Ken Hoexter
BofA Securities
Welcome to day 3 of our 32nd Annual BofA's Transportation and Airline Industrials Conference here in New York. Next up, we've got Werner Enterprises. For those that are new to the room, I'm Ken Hoexter, BofA's Airfreight and Service Transportation and Marine Shipping analyst. From Werner, we welcome Werner. Joining us here is EVP, CFO and Treasurer, Chris Wikoff; and SVP, Pricing and Strategic Planning, Chris Neil.
Well, this is both of Chris' first time at our conference. This is Werner's tenth time attending the BofA conference. So thank you for the commitment to the conference over the years. Chris Wikoff has been CFO for just over 2 years. Chris Neil has been with Werner for nearly 28 years. We welcome both of you here this morning.
Ken Hoexter
BofA Securities
So Chris Wikoff, let me turn it over to you maybe for some opening thoughts on Werner. Three things you want us to take away from the conference. We've had obviously a lot of news over the past couple of days, not just from the conference, but even from the weekend when everything outlook-wise turned on a dime. But let me turn it over to you for some opening comments and key takeaways.
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes, sure. Maybe for those that are less familiar with Werner, just a quick overview of who we are. We are a leader in providing supply chain solutions to -- at scale to customers of scale across North America. We've evolved over 7 decades from our founder with 1 truck to an asset pool of approximately 7,500 trucks and nearly 30,000 trailers comprising consolidated revenue of over $3 billion and associates company-wide that are nearly 13,000.
So we've certainly grown over the years. Our portfolio and solutions have also evolved over the years, being more durable, more diversified, being a multimode provider across both asset and asset-light solutions. We have two operating segments within our business, our Truckload Transportation Services, or TTS as well as Logistics.
TTS is over $2 billion in annualized revenue that really houses our Dedicated as well as our One-Way Truckload offering, 2/3 of that segment being in Dedicated, a turnkey, highly integrated offering to large enterprise customers where reliability is really paramount and at the focus.
And then One-Way houses our expedited, highly engineered lanes as well as cross-border and Mexico operations. Within Logistics, over $900 million in revenue, 75% of that is in truckload brokerage, including a trailer pool, which shippers that are using a brokerage model at scale, it's helpful for them to have access to trailers with a single carrier that gives them a more simplified, efficient operation.
And the other 25% of logistics is in our growing Intermodal business, both brokered as well as owned container assets and a dedicated Final Mile business.
In terms of just things to highlight, I mean, it's been a difficult long, deep downturn with lots of surprises here and there. But during this time, we focused on our long-term strategy and controlling what we can, putting us in the best position as the macro improves. That includes focusing on our customer every day, proving to them that they made the right decision in trusting us with their freight. And that comes down to safety, service solutions as well as our technology and talent.
Technology has been a focus for us for a couple of years, investing considerable time and energy and capital. We see that transforming our business and believe that will continue to do so and have a positive impact on our customers as well as our top and bottom line. We've been focusing on our cost profile to put us in a better position to expand margins as we get into a better backdrop. And then continuing to maintain a healthy balance sheet, capital structure, give us optionality to continue to invest strategically and invest in ourselves.
Ken Hoexter
BofA Securities
So let's talk about what did change, right, recently. Let's start off with that, right, in terms of the tariffs, right, just because we've talked a lot about the exposure to Mexico, which is about 10% of your consolidated revenues. The West Coast, if you think about the ports, 10% of One-Way revenue, each saw some network disruptions from tariff-related volatility. How are you -- how did you manage the disruption? What do you think has changed? Maybe talk about what your customer conversations are -- have been over the last 2, 3 days.
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes, I wouldn't say any permanent disruptions, meaning dramatic changes in supply chain and among our customers. It's certainly been the entire tariff backdrop and just the fluidity of that has been a distraction for sure, although we haven't seen dramatic changes. Obviously, we were tuned in from a West Coast perspective of just lower imports and the broader impact that can have across the industry. It's a little bit more directly focused and a bit more line of sight in terms of Mexico, although we believe our freight there being largely manufacturing, industrial, even food and beverage is uniquely sourced in Mexico or those shippers have considerable investment in manufacturing and infrastructure. So that they're just not going to abandon in the near term or even midterm.
