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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the TFI International's Third Quarter 2021 Results Conference Call. [Operator Instructions] Before we turn the call over to management, please be advised that this conference call will contain several statements that are forward-looking in nature and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Also, as a reminder, TFI changed its presentation currency at year-end 2020, and all dollar amounts are now in U.S. dollars. Lastly, I would like to remind everyone that this conference call is being recorded today, Friday, October 29, 2021. I will now turn the call over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir.
Thank you for the introduction, operator, and thank you, everyone, for joining us this morning. Yesterday, after the market closed, we released our third quarter 2021 results. TFI International further built on our solid performance all year by completing another strong quarter. Each of our business segments performed well, and many are now surpassing their pre-pandemic levels of revenue and profitability. We continue to successfully integrate UPS right now under the TFI umbrella as TForce Freight. And we're heading into year-end in the strongest position in our company's history. The past 2 years have been like none other, but TFI International rose to the challenges. Those of you who have followed our company for many years know that this means we simply maintain our focus where it's always been. We get it right on the fundamental details of our business. We look to maximize efficiencies, and we seek strategic acquisition opportunities. Ultimately, we're looking to drive strong returns on invested capital, optimize our free cash flow and grow our earnings per share in order to create long-term shareholder value. And then we return excess capital to shareholders whenever possible. This is our focus regardless of operating conditions. So even now with North America facing supply chain disruptions, labor shortages and then, of course, ongoing pandemic-related disruption, we at TFI International feel very confident in our ability to navigate the road ahead. On a more granular basis, right now, we remain focused on details such as optimal pricing, driver retention and what we call freight and network that fits. Another important current focus of ours is on the integration and fine-tuning of TForce Freight following the largest and most strategic acquisition in our company's history. While already having a positive impact on our positioning as we've improved quality of freight, we still have much work to do, especially with regards to cost. This also means that we, therefore, have significant remaining upside from this recent acquisition. And yet we were still able to produce the strong quarterly results that I'll now review. During the third quarter, our total revenue climbed to $2.1 billion, up nearly 125% over the prior year. Most of the expansion from M&A were with some positive organic growth as well. This organic growth was driven by rebound in freight volumes and our strong positioning, allowing us to price appropriately and benefit from ongoing strength in B2B and e-commerce. At TFI, we've always been more focused on profitability than simply growth and, therefore, are pleased to report operating income of $193 million, up 65% and adjusted fully diluted EPS of $1.46, up 55%. One of the key financial areas of strategic focus for us is net cash from continuing operating activities because of the flexibility it provides to invest in our business, seek attractive acquisition opportunities in a disciplined manner and return excess cash to shareholders when possible. So we generated $211 million of net cash from continuing operating activities during the quarter, which was up 50% year-over-year. We also increased our return on invested capital across all of our 4 business segments, a metric that we consider a high priority. Similar to last quarter, we're not adjusting these strong results for the $5.5 million or $0.04 per share mark-to-market loss on our cash-settled DSU due to the rise in our share price during the quarter. In the prior year third quarter, our results included a smaller loss from the issue of $2.7 million or $0.02 per share. Next, let's take a look at each of our 4 business segments, starting with P&C. This segment represents 7% of our total segment revenue and saw a 9% increase in revenue before fuel surcharge versus a year ago quarter. Operating income of $23.9 million was up 12%, with the operating margin up 40 basis points to 17.9%. Results benefited from continued strengthening yields from both B2C and B2B activity. For P&C, our return on invested capital was a very healthy 23.2%, up 210 basis points from the 21.1% a year ago. Our LTL segment, our largest, which is 47% of total segment revenue, generated revenue before fuel surcharge of $861 million as compared to $133 million a year earlier, with the increase mainly due to the acquisition of TForce Freight. Our LTL operating income was $85.1 million, was up 224%. And the operating margin was 9.9% with significant upside potential as we further integrated and optimized TForce Freight. This operating income was reduced by a nonrecurring $10.8 million purchase accounting adjustment. And further, last year's third quarter includes $6 million from the Canadian Emergency Wage Subsidy, but we received none this quarter. Our Canadian LTL business grew revenue before fuel surcharge 2% and produced a very impressive adjusted operating ratio of 80.3%, while our recently formed U.S. LTL business generated revenue before fuel surcharge of $727 million with an OR of 90.7%. Our return on invested capital in the U.S. LTL was exceptional, but we believe it makes sense to wait for a full year's worth of results from TForce Freight before considering this measure. Our return on invested capital in our Canadian LTL was 16.7%, up 370 basis points from 13% last year. Turning to our Truckload segment, which represents 26% of total revenue. Our revenue before fuel surcharge of $489 million was up 19% over the prior year third quarter. Our operating income was $56 million, was essentially flat and our operating margin was 11.4% relative to 13.7% a year earlier. These results include a drop in the Canadian Emergency Wage Subsidy from $8 million -- $8.1 million a year earlier to only $200,000 this quarter as well as a $4.6 million operating loss generated by TForce Freight Truckload division. Digging in on Truckload, U.S.