, we continue to be laser focused on accelerating our business model and executing on our strategic initiatives. We want to be in the best position possible to leverage the freight environment when it turns our way. We are also focused on our commitments to continuous improvement in the level of service and support we provide to our customers, agents, BCOs and carriers each and every day.
Turning to slide 5. The freight environment in the 2024 third quarter continued to be characterized by soft demand and readily available truck capacity. Accumulated inflation on goods continued to impact the amount of truckload freight generated in relation to consumer spending.
Industrial output was soft throughout the quarter, as evidenced by year-over-year declines in manufacturing, with ISM fluctuating in the mid-40s. Truck capacity continued to be readily available, with only small pockets of supply-demand equilibrium, and market conditions continue to favor the shipper.
With that backdrop, Landstar performed admirably in the 2024 third quarter, delivering top and bottom line results within our guidance range. Our third quarter guidance issued in conjunction with our 2024 second quarter earnings release call for the number of loads hauled via truck to be 6% to 10% below the 2023 third quarter and overall revenue per truckload to be flat to 4% above the 2023 third quarter.
The actual number of loads hauled via truck in the 2024 third quarter was 7.7% below the 2023 third quarter, slightly above the midpoint of our guidance. Actual revenue per truckload in the 2024 third quarter was 0.7% above the prior year quarter within the lower half of the guidance range.
Our balance sheet continues to be very strong, and our capital allocation priorities are unchanged. I'm a strong believer in the company's stock buyback program, and have committed to patiently and opportunistically executing on our existing authority to benefit our long-term stockholders.
As noted in the release, we deployed over $22 million of capital toward buybacks and repurchased approximately 121,000 shares of common stock during the 2024 third quarter. We continue to invest through the cycle in leading technology solutions for our network of independent business owners and have allocated a significant amount of capital this year towards refreshing our fleet of [trimming] equipment.
Turning to slide 6 and looking at our network. To scale, systems and support inherent in the Landstar model helped to drive the operating results generated during the 2024 third quarter. JT will get into the details on revenue loadings and rate per load in a few minutes.
As noted during previous earnings calls, I've been in the transportation sector for most of my career and realized how important Landstar's safety culture is to our continued success. Our safety performance is a direct result of the professionalism of the thousands of Landstar BCOs operating safely every day and the agents and employees who work to reinforce the critical importance of safety at Landstar.
I'm proud to report an accident frequency index of 0.56 DOT reportable accidents per million miles during the first nine months of 2024, an improvement of approximately 10% as compared to the corresponding period of 2023. This is an impressive operating metric that speaks to the strength, skill, talent and dedication of our BCOs and provides a point of differentiation our agents are able to highlight in discussions with our freight customers.
Turning to slide 7. On the capacity side, BCO truck count decreased sequentially in the third quarter from the second quarter by 153 trucks, consistent with our expectations of BCO declines slowing in Q3 relative to Q2. On a year-over-year basis, BCO truck count has decreased approximately 12% since the end of the 2023 third quarter.
It is typical to incur turnover in BCO truck count in a low rate environment. BCO turnover continues to be influenced by the significant increase in the cost of repairs and the often lengthy period of time trucks are out of service, awaiting repairs.
We would expect BCO count to continue to decline in the fourth quarter, given the challenging operating environment faced by many owner-operators at a pace somewhat similar to the pace experienced during the third quarter.
I will now pass the call back to JT to walk through the 2024 third quarter financials in more detail.
James Todd
Thanks, Frank. Turning to slide 9. As Frank mentioned earlier, overall, truck revenue per load increased 0.7% in the 2024 third quarter compared to the 2023 third quarter. In terms of the breakdown between van and unsided, revenue per load on loads hauled by unsided platform equipment increased 4% year over year, whereas revenue per load on loads hauled by van equipment decreased 2% year over year.
In comparison to overall truck revenue per load, we consider revenue per mile on loads hauled by BCO trucks a more pure pricing number, as it excludes fuel surcharges billed to customers that are paid 100% to the BCO.
In the 2024 third quarter, revenue per mile on unsided platform equipment hauled by BCOs was 1% above the 2023 third quarter, while revenue per mile on van equipment hauled by BCOs was 3% below the 2023 third quarter.
Although revenue per mile on BCO van loads softened a bit from a year ago, Landstar's revenue per mile on this service offering remains well above the pre-pandemic 2019 third quarter by approximately 19%. We believe that revenue per mile on van loads will stay relatively higher than pre-pandemic levels given the significant amount of incremental cost to operate a truck today, including the cost of insurance for both large and small fleets as compared to five years ago.
On a sequential basis, truck revenue per load increased 3.2% in the third quarter versus the second quarter. The sequential improvement was negatively impacted by a 4.3% decline in average diesel prices in the third quarter compared to the 2024 second quarter.
We believe the impact of lower diesel prices, particularly with respect to rates paid to truck brokerage carriers, muted some of the seasonal rate strength we experienced in the quarter. Solely when looking at loads hauled by BCOs, revenue per load improved 5.7% in the 2024 third quarter from the 2024 second quarter on a 4.1% increase in revenue per mile and a 1.5% increase in the average length of haul.
Delving further into these seasonal trends, revenue per mile on van equipment hauled by BCOs increased 1% from June to July, was flat July to August and remained flat from August to September. The August to September month-to-month change underperformed pre-pandemic typical seasonal patterns, whereas June to July and July to August outperformed.
As to loads hauled by BCOs on unsided platform equipment, revenue per mile increased 10% from June to July, decreased 3% from July to August off a more challenging starting point, and increased 2% from August to September.
The month-to-month seasonal trends on unsided platform equipment are generally less predictable compared to that of van equipment. This relative volatility is often due to the mix between heavy specialized loans and standard flatbed volume.
Heavy haul revenue, one of our areas of increased strategic focus, was down approximately 5% year over year in the third quarter, slightly outperforming core truckload revenue. Heavy haul loadings were essentially flat year-over-year, while revenue per heavy haul load declined 5% year over year.
Non-truck transportation service revenue in the 2024 third quarter was 9% or $8 million above the 2023 third quarter. The increase in non-truck transportation revenue was mostly due to a 28% increase in ocean revenue per shipment.