So we feel like while there's some stops and starts, there can be some inefficiency as shippers are evaluating, pausing, trying to figure it out that over the midterm, that freight is still going to flow and still going to be stable. And over the long term, we still like nearshoring and the positive long-term benefit that's going to have in our position in Mexico.
On the West Coast, you're right, it generally represents about 10% of our One-Way business, although that's what we can quantify as we get more inland and freight that we're carrying closer to the consumer, it becomes less transparent and visible of exactly where that freight is being sourced. And as we think about imports, that doesn't necessarily translate to a 10% impact. It's a percentage of that 10%. And we've been staying close to our customers.
Inventories are in healthy positions, even for some maybe more elevated than usual. So there is capability even before the 90-day pause, there was capability for certain of our customers and shippers to draw down on some inventory. That for us would look a bit more normalized just given we have more concentration inland and carrying freight closer to the consumer. But it's certainly something that we've been monitoring and engaging with customers on.
Ken Hoexter
BofA Securities
Let me just dig into that. I missed -- you just said inventories are in healthy positions, but even -- I missed the second part of that. You said -- even over...
Christopher Wikoff
Executive VP, Treasurer & CFO
With having some elevated inventory, maybe that are closer to the ports, closer to the coast.
Ken Hoexter
BofA Securities
Let me dig on that for a second because the Port of L.A. said, we asked them about the warehousing, right, as it comes to the ports, how full are those? I think you mentioned we're not at COVID levels, right, in terms. But if normal was, let's say, 14 days, COVID was 2, 3 days of excess availability, we're at like 4, 5 days, meaning that -- what are your customers thinking -- how are you looking at your customers' inventories? Are they at that point where if we get this, let's say, a couple of weeks, 3 weeks or 4 weeks of delayed stuff coming in, is it enough? Or do you look at it as a truck company that we're going to have another wave of freight in 90 days -- or I'm sorry, in 4 weeks after this blip, this air pocket that you're not going to have a rush to restock?
Christopher Wikoff
Executive VP, Treasurer & CFO
I think it really varies by customer, Ken. What we aren't hearing is that there's insufficient inventory. It's either as expected, healthy or maybe a bit more elevated. Even in some cases, shippers saying that they are running out of some capacity. So more shippers might have pulled forward a bit more than others.
Ken Hoexter
BofA Securities
Okay. So we just wrapped up bid season or I guess, while you got 2 weeks left in terms of the normal March to May. And I know some of your customers go throughout the year. But I think you mentioned low to mid-single-digit contract rate increases. I presume that was a one-way discussion, not dedicated. Am I reading that right?
Christopher Wikoff
Executive VP, Treasurer & CFO
Ken Hoexter
BofA Securities
Okay. How does that compare with what we see in the spot market rates where spot is still looking below operating cost, right? I mean if I look at DAT's published data, right, it's $1.47. Cost is generally about $1.50, if I understand right. How does that -- how is the contract market faring in that environment?
Chris Neil
Senior VP of Pricing & Strategic Initiatives
Well, if you step back for a minute and just broadly look at how that's progressed over the last couple of quarters, we reported a 0.3% increase in our One-Way trucking rate per total mile in the first quarter. That was the third consecutive quarter of year-over-year gains, although rather small at 0.3%. It would have been a little better without some deadhead issues or elevated deadhead that we had in the quarter. Rate per loaded mile in the first quarter would have been just over 1%. So that's reflective of the statements that we made around contractual rate increases generally increasing low to mid-single digits through the bid season, back to your bid season question.
So we're well over halfway through. About half of our One-Way revenue will be repriced in the first -- sometime in the first half, and we'll start to see that here flow through in the second quarter with another good chunk then implementing in the third quarter.
So several things would influence One-Way trucking rate per total mile. Certainly, the contractual rate increases that we're getting on bids would be an influence there. Business and lane mix, customer and lane mix will certainly be influential. And then, of course, the spot market, as you mentioned, was a little bit lower. It started strong in the year. It declined a bit in March and then into April and May.
Here we are in roadcheck week this week, and that's interesting. And so that will also influence where we end up here in rate per total mile in the second quarter. In terms of spot versus contractual rates, I mean, the national averages are the national averages. And certainly, within some geographies, you have some strength and some weakness. But in general, yes, we're still $0.20 to $0.30 higher on a contract rate versus the spot rate.
