Ken Hoexter: Okay. And then, the second one part of that was the weight per shipment focus.
Alain Bedard: Yes. Excuse me. Yes. The weight per shipment is something that we’ve been working at for day one. Because we said, look at our peers, nobody is hauling 1,000-pound shipment on average, nobody. So, why are we doing that? Well, because our focus has been with the previous owner on retail only, right? So, this is what we’re trying to change with our sales team and say, guys, I mean, retail is good, but let’s try to move more industrial freight, like most of our peers are doing. So, the target is to slowly get closer to the average weight per shipment that our peers are, because you’re paid by the panel, right? So, that’s number one. And we’ve said it many, many times also, what we’re trying to do is to reduce the time that our drivers are driving between each and every stop because they have to drive an average of about 10 miles between each and every stop, which is nonsense.
We drive less than five miles in Canada between each and every stop and the density in Canada is not the same as the density in the US. So, that’s another focus in terms of reducing the cost of our shipment — labor shipment costs, right? So, reduce the miles, focus closer to your terminal and stop delivering, let’s say, a shipment 70 miles away from your terminal, because this doesn’t make any sense. Now, all this takes time, right? So, we bought the company about two and a half years ago. We came in there. There was a sales team. The sales leadership has changed, right? A year ago, we started making some changes at the sales leadership. We’re beefing up the team now with some members of the TFI team in other sectors. So, we should start to see some improvement in 2024 in terms of growth.
We should also start to see improvement in our service. We’re moving more freight on the road, linehaul road versus rail, okay, than in 2023 to improve service. At the same time, our costs also are under control because we have better equipment. Our MPG is comparable to our peers now because our fleet always has got a normal age versus two years ago, we had a fleet that was way too old with an MPG that was way too low. So, all this years improved service.
Ken Hoexter: Great. And from — a quick follow-up on the spin. Just want to understand why you chose to spin the truckload as opposed to the LTL into an independent, given the strides, given the peer pure-plays, just wonder your thought on why not that way?
Alain Bedard: Yes. Because at the end of the day, I mean, if you look at what we have, P&C is very small, right? It’s only $500 million, $600 million of revenue ex-fuel. So, it’s really small. So, after truckload is gone, what are we left with? It’s really an LTL in a logistics company, and very different than our peers. Just look at our logistics, Ken, in Q4. We came out with an 88 OR. Most of my peers are down, like, 40%, 50%. One of my peer’s OR is 100. That peer has got LTL and Logistics, as LTL is great. Logistics is running 100 OR. Us, we run our logistics very efficiently, and we make a lot of money at it. Our return on invested capital is through the roof. So, I think that the combination of LTL and logistics make a lot of sense if you make money with logistics, right, if your return on invested capital is about the same.
So, if you’re running, let’s say, your LTL at an 85 OR, okay, with a return on invested capital at 25%, and your logistics is running a 98 OR with a return on invested capital at 4%, well, that doesn’t make any sense to have the two. So, I would agree with you that then you do the spin-off of only your LTL. But it’s different at TFI, because the way we run logistics, we’re about making money. That’s just volume. So, if you look at my Q4, excluding JHT acquisition, I’m flat, okay, on my OE. So, my peers are down 30%, 40%, 50%. One of my peers, like I said, is running 100 OR. We’re very different. And our logistics will keep growing, Ken. I mean, for sure, but smart, we’re not in the business to do logistics at 2%.
Ken Hoexter: Wonderful. Alain, appreciate the time and thoughts. thank you.
Alain Bedard: Pleasure Ken.
Operator: Our next question is from Walter Spracklin with RBC Capital Markets. Please proceed with your question.
Walter Spracklin: Thanks very much. Good morning Alain.
Alain Bedard: Good morning Walter.
Walter Spracklin: So, going back to the spin, and you mentioned the conglomerate discount, and I know in the past you’ve kind of talked about your P&C in Canada as having been already consolidated, not a lot of room for you to grow by acquisition. It’s a really premium asset, and I bet would fit nicely into a lot of other organizations that would see it as strategic. Is that something in that conglomerate discount kind of avenue that you would — it’s obviously we put something out on that, but love to hear your thoughts on how you see the P&C division in Canada?