Turning to slide 10. We've provided revenue share by commodity and year-over-year change in revenue by commodity. Transportation Logistics segment revenue was down 6% year overyear on a 7% decrease in loadings, partially offset by a 2% increase in revenue per load as compared to the 2023 third quarter.
Within our largest commodity category, consumer durables, revenue declined 3% year-over-year on an 8% decline in volumes, partially offset by a 5% increase in revenue per load. Aggregate revenue across our top five commodity categories, which collectively make up about 69% of our transportation revenue, was down 7% compared to the 2023 third quarter.
While Slide 10 displays revenue share by commodity, we thought it would also be helpful to include some color on volume performance within our top five commodity categories. From the 2023 third quarter to 2024 third quarter, total loadings of machinery decreased 9%. Automotive equipment and parts decreased 9%.
Building products increased 3%, and hazardous materials decreased 13%. Additionally, substitute linehaul loadings, one of the strongest performers for us during the pandemic and one which varies significantly based on consumer demand, decreased 36% from the 2023 third quarter.
Also, Landstar is a truck capacity provider to other trucking companies, 3PLs and truck brokers. During periods of tight truck capacity, those other freight transportation providers reach out to Landstar to provide truck capacity more often than during times of more readily available truck capacity.
The amount of freight hauled by Landstar on behalf of other truck transportation companies is reflected in almost all of our commodity groupings, including our substitute line haul service offering.
Overall, revenue hauled on behalf of other truck transportation companies in the 2024 third quarter was 21% below the 2023 third quarter, a clear indicator that capacity is readily accessible in the marketplace. Revenue hauled on behalf of other truck transportation companies was 12% and 15% of transportation revenue in the 2024 and 2023 third quarters, respectively.
Even with the ups and downs in various customer categories, our business remains highly diversified with over 25,000 customers, none of which contributed over 6% of our revenue in the first 39 weeks of 2024.
Turning to slide 11. In 2024 third quarter, gross profit was $112.7 million compared to gross profit of $128.1 million in the 2023 third quarter. Gross profit margin was 9.3% of revenue in 2024 third quarter as compared to gross profit margin of 9.9% in the corresponding period of 2023.
In the 2024 third quarter, variable contribution was $171.4 million compared to $187.4 million in the 2023 third quarter. Variable contribution margin was 14.1% of revenue in the 2024 third quarter compared to 14.5% in the same period last year.
The decrease in variable contribution margin compared to the 2023 third quarter was primarily attributable to a mix headwind and a decreased variable contribution margin on revenue generated by truck brokerage carriers as the rate paid to truck brokerage carriers in the 2024 third quarter was 145 basis points higher than the rate paid in the 2023 third quarter.
Turning to slide 12. Operating income declined as a percentage of both gross profit and variable contribution primarily due to the impact of the company's fixed cost infrastructure. Principally, certain components of selling, general and administrative costs in comparison to smaller gross profit and variable contribution basis.
Other operating costs were $15.1 million in the 2024 third quarter compared to $15.2 million in 2023. This modest decrease was primarily due to decreased trailing equipment maintenance costs, almost entirely offset by an increased provision for contractor bad debt.
Insurance and claims costs were $30.4 million in the 2024 third quarter compared to $29.5 million in 2023. Total insurance and claims costs were 6.7% of BCO revenue in the 2024 third quarter as compared to 5.8% in the 2023 third quarter. '
The increase in insurance and claims costs as compared to 2023 was primarily attributable to increased net unfavorable development of prior year claim estimates, partially offset by decreased BCO miles traveled during the 2024 period and decreased accident frequency of current year trucking claims during the 2024 period.
During the 2024 and 2023 third quarters, insurance and claims costs included $4.6 million and $2.3 million of net unfavorable adjustment to prior year claim estimates, respectively. Selling, general and administrative costs were $51.3 million in the 2024 third quarter compared to $51 million in the 2023 third quarter.
The slight increase in selling, general and administrative costs was primarily attributable to increased wages and employee benefit costs, almost entirely offset by decreased provisions for compensation under our variable compensation programs.
The provision for compensation under variable programs that is stock-based compensation and incentive compensation was $700,000 during the 2024 third quarter as compared to $1.3 million during the 2023 period.
Depreciation and amortization was $15.4 million in the 2024 third quarter compared to $14.4 million in 2023. This increase was primarily due to increased depreciation on software applications resulting from continued investment in new and upgraded tools for use by agents and third-party capacity providers, partially offset by decreased depreciation on the company's trailer fleet.
The effective income tax rate was 22.2% in the 2024 third quarter compared to an effective income tax rate of 24.3% in the 2023 third quarter. The decrease in the effective income tax rate was due to the impact of federal tax credits resulting in a onetime adjustment to the federal tax provision during the 2024 period.
Turning to slide 13 and looking at our balance sheet. We ended the quarter with cash and short-term investments of $531 million. Cash flow from operations for the first 39 weeks of 2024 was $225 million, and cash capital expenditures were $24 million.
The company continues to return significant amounts of capital back to stockholders with $108 million of dividends paid and $79 million of share repurchases during the first 39 weeks of 2024. The strength of our balance sheet is a testament to the cash-generating capabilities of the Landstar model.
Back to you, Frank.
Frank Lonegro
Thanks, JT. As we progress through the fourth quarter, year-over-year comparisons should begin to ease slightly. Looking at historical seasonality from Q3 to Q4, pre-pandemic patterns would normally yield a 1% improvement in both truck revenue per load and in the number of loads hauled via truck, yielding a slightly higher top line sequentially.
In 2024, as we moved from September into the first few weeks of October, our truck volumes trended reasonably in line with normal sequential month-to-month patterns based on pre-pandemic seasonal performance trends.
However, we do not anticipate our typical seasonal improvement into November and December, based on the expectation of a reasonably muted peak season as compared to historical fourth quarters.
On the [rig] side, truck revenue per load has trended slightly below these pre-pandemic patterns. Turning to Slide 15. Our year-over-year expectations for the 2024 fourth quarter are that truckload volumes will be in a range of 4% below to 1% above the 2023 fourth quarter, and truck revenue per load will be in a range of flat to 4% above the 2023 fourth quarter.