Ken Hoexter
BofA Securities
What is the general impact of roadcheck week? Can you -- maybe for those that aren't familiar, what percent of the fleet literally parks itself for the week or takes off or -- and what is the impact you've historically seen on kind of spot rates if you go from?
Chris Neil
Senior VP of Pricing & Strategic Initiatives
Well, it can vary by year depending on what the focus of roadcheck is. This year, roadcheck is Tuesday through Thursday. So it's kind of the last day here. But you see some changes leading up to roadcheck and some impact then on the week following. So it can be an event that lasts 7 to 10 days. I think typically, as you look back over the last few years for us, at least, I can't speak for others, but ours would be kind of high single-digit of an impact in spot rate from the weeks prior to the week or 10 days during roadcheck week.
So that's always been an indication to us because we've seen that blip here over the last couple of years that the market is relatively balanced when you see a week like that, and you see some percentage of trucks parked. And I don't know what that percentage is. I think it probably varies from year-to-year depending again on kind of what the focus is. And we'll see this year to what degree we see drivers or trucks off the road. But so far, from what we can tell, it's impactful this year. I can't define the percent or not if it's consistent with prior years, but indications would be it's at least consistent with what we've seen in prior years in terms of disruption and impact on spot.
Ken Hoexter
BofA Securities
I asked to get to the point, the exact point you're talking about when you think about the balance of the market, right? Because little things like that when you see those spikes, whether it's coming into the new year, and we've had a spike at the beginning of '23, another one in beverage season of '23, another one at the beginning of '24, didn't really have a beverage season last year in terms of a spike in spot rates. And I know you don't do too much in spot, but just interesting to see when you get these events, are we seeing the market react because that tells you, I think, a little bit more about how much capacity has come out, how well we are toward that supply/demand.
So if I think about -- you just gave me the contract view and you kind of threw in a little bit of spot up 0.3%, but you've got a target on the One-Way business of 0% to 3% Thinking about that, what -- maybe just give me parameters of what you think drives the upper end of that, what drives the lower end if you're running at about 1% right now? Is there -- just trying to think about what happens in the rest of the year. Is it just that demand spike or now that contracts are set, it kind of sets those rates?
Chris Neil
Senior VP of Pricing & Strategic Initiatives
Well, I think it's a few things. Yes, so our guidance was flat to 3% for the second quarter on a year-over-year basis. And so the things that will drive it on the upper side would be a better spot rate maybe than what we've seen here in March and April and into the early part of May. So if we can get a lift in June, you typically see an end of quarter lift with spot and just projects and shippers looking to get inventory out into the stores.
And so business mix and lane mix will definitely be impactful. Clearly, if we see some kind of a drop-off in volume due to some of these imports, I mean, that could be a little bit on the headwind side. So I think mix and compliance with kind of commitments and what we've seen in the last couple of weeks and whether or not that continues at those levels or could be elevated now with maybe some pull forward, maybe not. So those are the factors that would influence lower versus higher end.
Ken Hoexter
BofA Securities
Yes. Can you talk about that, the air pocket? I mean, because it would be hitting the ports right now, right? So what do you look at or hear from your customers? Or as Chris was saying before, it doesn't matter that air pocket because we're already staged and ready to go. And so we look at kind of smooth sailing as we go through the quarter.
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes. I think it certainly pushes some of the uncertainty out further in the year. As I said earlier, some shippers had pulled forward some inventory that they can draw down for a period of time. I think it's a bit more of wait to see with this development and how shippers react, and it's probably going to continue to vary by shipper.
Ken Hoexter
BofA Securities
So when you say wait to see, I just want to understand that one because if we get this, let's say, they've staged it, then you get the period of, okay, now we're drawing it down -- the access, we're drawing it down, we're getting to a normal thing. Do you feel like -- in any discussions, do people feel like we've got to hurry up in the next 90 days to reset that rebuild, right, get stuff ordered, get it over here because who knows what happens after the 90 days? Or is the comfort like, all right, they've already taken it down to this level. They're not going back up to 145. We can at least base build here and then just smooth planning for -- I'm thinking as we go through peak into the back half of the year.
Christopher Wikoff
Executive VP, Treasurer & CFO
I think it's a little bit early. I think you're spot on in terms of the real focus is on peak and how much over the next 60 days that's being pulled forward? Do they have capacity from an inventory perspective? So it's a little bit early to tell.
Chris Neil
Senior VP of Pricing & Strategic Initiatives
Yes. Okay. Ken, I think one thing I'd add...