Alain Bedard: Well, like you just said, Walter, the problem we have with our P&C is that it’s so good, right? And except organically, we can’t grow it. I mean, there’s nothing really of size that we could do in Canada, right? So, we can’t buy ABC. We could buy — there’s not much we could do on M&A on P&C. So, if you go back to the waste in 2014-2015, we could not grow the waste at the time. We had a fantastic business that was called Matrak [ph] and we couldn’t grow it. And people said, well, this is probably worth $500 million — $400 million, $500 million. And then we said, no, we’re going to sell it. Then we sold it to GFL for $800 million at the time. So, if you look at our P&C, it’s a diamond. It produces a ton of free cash flow, it’s a gem.
The problem we have is same as the waste. Our waste business at the time was also a gem, right? But same story is, we can’t grow, right, except organically. So, for sure, right now, Walter, our plan is to keep growing organically our P&C. We’re trying to do — we’re having some discussion with players right now to try to do more for them, okay, versus what the situation is. But our real focus is, like I said on the call, for 2024 is our US LTL. We have to deliver that famous 88 OR. And we have to do this Daseke deal and get ready for 2025 because we believe that this will create a lot of value for our shoulders if we could strike this deal in 2025. And we also believe that maybe this spin-off is not just going to be about the TFI assets, maybe other assets will be part of that deal, okay?
Because we have a value proposition that is second to none to other parties if they want to join us. So, now, going back to your question about P&C, this is why at the end of the day, we’ll have to make a decision down the road, Walter. But it’s not going to be 2024, because I’m too busy in 2024 with everything that we’re doing and our team the same. But our P&C team, they’re really focused. I think that in 2024, we will start growing organically. It’s not easy, okay, in 2024. If you look at my Q4, my volume is down, what, 3%, 4% again quarter-over-quarter. The market is soft. Hopefully 2024, things will start to get better.
Walter Spracklin: Okay. And then, my follow-up question is on your reference to the next deal. How much of that is when you’re ready as opposed to when there’s an opportunity? You always mentioned there’s a bunch of larger players that you’re always in talks with. Could it be that the timing works and this is a 2024 deal, or is it possible that this happens in 2025 and maybe not at all depending on if it’s things that are outside of your control and timing? Just help me understand a little bit how that will play out this larger kind of LTL, logistics acquisition in a potentially 2025 framework?
Alain Bedard: But you know what, Walter, the big difference between when we bought UPS Freight and while buying Daseke. UPS Freight was a very difficult deal to do because it was a carve-out and the company was not making any money. The OR was about 110, the fleet was a disaster, et cetera, et cetera. Daseke is a different story. I mean, Daseke will run a sub-90 OR within six to 12 months in my mind, okay? The operating groups there are very, very, very good. I mean, there’s a few things that will work with them to fix. But in general, this is an easy transaction for us compared to UPS Freight, which was a very complex one. So, with that in mind, okay, what I’m saying is that once we do Daseke early in Q2, if something comes along before the end of 2024, that makes sense, okay, financially even before we do the spin-off, we are in position to do it.
Why? Because Daseke is not a big rock in our shoe. They run a very, very good operation, okay? And I think that to bring those guys to a sub-90 OR, it’s not going to take five years, okay? It will be very short, same market condition as we have today, right? If market condition freights changes in 2024 late or into 2025, that’s going to make it much easier even that. So, to answer your question, yes, we’re doing Daseke. Yes, we’re working on the spin-off. But if a good opportunity comes along late 2024 into the LTL or into the Logistics world in US, we’re in.
Walter Spracklin: Excellent. Thank you very much for the time. Appreciate it.
Alain Bedard: Pleasure Walter.
Operator: Our next question is from Jason Seidl with TD Cowen. Please proceed with your question.
Jason Seidl: Thanks Alain for taking my follow-up. Along those lines, you made a comment about potentially growing your specialty truckload a little bit before a potential spin. I guess, two questions. Geographically, where would you be looking to do that? Number one. Number two, what types of specialties do you think would be additive to make that a more attractive asset on the spin? And three, would it have to be done before a potential exiting of the P&C business, or could you do it — do you need to do it after?