On a sequential basis, our guidance for the fourth quarter implies a 3% decline to a 3% increase in truckload volumes and a truck revenue per load ranging from down 2% to up 1% versus the 2024 third quarter. We also expect revenue for our nontruck modes to be somewhat similar to what we experienced in the 2024 third quarter.
Based on these assumptions, we expect revenue in the 2024 fourth quarter to be in a range of $1.15 billion to $1.25 billion and earnings to be in the range of $1.25 per share to $1.45 per share. The 2024 fourth quarter guidance incorporates a variable contribution margin range of 13.9% to 14.2% and insurance and claim costs of approximately 6.0% of estimated BCO revenue.
One last point before we take your questions. The 2024 third quarter included a $0.04 tax benefit as a result of the onetime impact of certain federal tax credits on our federal tax provision. We do not expect similar tax benefits to occur in the 2024 fourth quarter.
The normalized tax rate reflected in our fourth quarter guidance accounts for most of the difference between the $1.35 midpoint of our fourth quarter EPS range and the $1.41 of EPS we achieved in the third quarter. With that, Bill, we'd like to open the line for questions.
Question and Answer Session
Operator
Thank you very much, sir. At this time, we will begin a question-and-answer session. (Operator Instructions)
Brian Ossenbeck, JP Morgan.
Brian Ossenbeck
Hey guys afternoon. Thanks for taking the questions. So I wanted to see, first, if you could just talk a little bit about the BCO count. You say it's trending down or at least the decrease is decelerating a little bit. So do you have any visibility to when and where that might bottom out if rates were to pop up 5% tomorrow, just hypothetically, do you think you get them to come back pretty quickly? Or at this point, do you feel like maybe some of those folks have moved on to other things?
Frank Lonegro
Hey, Brian, good to hear from you. I'll certainly give a start and then turn it over to Joe. One of the reasons that Q4 is going to be similar to Q3 is just the time of year when you're coming into the holidays. And Q1 is also usually a slow add period for us.
So I think the trend we've seen over the last three or four quarters where the declines have begun to moderate. I mean, that is still the general thematic. If we get a 5% bump in rates, are we going to see folks come back? Yes, we are. Assuming it's stable and sustainable.
I mean, that's the one thing that we have seen throughout this year and even in this quarter, on a month-to-month basis, you get a couple of good weeks and then a couple of tough weeks. So sustainability in that rate environment is going to be really important.
And when the freight recession turns, I mean, similar to prior instances where we've had downturns and upturns, the BCOs come back. I mean, we offer a tremendous opportunity for folks to leverage the percentage pay that we offer and certainly all the benefits that we provide more broadly. But let me turn it over to Joe and let him add some color.
Joseph Beacom
Yes. Thanks, Frank. Yes, I would echo that. I think the duration of this downturn has really been the unique part of it. I think Frank mentioned our appreciation events that we had. We had one in September. And we had hundreds of BCOs there, and they all had great attitudes.
They all were appreciative of Landstar, making good money. And yet in the quarter, we lose 153 trucks. And I think it's because a lot of them were experienced. They have a low cost to operate, and they're doing fine. They can weather the storm, they've seen it before.
But that is not everybody. And I think what's happened over time over these couple of years is that we've seen a kind of an exodus of those that are less tolerant of a little higher cost to operate. So with the rate increase, obviously, that benefits them.
And I think we would see a pretty decent turnaround, much like we did when we added over 900 trucks in 2018, 750 in 2020. So I think the model proves that we can add capacity at a pretty rapid clip. But I do think something that's sustainable that really whets the appetite to get back in.
We've had a couple of false starts. And I think anything that could be sustainable in moving in that direction, that would be attractive. I think you'd see people come off the sidelines.
Brian Ossenbeck
Okay. Thanks for that. And just a follow-up. Maybe, Frank, you can talk a little bit about the cross-border business. It seemed like it was a little bit softer than you thought in the last quarter. But where does that stand now?
Obviously, there's a bunch of noise on both sides of the border with elections and tariffs and things like that. So anything you're seeing here in the near term? And how does that business look in terms of the strategic directions once we get past the next month or so here? Thanks.
Frank Lonegro
Great. Great question and a lot of the points that you raised are obviously the ones that are the key drivers there. Look, on a long-term basis, we continue to see that near-shoring phenomenon being the right thing for us to invest in and continue to drive growth from. There are a fair amount of uncertainties that exist right there right now given whether it's US politics or Mexican politics.
So the uncertainties around what is trade policy going to be is certainly an overhang. Just earlier today was looking at foreign direct investment by month. And when you look at that over the last 12 months, it has ticked down meaningfully, and I think it is a bit of a wait-and-see approach for many businesses who are thinking about deploying capital on the nearshore side.
So all of that translates into some softer play on a year-over-year basis. But the long-term trajectory for that business continues to be very positive. And maybe Jim and Joe, I'll let you guys chime in a little bit on this one.
Joseph Beacom
Yes, I would just say, Frank, we're kind of seeing what we saw in Q2. We've got a small handful of large accounts there that do a lot of cross-border for us, mostly in the consumer durables area that are just slow. I mean, we're getting some assurances that we haven't lost the accounts or the business, that's just a lot of indecision there.
But on the flip side, as we've put salespeople in the interior, we're getting traction on new accounts and new geographies. It's just hard to overcome some of the larger declines with those accounts that are kind of flat in the quarter. But overall, I think to Frank's point, our value proposition there and our capabilities there and the -- just kind of the -- what we've proven to be able to do in the cross-border space will serve us well going forward.
Jim Applegate
Yes. And just to touch on that as well, too, from a customer standpoint, the interest is definitely there. That pipeline is very strong. We're recruiting more agents into that market. I think everybody sees the long-term potential. And I think it's going to be something that can be a good growth area for Landstar for years to come.
Brian Ossenbeck
Okay, thanks very much for the time.
Operator
Tom Wadewitz, UBS.