Ken Hoexter
BofA Securities
I have the answers, Chris.
Chris Neil
Senior VP of Pricing & Strategic Initiatives
One thing I'd add, I think, specific to Werner, we're 2/3 retail in our business. And a good chunk of that is discount retail, value retail. And it's really focused on more nondiscretionary versus discretionary type items. So as you think about imports and some of the impact that, that could have on nondiscretionary versus discretionary, I think, there could be some differences there. And so a lot of the business that we do is replenishment. These are things that are consumed on a weekly basis, and it's things that are going to continue to hit the store shelves. So...
Ken Hoexter
BofA Securities
Chris Neil
Senior VP of Pricing & Strategic Initiatives
You definitely could have a different answer from someone like us who's more focused on that part of the business versus more discretionary type retail that might be more impacted.
Ken Hoexter
BofA Securities
Let's talk about the fleet size, right? So if you think about the TTS fleet as a whole, your target is to grow 1% to 5%. You noted momentum with some wins outside of your core discount retail focus. I presume you were talking about dedicated on -- so -- but yet you noted there reputable logos. So this is potential to really drive some business. Talk about those wins. And then I don't know if you can provide any detail on what kind of type of customer this is and how well it blends in for your expertise.
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes. We're excited about the wins that we papered in the first quarter that we're now implementing and really will come to bear more so in the second half, but certainly, some of those trucks and fleets implementing late in this quarter. Maybe backing up a little bit in the fourth quarter, just the sentiment of customer conversations was more positive, more engaging, more strategic and long-term focus, maybe a little bit of a bounce back from pockets over this last year where there was just more price sensitivity that was unique over the long term that we see with our dedicated offering.
So it's nice to be able to see reliability coming back into focus. And when reliability matters the most, that's when our dedicated offering will excel the most. So I think in the first quarter, we really saw the proof of those conversations from the fourth quarter. You're right in that of those over 200 truck wins in the quarter, first of all, it was really the largest streak of wins that we've seen in 3 or 4 years in a quarter in Dedicated. And about 25% of that was retail. The other 75% was other verticals, manufacturing, industrial and some other specialized verticals. So it's good to see that. That's not to say anything about a change in strategy or our view on retail.
We're very happy with our position in retail, our footprint and expertise in that space. But the dedicated offering and the strength of that offering have other natural applications in other verticals. And so it's good to see shippers that are focused on reliability, focused on their future growth and having long-term reliable partners of scale.
Ken Hoexter
BofA Securities
Sticking with that, is there a return criteria we should think about? Obviously, margins have been impacting the business. We hear a lot more about competition in Dedicated. How do we think about the returns of the business you're adding?
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes, it continues to be competitive. I would say that we haven't done anything unnatural to source and pay for those wins. This is more, again, of the customers' focus and reliability swinging back into focus. So we would expect a consistent set of parameters and margin profile as these fleets settle in. Certainly, there's some start-up costs initially. And some of these wins, while a portion of them are with new customers in new verticals, others are with existing customers and under similar terms and similar pricing.
Ken Hoexter
BofA Securities
Helpful to understand. So the fleet, you mentioned about 7,400 lately, give or take. Is there a minimum size you need to stay active in the One-Way business? So One-Way is now 2,600 tractors, Dedicated is about 4,800. So just thinking about the One-Way business, right, which has come down, is there a level you want to stabilize that and keep just to -- I think you mentioned on the call, like to be competitive in the business?
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes, I wouldn't get too specific on really putting parameters on the size. Certainly, Dedicated is growing as a percentage of the mix of TTS. That's intentional, given more durability and a higher margin profile and our unique position in Dedicated. But we'll always have a sleeve and a portion of One-Way for a number of reasons. It provides flexibility and surge capacity for our dedicated customers. It houses our expedited, highly engineered lanes and freight as well as our operation for Mexico and cross-border, which we're going to continue to lean into.
And then it's also a good entry point for new drivers as well as new customers that want to test drive our solutions and capabilities, whether that be on a transactional basis or a 1-year contract. So a lot of benefits that will continue to be benefits within One-Way, although we expect Dedicated will continue to grow as a percent of the mix.