-based conventional operation grew revenue before fuel surcharge 21% with an OR of 91.9% while absorbing lingering operating loss from the acquired TForce Freight. Primarily a result of these losses, return on invested capital in the U.S. Truckload only improved 40 basis points to 5.6%. Our Canadian conventional operations grew revenue before fuel surcharge 15% with an OR of 88.4%, again, reflecting the loss of $1 million of Canada Emergency Wage Subsidy versus the prior year period. Here, our return on invested capital improved 80 basis points to 12.4%. Our Specialized Truckload operation grew revenue before fuel surcharge 19% with an OR of 85.8% despite the loss of nearly $7 million of Canada Emergency Wage Subsidy versus the prior year period. In Specialized Truckload, our return on invested capital improved 130 basis points to 10.8%. Our fourth business segment to discuss is Logistics, which represent 20% of total segment revenue and saw revenue before fuel surcharge nearly double to $408 million. Our Logistics operating income more than doubled to $45.3 million, although this included a $12 million bargain purchase gain related to certain Logistics assets at TForce Freight. This strength in our Logistics business was mainly driven by our same-day package delivery business in U.S. and in Canada and by the addition of TFWW, which continues to perform really well. Our Logistics return on invested capital was 24.3%, up a robust 630 basis points over the prior year. We continue to maintain a strong balance sheet at TFI International, which we view as a pillar of our strength, facilitating our ability to grow over time, both organically and through our disciplined acquisition strategy. We produced free cash flow of $169 million during the third quarter, which was up 38% relative to the prior year period. And we ended September with a leverage ratio well under the 2x in terms of our debt to adjusted EBITDA. With 1 quarter to go in the year, we're again raising our full year guidance, reflecting our confidence in our operational strategy, our focus on what matters and the continued opportunities to optimize TForce Freight where we see significant potential following the recent acquisition. Keep in mind, the usual seasonality should also be expected during the next 2 quarters. That said, we expect full year earnings per share to be in the range of $4.75 to $4.85, up from our prior range of $4.50 to $4.60. We expect net CapEx in Q4 to be in the range of $75 million to $100 million. And we're also increasing our outlook for free cash flow from $550 million to $575 million to a new range of $675 million to $700 million, again, reflecting our ongoing strong performance and confidence in our ability to navigate what's ahead. We expect our leverage, defined as funded debt-to-EBITDA ratio as calculated in accordance with our debt covenants to remain below 2x. Before I conclude, I'd like to take a moment to highlight some of our recent personnel moves at TFI International, starting with 2 well-deserved retirement from -- retirements from the industry. Well, first, Louis Gagnon, who has had a long and productive career and joined our team more than 10 years ago, announced his retirement this summer. Louis joined us in 2009 as a VP of Business Development and was promoted to EVP in 2016. He took on even more responsibility in recent years, overseeing several of our division and subsidiaries. Also, Brian Kohut, who has been with us for more than 20 years, has announced his intention to retire at the end of December. Over the past 2 decades at TFI, Brian worked his way up to become one of our esteemed EVP, most recently overseeing our Package and Courier segment across Canada. We wish both Louis and Brian highly fulfilling retirements. And on my behalf and everyone at TFI, we thank them both for their countless contribution and for playing such an important role in our success over the years. I'm also very pleased to announce several promotions across our organization. First, our EVP, Bob McGonigal will be assuming Brian's responsibility upon Brian's retirement at the end of the year. Bob, as you know, has been with TFI for many years since 2004 and currently oversees several of our LTL business units. We congratulate Bob on his new role. Next, to take on many of Bob's various responsibility, I'm proud to announce that Chris Traikos, one of our operating managers and currently President of Vitran has been promoted to Executive VP effective Jan 1, 2022. Chris has been with TFI since 2017. He brings a wealth of experience to his new role, and we congratulate him on his growing responsibilities. Lastly, I'm equally pleased to announce the promotion of Junior Roy to EVP. Junior has been with TFI for 23 years, during which time, he has led several business units within specialized transportation and logistics services. He has an in-depth understanding of our business and the transportation industry and will now be responsible for various TFI division in the province of Quebec. We congratulate Junior and look forward to his many contributions in the years ahead. In summary, TFI International continues to generate record performance, and we expect to finish the year strong. Importantly, the strategic acquisition of UPS Freight earlier this year should have an even more favorable impact on our growth and profitability as we move forward. You can rest assured, we will continue to focus on what we got us here, including our attention to the fundamentals of the business in order to optimize profitability and enhance our cash flow. And as you heard me say many times, our ultimate aim is to create and unlock shareholder value, returning excess capital to our shareholders whenever possible. With that, operator, if you could now open the lines, we can begin the Q&A.