Tom Wadewitz
Yes, great. Good afternoon. I wanted to see if you could offer thoughts on any changes in the pace of attrition? It seems like the market has been just a trading in a slow pace with solid here and there, maybe a bump in rates recently from hurricanes. But how do you think about the kind of pace of attrition in the markets you're seeing and whether that's enough to be optimistic about some improvement in first half next year in the truckload market? Or if it's just kind of tough to see when that supply-demand balance is more?
Frank Lonegro
Yes, Tom. So I think a couple of things are happening. When the hurricanes came through, we did see some regional tightness, which tells you that you got to be getting close in order to generate that level of tightness.
That's a little bit of a maybe a green shoot to think through. But at the same time, the hurricanes, at least the ones that came through the middle of the country, I mean, those are ones where demolition is going to happen before reconstruction, just given the magnitude of the damage there. That's one that I think ultimately will help us longer term.
But in terms of the pace of declines, I mean, we're continuing to track that on a weekly basis. Our attrition has slowed. We thought it would slow. It did slow. Now we're in kind of the shorter part of the year. So I think you're going to see exits outpace additions, just given where we are in the calendar.
But one of the things we're really working on is how do we accelerate our recruiting efforts to make sure that we have the accounts that we need and have the capability that we need when the environment turns. But I think it's going to continue to bleed out over the next few quarters before that cross -- that cross-line happens, and we ended good a little bit of boost in rates. Joe, anything you'd add to that?
Joseph Beacom
No, I agree. I do think there has to be some sort of a catalyst, right? And right now, it's just hard to see exactly what that catalyst is going to be.
Frank Lonegro
Yes. I think there's a lot of sidelines on this one. Tom, as I mentioned, trade policy a little while ago, I mean, tax policy is up in the air, depending on the election. Are we going to have a little transition of power? What's the Fed going to do? Like those are all unknowns, but likely have near-term visibility. If we can all just hang on for the next three or four months, I think we're going to have a lot of clarity on what 2025 looks like.
Tom Wadewitz
Right. Okay. That makes sense. And then for the follow-up, in terms of the earnings guide, is there -- it sounds like maybe kind of similar on revenues, 4Q versus 3Q, but the guide is midpoint, a little bit below where you reported earnings for 3Q. Are there particular items that are kind of explain that or cost headwinds? Or is it kind of noise below the line? Or what drives some of the difference in terms of lower 4Q earnings versus 3Q?
James Todd
Hey, Tom. The big one is the kind of $0.04 tax item we called out. So really, you're kind of -- at the midpoint, you're trying to square the circle [135 to 137]. It is slightly lower revs than a typical 3Q to 4Q walk. But we've got that mitigated a little bit by the fact that we typically compress about 25 basis points on variable contribution margin. Based on what we saw in the third quarter, we don't anticipate that same degree of compression.
And then the only other item I'd call out, Tom, that was worth about $0.01, 3Q to 4Q is the 50 basis point Federal Reserve cut impact on our excess cash balance walk in 3Q to 4Q. Those are the biggies.
Tom Wadewitz
Okay. Do you think you got some room for rates to move up and benefit you? Is that like you're maybe not assuming improvement in rates?
Frank Lonegro
Yes, Tom. So it's interesting to watch this on honestly, a daily and weekly basis. JT can give you some more color in terms of the trends within October. The first couple of weeks of October were soft and it came off of a soft September. I mean September was the counterbalance to July.
If you think about the third quarter, we had a really good July and a really soft September. And then October comes in, the first part of October was soft. And the last six or eight days have been pretty good. So it's really where do you snap a line from. And we're not obviously expecting a strong peak. So if we get some rate and some peak, then we're probably in the upper part of the range. JT?
James Todd
Yes. No, I would echo that. The rate strength that we saw in the third quarter, Tom, was primarily front loaded in July. We saw kind of a normal seasonal downtick into August. And then September seasonally underperformed.
When we walk September to October, we typically see about a 50 basis point good guy on truck revenue per load. Based on the information we've got today, it's looking like it's going to be flat to just slightly down.
So with that set of circumstances, our opening revenue per load for the fourth quarter in October is probably about $40 below July, which was the opening month for 3Q. So we would need a pretty good rest of the way in.
Tom Wadewitz
Yes. Okay. Thanks for all the perspective. Appreciate it for sure.
Operator
Jordan Alliger, Goldman Sachs.
Jordan Alliger
Hi, yes. Thinking about the businesses, the dry van and then the flatbed or unsided. Can you maybe talk a little bit about the -- what you're seeing if the differences between the two? I mean, especially given manufacturing has been kind of sluggish. So I'm just curious about the flatbed side of the equation specifically, I guess.
Frank Lonegro
Let me open it up and then JT can certainly chime in. We continue to be bullish on our unsided platform business. I mean, I think we have a real competitive advantage in that space, and you're going to continue to see us focus there broadly and then certainly in the heavy haul part of the equation.
What was interesting about the van side, if you go back to 1 of the slides that JT talked about, the consumer durables business actually performed better than the company average, which -- it's been a while since I could say that or any of us here in the room could say that. So that's actually a bit of a bright spot.
Obviously, the rate question immediately comes to mind if it's moving at an appropriate rate, and that's a good sign for the future. But back to the platform piece and the platform business continues to perform well relative to VAN. But JT, can you give a little color?
James Todd
Yes. Certainly, on the pricing, right? So if we just walked 2Q to 3Q sequential, we saw 4% good guy on unsided which outpaced the 2% on van. What was interesting to Frank's comment, the van loadings held up better, Jordan, walk in 2Q to 3Q only dipping 4%, whereas the platform loading 2Q to 3Q dipped 7%.
And I think that's -- we were pleased with what we were seeing in the second quarter. We saw the kind of manufacturing backdrops started to weaken a little bit in the second quarter, and our numbers held up pretty good.
We started to see a little bit of weakness in machinery. Heavy haul has been a tailwind for us, Jordan, in the -- inside of the platform category. That strength took a little bit of a step back. So it was interesting to see van loadings hold up a little bit better.
Good performance in consumer durables that Frank talked about, and then building products as well. We had -- the three largest customers for us in building products had triple-digit revenue growth and some of that stuff was on van equipment.