Ken Hoexter
BofA Securities
Yes. A few years ago, one of your largest customer, Dollar General was focused on building out its own fleet. We were a little nervous about what that meant. You kept saying, "Hey, don't worry, we're going to still grow with them. They're just growing faster. It's kind of a natural evolution that they'd want to bring some more of that in-house." When we look back as they and others have expanded their fleets, what have they learned about the trucking market? What have you learned about working with them as they became larger truck owners? And do you see them absorbing more in-house? Or have they kind of figured it out and now it's back to external growth?
Chris Neil
Senior VP of Pricing & Strategic Initiatives
Well, it's been a journey for sure. And we've gone -- our relationship with Dollar General has gone back decades. And so we're very comfortable with them. We're very comfortable with where they're headed and the relationship that we have with them, and we think that will continue to evolve. They communicated that they were leaning into their private fleet here a couple of years ago and did grow that. And consistent with what you just said, Ken, I mean, our fleet size with them is up on a year-over-year basis. It's been relatively steady.
So I think as they've grown, we've grown with them. We've gained share. We're a unique provider in the space. It's a unique operation that requires driver involvement beyond just driving. So you have drivers helping and assisting with the unload there. So it -- it points back to the resiliency of Dedicated, not just anyone can roll in and hire that kind of driver to do that kind of work and do it at a high level.
So we're comfortable with them. And I think it adds some benefit to work with shippers who have their own private fleet. They understand the driver network. They understand the capital intensity of the business. They understand the risk associated with it. And so there are some benefits to it. And as long as we continue to perform at a high level in terms of service and quality, and scale and reliability, then I think it will continue to work out both with that customer and others.
The other thing that is nice about working with customers who have a private fleet is their private fleet generally doesn't have the capability to surge much at all. Whereas as Chris was just mentioning with our One-Way fleet, we can roll in and help provide some additional sources of capacity, whether that be through our One-Way system or through our logistics group. And so I think that's a unique offering that we can contribute to those shippers.
Ken Hoexter
BofA Securities
Did you mention you grew share with them or you've grown with them?
Chris Neil
Senior VP of Pricing & Strategic Initiatives
Specifically, our tractor count would be higher on a year-over-year basis.
Ken Hoexter
BofA Securities
Okay. But I presume if they're growing their fleet, your share has declined...
Chris Neil
Senior VP of Pricing & Strategic Initiatives
Ken Hoexter
BofA Securities
Representation of their business, right, the percent or...
Chris Neil
Senior VP of Pricing & Strategic Initiatives
I think our share on the for-hire side has grown.
Ken Hoexter
BofA Securities
Okay. Dedicated, let's return to pricing on the Dedicated, right? Your revenue per total mile, you mentioned was down 0.3% in 1Q, targeting 0% to 3% for the full year. What's the momentum? I just want to understand the momentum of the contract renewals, the pricing in the market.
Chris Neil
Senior VP of Pricing & Strategic Initiatives
Well, again, stepping back just for a second. So you look back over the years and our revenue per truck per week in Dedicated has been up 10 out of 11 of the last years. It was even up last year just over 1%. So we've shown a strong track record of continuing to increase -- I mean, that's both a price and a utility metric, the revenue per truck per week. So that's been steady. At the same time, we've grown the fleet 14 out of 16 years. So that's part of the interest we have in Dedicated that it's something with some contractual rate inflators in part of our contracts that we can execute and result in an improved benefit there on a year-over-year basis in terms of price.
And so as the year progresses, even though we were off a little bit in Q1, I think, we probably would have been up on a year-over-year basis had the days in both periods been the same. We had one fewer day in this period versus the prior. That's always a little bit of a negative impact. And so we would expect over the course of the year as we continue to bring on some of these new accounts as we continue to work through some of the contractual increase escalators that we have in contracts and then also work with customers where we do -- where we maybe don't have an escalator.
But nonetheless, that doesn't mean that we don't review pricing on an annual basis. And so we'll continue to work through that with those other shippers, and we've been successful so far the year in getting some increases there also.
Ken Hoexter
BofA Securities
So Chris, I still have a couple more questions on the TTS side, but let's just talk operating ratio for a second. You posted 99.6% OR in TTS in the first quarter. Normally, a 5-year trend, if I look back, would aim for a couple of hundred basis points of improvement from 1Q to 2Q. Although if I look over the past decade, it's really been all over the map. I mean, obviously, maybe the cyclicality of the business and whatever is going on in that given quarter. But given the high cost in first quarter, is it rational to think of kind of a 250 basis point improvement?