[Operator Instructions] Our first question will come from the line of Jordan Alliger with Goldman Sachs.
Curious on the LTL side. I know you've been discussing yield initiatives and price initiatives. Can you talk about, I don't know, in terms of proportion of the business perhaps that you still have left to go in terms of reorienting the pricing or the freight mix?
Very good question, Jordan. So I would say that if you look at the freight that we're holding right now at TForce Freight, we're pleased to say that probably 50% to 60% of what we do today fits the network and also fit the freight profile that we want at TForce Freight. So the team there has done a fantastic job, I would say, over the last 9 to 12 months because this process has already started when we bought UPS Freight, right? So the guys have done a fantastic job, but there's still more to come. More to come in terms of making sure that what we're hauling is always freight that makes money for the company and fits the network. And there's also a lot of discussion right now. We've informed our people that we'll be shutting down a few terminals early in December because there is a very low volume and too much fixed cost, right? So it's an ongoing process, and working on the freight that fits will take time. As we are coming out with Q3 with a 91% OR. I mean it's acceptable because we've owned this company only for a few months. But this is not the goal to be a 90% OR company, right? So we still have a lot of work to do on cost. But on the freight, fixing something that makes sense in terms of rates, something -- all the accessorial that needs to be applied to freight. It sits well on the goal, but we still have something to do.
Your next question will comes from the line of Scott Group with Wolfe Research.
So I want to stay on LTL. Can you talk about sort of the underlying tonnage trends and revenue retention? And then on the operating ratio, maybe just your expectations for fourth quarter? And then where ultimately you think the operating ratio here can go?
Yes. That's a very good question, Scott. In terms of fourth quarter, I mean, this is really the unknown for us. If we look historically, those at UPS Freight did not perform too well in the month of December, in the month of January and in the month of February. This is something that we are addressing right now, getting ready for this difficult season historically. We're addressing that with the team there, with Paul and his team, to see what can we do to make sure that we're not in a position where our OR is going to go from the 91% in Q3, let's say, to a 94% or 95% in Q4. So still lots to do. Historically, those guys were not doing well in Q4 because of December. And they were not doing well in Q1 because of the first 2 months, right? So we're working hard with the team to make sure that we adjust our people. We also try to change a little bit more of our mix of freight. We're very dependent on retail. And as you know, retail is not doing well in December or in January and February. We need more of this industrial LTL that still exists in the U.S., right? So this is really what we believe it's going to be important. Like I said, we came out with 2 quarters with some kind of like a 90%, 91% OR. But it's still not a 90% OR company until we get through Q4 and in Q1. And where we think that this company could go, it will take us some time. Like I said, within the next few quarters, we will be able to confirm that this is a 90% OR company, but this is not the goal. If we can get a 90% OR company in Canada in a very difficult market compared to the U.S. one, I mean, to us, the goal of being closer to 80% has to be the goal, the target. So now are we going to do that in '22? Probably not. Are we going to be heading in the right direction in '22? I think so. Now can we get to a sub-85% OR with this market? I believe it can be done. But it will take us some time addressing the cost, adjusting the network, getting the equipment in because already we have an issue with the equipment because of supply chain issue. Instead of getting 1,100 trucks, we're just going to get 500 into the Q1 of '22. So with that in mind, I would say that probably into -- sometime in '23, we should be flying closer to an 85% than a 90%. But the first goal is to really confirm that this is today a 90% OR company in the summer of '22. And then from there, our next goal is going to be to bring that to an 85% OR. And what was the first part of your question, Scott? I forgot.
I was asking about just the tonnage and trends in revenue in Q4 for...
Yes. Absolutely. I mean in order to correct the situation about freight that fits, absolutely. So we are -- for the last, I would say, 18 months at UPS Freight, now TForce Freight, revenue -- shipment count has been dropping in 10%, 12% year-over-year. Now this is, to me, I think that we are now at a floor with now our sales leadership and our sales team because the market is growing, right? I mean if you look at our peers, most of the guys are up 10%, 15%, 20% year-over-year, right, and we're not. We're not like that at TForce Freight at all because we had lots of things to correct, right, to build a stable base, a base where we can -- solid base, where we could start building on it, right? So I would say that right now, we are running like 30,000 to 31,000 bills a day. When we took over the company, we were running about the same 32,000, 33,000 bills a day, right? So we've dropped a little bit on the volume. But we've improved -- if you look at the revenue per ship and ex fuel, I mean, you could see some major improvement. What you don't see is major improvement on the average weight of our shipment. The average weight of shipment at TForce Freight is way too low. We have too much of this light freight, right? So this is also part of freight that fits approach that we have to change that. Like I said earlier, we need to have less of this retail freight and more of this industrial freight. But that takes time, but at least the message is there. The mission is there. Everybody knows what they need to do. And if you look at our average weight of shipment in Canada, it's day and night versus what we do in the U.S., right?