Jordan Alliger
Any sense from your manufacturing-oriented customers about a bottom on that side of the market? I mean, what's sort of the -- I guess, the holdup? Is it political uncertainty? Or if you have any color around that would be helpful.
Frank Lonegro
Politics, trade policy, Fed policy, tax policy. I mean, if you're in the manufacturing business today or anything industrial and you're thinking about deploying capital either to build inventories or to build a new plant, you probably just wait three or four months until the dust settles and you have much more clarity around things.
And then obviously, we're back to deploying capital more broadly in the industrial space. I just -- it's so late in the year. The election is a week away, inauguration in January. We have so much uncertainty there that's actually going to get cleared up. And I just don't think folks are leaning into deploying capital right now because of that uncertainty.
Jordan Alliger
Thank you.
Operator
John Chappell, Evercore ISI.
John Chappell
Thank you. Good evening. Jim, maybe this is for you. When we think about the eventual stabilization and inflection, do you feel the model has the same operating leverage that it will in the next cycle, given that some of these line items on the cost side, like other, insurance and SG&A, et cetera, as a percentage of revenue or just so much greater than they were in 2019 or any kind of prior downturn?
James Todd
Jon, it's a good question. Frank and I are still big believers in our ability to push through 70% of the incremental variable contribution down to operating income. Now I will call out, Jon, next year, given the incentive comp and stock comp baseline in 2024, we're going to be facing about a $13 million headwind year-over-year on those lines, '25 versus '24.
The insurance has been tough. You've heard me say before, and overall, trend has not been a friend on insurance. Frank called out that the 10% decline in the DOT accident frequency, the more severe accidents, our overall accident frequency, the first 39 weeks of 2024, down 3%.
Unfortunately, we've got that claim cost severity factor, Jon. It's still high single digits, and our BCO revenue per load is down [11] year over year. So we've seen some stabilization in the premium side of the house, but we're going to have to get some help on yield, which you know is a lot easier to push down to operating income than on the volume side.
John Chappell
Okay. That's helpful. And then just a follow-up. I know we've kind of pulled the string a bit here on the rest of the fourth quarter, but little bit noticeable that maybe some others had a lot more optimism and maybe that's just the way that others operate in the kind of the seasonality in the fourth quarter and the bridge where you guys have said you don't anticipate November and December to follow the seasonal trend.
Do you think that's just conservatism around what you've seen in the first few weeks of October? Or is there something maybe a little bit more that you're seeing from the breadth of your customer base that just makes you think that there's a greater pause in the demand side post some of these issues that may provide a little bit more certainty in the next couple of weeks?
Frank Lonegro
Let me give it a start, and then Matt, maybe have you chime in a little bit on peak. To your point, we have a very diversified revenue portfolio. I think it's going to be dependent on what people do toward the end of the year, either on the industrial side. I mentioned the uncertainties in answer to a prior question. So I think that's going to be muted.
And then more on the holiday and the peak and the consumer. We're still seeing goods and services in the split there in the GDP numbers. And we pulled agents and customers, et cetera. Obviously, you all have listened to the UPS call and have a good view of how they feel about the peak. We feel like we are certainly holding our own in peak in terms of share of volume.
But nobody has really leaned into from our customer side has leaned into a broad peak. It's going to be shorter in terms of duration just given the timing of the holidays, but nobody is really saying it's going to be a robust peak.
If it turns out, we get a little bit of lift of rate, we get a little better peak season, then obviously, we'll be trending toward the upside of that -- the upper half of that guidance. But right now, leaning in has not been a great strategy over the last couple of years. Go ahead, Matt.
Matthew Dannegger
Yes. I'll just -- on top of that, at the end of every quarter, we sit down and we pull our top 50, 60 agents. And they really have a pulse on their customers. They're dealing with their customers on a daily basis, trying to see what's in the pipeline, how they can serve them better, if we need to get trailing equipment in, whatever the case may be. So really, we're just echoing the agent base in what we hear going through the fourth quarter here.
On the peak side, as Frank said, we're not expecting a huge peak this year. I think as the year has gone by with the shortened cycle and there may be more folks going towards the brick-and-mortar. Within that shortened cycle, it's kind of muted a little bit.
We talk to our -- it's just a handful of customers like for us on the sub line haul side that really drive the peak for us. And about starting June, we start talking to them monthly almost to make sure that we've got expectations in line on trailing equipment and drivers in place.
And I think we're -- based on their projections and what the agents are telling us, that we should be really comparable to what we saw last year, which is quite a bit down for what we see in those pandemic years '20, '21, '22.
John Chappell
That's super insightful. Thanks to all of you.
Operator
Scott Group, Wolf research.
Scott Group
Hey, thanks afternoon guys. So just one more on Q4. Frank, you talked about regional tightness. Some of the national spot data looks like it's gotten better in October. I guess, help us understand that disconnect maybe, if there is one, of you guys saying the data has gotten a little bit worse and underperformed seasonality in October, just given some of the spot data looks like it's gotten better.
And then can you just clarify, do we get a hurricane impact or benefit anymore? I don't think we have the direct [FEMA] contract, but I still thought there was maybe some hurricane volume opportunity with you guys.
Frank Lonegro
Yes, Scott. I think on Q4, I think what we're trying to say is that Q4 relative to Q3 is going to be essentially kind of in line from a revenue perspective. We've got a question mark around peak that you heard Matt talk about. The hurricane piece is demolition before reconstruction.
So I doubt we're going to see anything near term. Matt, you've had some conversations with some agents and some customers. A little bit of food water coming in, a little bit of prepositioning of building products, but nothing that's a needle mover in the grand scheme of things. JT?
James Todd
Yes. No, nothing to add, Frank.
Jim Applegate
I'd add on the hurricane, and I think a lot of the expectations around the hurricane that the whole process of selecting carriers around the hurricane has streamed quite a bit over the last 10 years. It used to be a handful of asset-based carriers that would kind of benefit from these storms.
Now you have hundreds of carriers along with brokers that are bidding on a lot of the government type business. So you're going to see that spread out across a broader base of carriers and you're going to see the rates a little bit more suppressed than what they've been in the past.