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes. First, just to pause on the 0.4%. I mean, you're right in terms of adjusted OI for the first quarter. There were some headwinds in the quarter that drove that down over 200 basis points from a combination of insurance, some outsized weather as well as on a year-over-year basis, some elevated IT spend as we kind of get into a higher gear relative to our technology journey.
So some contributing factors there. But when you think about Q1 to Q2, I mean, we see more momentum, not less momentum. Dedicated volume is trending up. Obviously, with the wins, it won't be fully reflected until probably the third quarter. But on the revenue side, there's some lift there, although there is going to be some more elevated start-up costs that will be offsetting a portion of that.
We're also going to have more accelerated cost savings as part of our accelerated and $40 million cost savings target for the year that will benefit in the quarter. And then the rest really comes down to rate and some of the backdrop that will uniquely impact One-Way. And that was a little bit softer coming into this quarter, although, as Chris said earlier, roadcheck has been positive, and we'll see how we get through the rest of the quarter.
So I would say there's more -- relative to the first quarter, there's more a benefit and momentum. Overall, we're looking to get back to positive on a consolidated basis. Certainly, the first quarter did not reflect where we expect it to be, but we do feel good about the momentum and where we're heading.
Ken Hoexter
BofA Securities
So when I think about that momentum, but yet you threw out the pricing was a little bit tougher. Momentum meaning, is there an average 5-year tenure that you look from 1Q to 2Q? Or is it just too tough for seasonality?
Christopher Wikoff
Executive VP, Treasurer & CFO
I guess maybe putting TTS aside, I mean, on a consolidated basis, maybe from an EPS perspective, I mean, it's -- over the last several years, it's a range of over $0.40 from Q1 to Q2, being down over $0.20 or being up over, call it, maybe $0.15 to $0.20. So it does vary.
Now you've got COVID that was in there that brought it down 1 year between Q1 and Q2. So it varies, but we were negative $0.12 in the first quarter on an adjusted EPS basis. So that's $0.12 correction to get back to positive. Insurance was a big outlier in the quarter that contributed $0.09 of EPS drag, 2 consecutive quarters of over $40 million. We don't consider that to be a new normal. So even some sequential retreat in insurance and claims back into upper 30s would be positive in terms of sequential improvement.
Ken Hoexter
BofA Securities
What's the time frame for when you understand those outsized insurance, right? I mean to go from $30 million to $40 million, a big percentage increase, how much through the quarter do you start seeing those roll in?
Christopher Wikoff
Executive VP, Treasurer & CFO
Well, a lot of what's being reflected in that line item in our P&L is more so reflective of large prior year claims. I mean anything that's 3 years old to up to a decade old that continues to develop. In the first quarter, there was a particular verdict that goes back to a 2019 incident that was unique and took a different path in the court as it came to trial in the first quarter. And we would call that -- given the circumstances, we would call a nuclear verdict that was not what we expected. So while that's a 6-year-old claim, there is certainly was some new development that was unexpected during the quarter.
Chris Neil
Senior VP of Pricing & Strategic Initiatives
And that was very late in the quarter.
Christopher Wikoff
Executive VP, Treasurer & CFO
Very late in the quarter.
Ken Hoexter
BofA Securities
So if here we are mid-quarter, are there -- have there been any nuclear verdicts that have been ruled so far?
Christopher Wikoff
Executive VP, Treasurer & CFO
Ken Hoexter
BofA Securities
Is the docket clear through the next 6 weeks.
Christopher Wikoff
Executive VP, Treasurer & CFO
There's always a lot going on.
Ken Hoexter
BofA Securities
Yes. Okay. Supply side on trucking. We saw ACT net orders down to 7,600 for April. Derek usually has some good thoughts on the pace of bankruptcies that you're seeing in the market. Chris, anything you can throw us? I mean, if we're getting net orders now so low, less than half of replacement rate, what are your thoughts on the supply balance?
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes. Well, we've certainly seen evidence even late Q3 into Q4 with certain, whether it's hurricanes or short-lived port strike type of disruptions. And even here with roadcheck, where there's these opportunities to step back and evaluate and kind of use that as a measure of how much capacity is coming out. So there's evidence that it's getting more balanced and capacity has come out.