But to Frank's point, really, the real prize is kind of the rebuilding efforts, and I think you see that later on in the cycle.
Frank Lonegro
One thing on the spot rates that I think is worth just clarifying. What you're looking at it from [DAT and truck stop] and things like that are posted rates. That doesn't necessarily mean the traffic moved at the posted rate.
A lot of times, there's it's going to get posted and then it's going to get discussed and it's ultimately going to move at a little bit of a different rate. Our freight moves at a little different price point. As I think I've mentioned before, we don't necessarily play at the bottom rung of the spot market.
What we haul is generally a little higher quality freight. And obviously, we've got the platform business as well, which transacts at a higher rate there.
So we have seen throughout the month, rates have gone down, rates have come back up. So there's a lot of volatility around the trend line, and that's something that has made it more and more difficult for the last couple of quarters to predict what the quarter is going to look like.
July, for example, was a really strong July. August was fine, then September was soft, and first couple of weeks of October, soft. Last 8 or 10 days have been pretty good. So it's really hard to, again, pick the point on which to snap the line. Joe?
Joseph Beacom
I'm just going to say around the [FEMA] national contract, yes, those days are gone. And now that's all kind of run state by state. And with the kind of lead time you have on some of these hurricanes, there's a lot of prepositioning of a lot of things that didn't used to occur.
So I think the opportunity around some of these storms is not what it used to be in years past as the states get a little bit better in prepositioning and trying to put themselves in a position to get people back to normal life and with power and so forth a lot quicker than they were in the heydays of [FEMA] contract for Landstar.
Scott Group
Okay. That's helpful. And then just one more follow-up on the BCO count. And I totally understand and see the cyclicality of the BCO count, but it's at a pretty low -- I think we're at like the lowest level in like a decade. And so I'm wondering, I guess, how do you think this plays out in the next cycle in terms of like how much of this can you add back? Can you get it all back in a cycle? Or does it take more?
And is there any thought that maybe you need to like change some of the splits to encourage better BCO retention? I don't think so, but I'm just curious if you've contemplated something like that at all?
Frank Lonegro
I think on the compensation, this has worked really, really well for us for a long time. But obviously, academically, I see your point. The BCO count, remember, it's a combination of what we've added and what comes out.
We continue to have hundreds, if not thousands of additions every year. The challenge is that we're seeing a significant set of departures for any number of reasons. Joe can go into. What will happen when the rate cycle turns is the additions will go up and the departure will decline, and therefore, you're going to get a net add basis, which is obviously a good guide for us, and certainly something that the model has produced in the past, and we would expect it would continue to produce in the future. Joe?
Joseph Beacom
Yes. I would say, as we mentioned earlier, Scott, the number of terminations and those that are leaving has trended downward. I mean, our retention has actually improved a bit. Where I think we're at now is -- there are -- it's a little bit more difficult to get a truck.
The lease purchase owner operator volume is down. A lot of interest from guys who don't have a truck, but you need a truck. The asset-based carriers don't have the owner operators in the lease purchase programs at the levels that they have historically had.
You can still -- you can access used trucks now, but the costs are a little bit elevated for the environment that we're in. So I think just the appeal of the spot market is a little bit hazy. And so you don't see people willing to make the investment. If we get the rate upturn and the demand starts to improve, I think there's a lot of potential BCOs on the sideline.
I just think that right now, if you don't have that low cost to operate that I was mentioning earlier and you have to go out and have a truck payment that at all elevated, given the rate levels that we have today and the inflation around maintaining a truck -- I saw a report just this week in the Commercial Carrier Journal that since last September, cost to operate are up 4%, rates aren't up 4%.
So do you really want to make the investment to come in at this time? I think when that door opens and when the opportunity is there, I think we'll appeal and attract owner operators as we have in the past.
I think there -- to your earlier -- we consider -- there isn't too many things we haven't considered as to how to do this. But again, I think it's an economic phenomena that we're trying to address from trying to recruit better, clearly using some social media differently and working with our agents in different ways to try to promote growth and that kind of thing.
The margins, the spreads on brokerage have been pretty elevated. And I think some of the volume that may have grown BCOs probably went brokerage for that reason as those spreads tighten, which they have done over time and continue to do, I think the decision maker in our model, which is the agent, has the potential to change. And I think that changes the outcome for BCO count.
Scott Group
Thank you guys. Appreciate the time.
Operator
Daniel Imbro, Stephens.
Daniel Imbro
Yes. Hey, good evening guys. Thanks for taking our questions. I want to start on the demand side, Frank. I want to ask automotive specifically. That's been a weak category, but it still feels like it's declining. It's about 10% of your revenue now.
I guess, how are you viewing the automotive landscape into the fourth quarter given the production reductions that we're hearing about from the large domestic OEMs? And when would you expect that market to begin actually growing again?
Frank Lonegro
Yes. I think the automotive business, I mean it's something that we're really good at. It's obviously got an expedited component to it when truck capacity is readily available and demand is not as robust on the OEM side, then you don't need as much expedited capacity.
So there's that element to it. Back to the uncertainty on rates, if you're in the new car market today as a consumer and you could wait four months and get it for 150 basis points lower in terms of your loan, you're probably going to wait.
So I think what we're seeing is that combination of things at the same time, I think we -- to your point, we're a little surprised at the auto numbers in the quarter and some of that revenue softness that you're looking at on a sequential basis from us has got a little bit of that in there. JT?
James Todd
No, nothing to add, Frank.
Jim Applegate
Yes. Just as well, too. Just over on the [Experis] side, if you're really looking at what happened in the industry right after COVID, a lot of supply disruption that was going on in that industry. But if you look back to the fourth quarter last year, there were a lot of expedites going on, a pretty healthy spot market.
You fast forward to today and to a lot of reasons, like rates and getting their inventory stabilized. It's just a more stable supply and demand market, where a lot of that spot market business isn't there than it was at the last half of last year.
Daniel Imbro
Understood. And if we could follow up on a previous question on the cost side. I know it's early, but I think you talked about next year, incentive comp, $13 million headwind, insurance probably remains tough. I guess, are there levers you can pull to actually offset some of this inflation? And would you expect overall costs to begin growing again next year? Just trying to think about what the cost base does if this macro remains challenging kind of into '25.
James Todd
Daniel, happy to walk the line. So other operating costs, you've heard me talk for a couple of years now with this elongated freight recession. Our contractor bad debt numbers are running at close to 2x kind of historical norms.
So could you say there's -- if we return to a more balanced market and the truck turnover rate, which, to Joe's point, has dropped from 41% to 37%. As that mean reverts closer to our 28%, 29%, there's a couple of million probably ringing out in other operating costs on contractor bad debt.
We have been shrinking the size of the trailer fleet, plus we're bringing in some new trailers. So that should result in reduced maintenance and tires expense that I talked about that we saw in the quarter in the prepared remarks.
Insurance, we continue to focus on the quasi controllables, right? So we've got our mutual understanding of Safety Together program with customers, Landstar Safety Officer with our agents. Clearly, all the Safety Thursday calls and truck giveaways with the BCOs. We like the trends that we're seeing on the accident frequency side. When you get in an accident and a bad venue, this is not Landstar specific, the numbers get larger.
G&A, we've been -- we've reduced head count by probably 40 folks or so, Daniel, through attrition. We've got 1,335 folks supporting 1,100 agents, 9,000 BCOs pushing through 2 million freight bills annually in the network. So we're being real cautious on headcount.
And then finally, the last one is depreciation. We've got probably our largest IT project in company history becomes fully depreciated here in the fourth quarter of '24. So some of the pressure on -- that's 1 project, but some of the pressure on the depreciation side from tech will slow.
The flip to that is we are taking delivery of a lot of new trailers. We've -- '23, we weren't refreshing a bunch of trailers. '24, we're playing catch up. So a chunk of that IT depreciation tailwind is going to get eaten up in the form of new trailers. So that's kind of a high level how I think about the cost structure going into '25, Daniel.
Daniel Imbro
Understood. Thanks for all the color.
Operator
Elliot Alper, TD Cowen.
Elliot Alper
This is Elliot on for Jason Seidl. You guys in the past have had a good view into fleet sizes that are exiting the business. Can you speak to maybe the overall capacity landscape in that sense? Are you still seeing larger fleets shed tractors?
Frank Lonegro
Yes. I mean I think we have a view that there is capacity that's parked against the fence, so to speak. We probably have a better view of the [onesie twosie] operators, which is obviously the majority of our have a single truck or say, less than five trucks.
So we think we are certainly in as good a shape, if not a little bit better in terms of those accounts. We watch the net adds from the FMCSA database pretty much every week. So we've got a good view of how that is.
I think there's capacity out there. I think the combination of the asset-heavy folks as well as some of the private fleets, there is likely some capacity out there that's sitting on the sidelines. At the same time, I think the value that we provide, like the safety numbers that you heard JT and I speak about, I mean, that's a real differentiator when it comes to doing business with customers who have high-value goods that they want to make sure to get the destination safely and securely. Joe?
Joseph Beacom
Yes, I would echo that. And also, if you look at the small carrier participation in our brokerage volumes, it was -- 58% of our volume moved on carriers with less than 10 trucks in the third quarter of 2023 versus only 53% this year. Tends to be going to carriers with a few more trucks.
And there is a little bit of a lack of visibility in some of that because the carriers only are required to update their fleet size every couple of years. So you've got to believe there could be carriers out there that you think have 10 trucks when they actually have five or they showed 50 and they only got 20.
So there is some shrinking that's kind of hard to put your hand on. But just by their participation in our mix, it certainly would support the idea that they're a little bit smaller than maybe they appear to be in the FMCSA database.
Elliot Alper
No, that makes sense. And then you spoke about the longer-term support as the rebuild begins. I guess, what could that look like? Is this something you're starting to plan for now? Will that skew towards some of the platform business? I guess any other color or magnitude on the time line? Or is it just too soon to tell?
Frank Lonegro
It's probably too soon to tell in terms of both timing and magnitude. I'll let Matt chime in in a second. I mean, we have a hurricane playbook. I mean, this is not the first hurricane that Landstar has been involved with. So we have a good playbook in terms of what we do with agents and customers and just making sure people are familiar with us and obviously are willing to give us a try if we've not done business with them or some of the customers that we have already, just making sure that they know we're here and ready to help them. Matt?
Matthew Dannegger
Yes. That's something we started on early once everything started roaring through is getting out in front of the customers that we now participate in the rebuild, food, water, and get it in front of them. We had some success with that.
We've got a couple of dozen customers now that, as Frank alluded to, we're doing the food, the water, placing some equipment, some machinery. But the building products, the folks we're talking to on that, they're not really moving heavy in that sector yet.
So the timing on that, I think we're still a little bit early to put a number on that. Hopefully, sooner than later, we could use it here in the fourth quarter. I just don't think we have a good handle just yet when they're going to start rolling that out. But we're certainly in front of them and talking to them and trying to be if they're ready when they do start rolling those out.
Frank Lonegro
I think in the Florida storm, you're probably a little sooner on the rebuilding because it's roofs and things like that. I think in the path of Helene, I think there's a fair amount of demolition and [Holloway] that's got to happen before we participate. And as you guys know, we don't do sort of open hopper demolition at [Holloway] work. But we'll be there and ready when the reconstruction commences.
Elliot Alper
Thank you guys.
Operator
Stephanie Moore, Jeffries.
Stephanie Moore
Hi, good afternoon. Thank you. Good afternoon. Maybe wanted to touch a little bit on capital allocation, capital priorities here. First, just buybacks slowed a little bit in the third quarter despite what remains a really solid net cash position. But then also maybe from a more strategic lens, just would love to gauge maybe any updated thoughts on potential M&A. I think we're all aware there's a lot of kind of PE backed and other assets that might be coming up for market here looking for exit. So given where we are in the cycle, your positioning and the like, any thoughts on potentially doing any M&A as well as your more historical capital allocation priorities? Thanks.