You're correct. We continue to see bankruptcies. In fact, there's a third-party report that we recently received specific to March, showing that March was up year-over-year in trucking, bankruptcies of approximately 30% and was really higher than any other month bankruptcies over the last couple of years. So capacity is coming out and that's helpful, but more to be seen.
Ken Hoexter
BofA Securities
So utilization, you mentioned the deadhead creeping up before. I'm amazed sometimes how high these levels have gotten just from a few years ago when we were looking at that. But miles per tractor, so sticking with utilization fell 3.5% at One-Way in the first quarter. I think you mentioned you're accelerating some disposal of equipment. What do you think of utilization? Is that a focus as you talk about cost cutting? Is there something you can do in this kind of environment to increase that utilization?
Christopher Wikoff
Executive VP, Treasurer & CFO
Well, the utilization gains that we reported pretty consistently over the last couple of years have absolutely been intentional through a variety of ways, just having better throughput in our terminal, bringing more repairs, maintenance in-house, utilizing technology and other means to really drive that utilization up.
There were quarters where we were having double-digit year-over-year improvement. I think last year, overall, it was a 7% improvement year-over-year. And so we expected to continue to hold on to those. I think the first quarter was unique with some outsized weather disruption in geographies that just made it more difficult as well as some inefficiencies given just some of the tariff backdrop that reduced that utilization as well as a bit more elevated deadhead on a year-over-year basis.
Ken Hoexter
BofA Securities
Last one for me before I wrap up, logistics. So revenue is down mid-single digits, mid-teens gross margin breakeven business at this point. What operational do you look to do to adjust that? And you talked about the overall company getting to profitability and at least getting the $0.12 back on EPS.
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes. Well, being down in the quarter, 3% year-over-year, while it's down, it's an improvement. I mean, the last several quarters, it was down anywhere from 6% to 11% on a year-over-year basis. So that gap is narrowing in the quarter, particularly late in the quarter, we saw some positive momentum in truckload brokerage that continues into this quarter with some elevated awards, also with some pop-up business that looks good in the second quarter.
So there is some momentum there. And given that it was more so in March, in fact, March was one of the first months in a while where we saw year-over-year growth in terms of truckload brokerage volume. So that's positive. We have had 4 quarters of adjusted OI that was positive despite over this last year, the segment and more so in truckload brokerage being a bit softer. And some of that's really been focused on cost as well as benefiting from being further along in our technology journey within logistics.
Our operating expenses were down 11% year-over-year. Our salaries, wages and benefits in logistics was down 14% year-over-year in the quarter. So we are staying positive on an adjusted OI basis. But we see some momentum. Any time there's a change in truckload brokerage, that's going to move the needle a bit more, coupled with what has been ongoing strength in our PowerLink and Intermodal offering.
Chris Neil
Senior VP of Pricing & Strategic Initiatives
All right. I'm going to try and sum up with what we've talked about here today. If there are key things you want to highlight that I missed, fill me in. So you've got -- I think the preset on -- or we talked about kind of the transfer of traffic, customers have brought in preset early -- some early inventories. We're looking at a drawdown, steady as she goes, kind of too early to tell about what happens as peak season if we see another rush or not. Rates are up about 1% if we do some adjustments on One-Way. Contract is running about $0.20 to $0.30 above spot. Dedicated, the wins in 1Q, you're implementing now. Pricing is still at that 0% to 3% range.
The opportunity for the OR improvement, you're seeing some momentum, but your aim is to be positive on a consolidated basis, which gets you to $0.12 back which fits in with the seasonality, which is a pretty big swing from [ minus 20% ], [ positive 20% ]. So we're in that range and look forward to the continued improvement and the dedicated wins is kind of the growth and the story for Werner.
Christopher Wikoff
Executive VP, Treasurer & CFO
Ken Hoexter
BofA Securities
Anything else you want to toss in?
Christopher Wikoff
Executive VP, Treasurer & CFO
Yes. It's been a mixed bag, but there is momentum, and we're excited about the intentional actions that we've taken to improve our business and be ready for a better macro.
Chris Neil
Senior VP of Pricing & Strategic Initiatives
And I forgot to throw on the cost cuts you mentioned.
Ken Hoexter
BofA Securities
Chris, Chris, thank you very much. Appreciate your time and thoughts today.
Christopher Wikoff
Executive VP, Treasurer & CFO
Chris Neil
Senior VP of Pricing & Strategic Initiatives