Frank Lonegro
No, good question, Stephanie. We certainly heard JT talk about and we're going to continue to invest in the core business. That's an important thing for us on both the technology as well as the trailing equipment side, obviously, the less trailing equipment purchases in 2025 based on what we're currently thinking the environment is going to yield.
Buybacks, we restarted the program a quarter ago and obviously continued that this quarter. I'd say the volatility in the stock price this quarter was probably a little less than it was in the prior quarter, as you know. And I'm a strong believer in being both patient and opportunistic on the buyback program. We just didn't have that many opportunities to jump in at what we thought were kind of favorable to market type of opportunities.
In terms of M&A, good question. Gosh, I've been in the company nine months or so. And it's certainly something that we've talked a little bit about with the uniqueness of our model, the number of companies that are out there that would provide us an opportunity to seamlessly integrate is smaller than your typical transportation and logistics provider.
But it is something that we've begun to talk about internally. And more to come, but if there's something that comes along that fits us really well. And again, that's a fairly narrow set of targets. We'd certainly be open to that conversation.
Stephanie Moore
Great. Well, I will leave it at that. Thank you.
Operator
David Hicks, Raymond James Financial.
David Hicks
Hi guys. Thanks for taking the questions. Can you guys just maybe talk about the recent truck investments that you've been making, resulting impact to productivity of your workforce, agents and BCOs have kind of tried to offset these cost inflation headwinds have been persistent kind of as we look into 2025?
Frank Lonegro
Yes. So we'll probably run around the table on this one a little bit. So we have been investing, gosh, over the last decade or so in tech investments. I would say the lion's share of that investment over the last decade has been on behalf of agents and BCOs.
We're going to continue to invest there, but I'd say a lot of the heavy lifting has been done in those spaces, which allows us then the ability to turn the IT lens inside the building. So we have some pretty neat service center technologies that we're working on here that certainly will give us the ability to provide better service for our agents and our BCOs.
And could they unlock some efficiency? Sure. But those are things that are really important to us on a going forward basis. And if we can do a great job of serving our customers, our agents and our BCOs well, they then have the ability to go out and sell more.
They have the ability to handle things on a more productive basis. And so if we're successful at doing that and we're able to hold the line internally, then I think we'll be in really good shape. So Jim Applegate has been maybe the tip of the spear in some respects on the technology side. Business side of technology for a while. So maybe let me hand it over to you, Jim.
Jim Applegate
Yes. Great. Thanks, Frank. Yes. From a technology standpoint, our -- really, our whole playbook has been around making sure that our agents and our BCOs have better technology so they can be more efficient. And it's about giving agents more ability to handle more revenue.
And if you see with the tools that we've rolled out, we've actually documented it. We've significantly improved their ability to handle revenue with single employees, single agencies. So they don't have to go out and add new employees to go ahead and be able to take on more business.
One side over on the BCO side. It keeps them on the road. They're not pulling over, dealing with paperwork. And we're seeing from a BCO standpoint, they're embracing the technology as well, too. So I look at it as more of a capacity to grow strategy and the technology has really kind of allowed us to open that up for both agents and BCOs and continue to do that.
But as Frank had said, we're pretty far along in our tech road map. We've got a lot of tools out there in the marketplace. But Joe, do you want to comment?
Joseph Beacom
Yes. I would just add that, David, we've had a pretty robust freight matching capability here for a long time between our agents and BCOs. And we're going to be making some tweaks to that. As the profile of freight changes, I think our ability to direct that freight and market that freight between agents and BCOs needs to also change.
And so we're kind of excited about some things we're going to be working on to enhance the ability to be a little bit more targeted and to allow people to make decisions more quickly. And our model success comes from putting good information to the decision makers, and that's our agents and BCOs and kind of let them do what they do. And I think that's a good stuff on the horizon that should allow us to do that.
David Hicks
Okay. Great. And then just as a follow-up, I just wanted to dig a bit deeper into the kind of our current health in BCOs. Particularly, if you guys have kind of visibility around their tractor age relative to the rest of the industry, kind of the associated maintenance costs and downtime, which you kind of spoke to earlier and any impact that's having on service relative to peers?
Joseph Beacom
Sure. Yes. Not a lot of impact to service, David. I think the average truck in our fleet is about 10 years old. We've always operated largely in the used truck environment. And one of the reasons for that is because our BCOs tend to be pretty mechanically inclined, they do a lot of repair work on their own, and it provides them a very low cost to operate. And those that are doing that, I think, are the ones that are still with us and very active and very profitable.
Not everybody is like that, right? And so they make challenges. But I don't think it affects our service. I think from a corporate perspective, you're required to get an inspection annually. Based on FMCSA, we require it every 120 days.
So we don't really allow equipment to get away from us from a maintenance perspective or a safety perspective. And we require them to -- we measure tires and do all that stuff every 120 days. So I don't think it puts them at a disadvantage. I think actually from a cost standpoint in this kind of environment may give them an advantage over others.
And then we've got a pretty good [LCAP] program that -- where we've gone out and taken the fleet of 9,000 trucks and negotiated fuel and repairs and inspections and pricing on all those very fundamental services that they need to operate.
We've negotiated beneficial pricing for them, so it's quite a bit better than they might get if they were out as a one or two, three truck fleet on their own authority. So I think those things in tandem, I think we do a pretty nice job out here.
David Hicks
All right, great, very helpful. Appreciate the time.
Operator
Thank you at this time. I show no further questions. I would like to turn back the call over to you sir for closing remarks.
Frank Lonegro
Thanks, Bill. In closing, while the freight environment remains challenging, we do see some positives in the near term. We are encouraged by the recent stabilization in freight rates after the elongated downturn experienced the 2022 second quarter.
And regardless of the economic environment, the resiliency of the Landstar variable cost business model continues to generate significant free cash flow. Landstar has always been a cyclical growth company and we are well positioned to navigate these dynamic times and look forward to higher highs when the freight market turns our way.
Thank you for joining us this afternoon. We look forward to speaking with you again on our 2024 fourth quarter earnings conference call in late January. Thank you.
Operator
Thank you for joining the conference call today. Have a good afternoon. Please disconnect your lines at this time.