Yes. And then if I can -- can you just clarify on the guidance for the year and what it implies for the fourth quarter? Obviously, there's a seasonality. Is there the typical conservatism that we typically think with you guys? And maybe just some thoughts on...
Scott, it's part of our religion. We always try to overdeliver, underpromise but overdeliver, right? So we're conservative. We feel that $4.75 to $4.85 -- although I know consensus is above that at $4.85. We're just saying, guys -- I mean, it's too much of the unknown to me, TForce Freight December. When I look at that, I said, "What are we doing," right? But this has been going on for years and years and years, December and January and February. So this is why we're prudent. We're cautious. That's why we're saying, "Hey, guys, we think that $4.75 to $4.85, for sure, we'll try to do better than that." I would like to be a $5 guy for '21. But I'm not saying that because of TForce Freight Q4. We have no experience. We don't know. But when I look at the historical numbers, I say, "Guys, we have to be very cautious." For sure, we made a lot of changes that should help. But it's still the first time that we go through Q4, right?
Next question will come from the line of Brian Ossenbeck with JPMorgan.
I just wanted to go back to the LTL side and just maybe get your thoughts on the cost. As you mentioned, that was the biggest lever here in the future. I know you worked on some of the fueling stations. And you're talking about some terminals being closed. So maybe you can put some context around that in terms of what type of impact do you think that can help to get to the sub-90% mid- next year and then beyond?
Yes. I think -- Brian, I think that cost is really -- to keep our cost takes time. You can't -- so yes, on the equipment side, we're a little bit behind. Why? Because of the supply chain mess that we're going through right now. So our maintenance cost is still creeping up. Why? Because I mean we don't have the equipment that we need to bring those costs down. Now this is going to be a little bit of a handicap for us in '22 because there, again, it's getting hard to get this equipment. But really, when we talk about fuel economy, when we talk about maintenance, when we talk about all these different costs, claims and all that, we're heading in the right direction. The biggest thing that we have to work on is when we also work on the freight that fits, we have to work also on the network that fits. So as an example, right now we are operating a terminal with 40 bills a day. And guys, does it make sense? If you're a 30,000 bills a day company to be running a terminal in a 60,000-people city, does that make sense? Well, we've always done it. Well, let's start asking ourselves. So yes, Brian, we are shutting down a few terminals because it makes sense. Like in Chicago, we're shutting down one. We got way too many. We don't need that. It's a huge fixed cost. And so part of the cost is going to be to make sure that the freight fits the network, but also the network fits our mission. So if you go back to when we bought CFI, we were running all the way up to the West Coast with CFI. And we said, "Well, this doesn't make any sense." I mean if we have 20,000 trucks in the U.S., that makes sense. But if you have only 3,000, you need more density, right? So it's the same story with LTL, right? We need to operate terminals where we have density of population and density of customers. And we're not going to run a terminal with 3 drivers because who's going to manage 3 drivers? It's way too expensive. So cost will take us some time. It's not going to happen overnight. So this is why we're cautious. We're saying, "Guys, this should be a 90% OR company within the next few quarters," right? That's step one. Then step two is that, "Hey, guys, we think that this could be an 85% company." Then it's more of cost that's going to bring us from 90% to -- let's say, closer to 80%.If you look at what we do in Canada, I mean, our costs are way better than our costs of what we're running in the U.S. Why is that? Because we're so dense, because we're so used. We -- even in Canada, we would never operate a terminal with 40 bills a day. And this is Canada. It's not the U.S., right? So we will have to adjust that, get rid of all these fixed costs and change this network so to have a proper network that fits the customer that we want to service or we service today.
Great. That's all very helpful. Just wanted to ask you about the vaccine mandate in the U.S. here. I know the Canadians are carved out for trucking. And hopefully, we'll see something similar on the U.S. side. But obviously, you have a big operation in the U.S. as well. So if you could just give your impression on contingency plans or what else you're hearing in terms of potential carve-out? Because it sounds like we might see some headlines here on that front in the next perhaps a week or so.
Yes. So Brian, what we've been doing is to try to entice our people to get vaccinated. But as you know, I mean, on the Canadian side, we're doing really well. I mean on the Canadian side -- I was just reading this morning that Air Canada and WestJet, I think it's -- I would say that they're probably like 95%, 99% of their people being vaccinated. So the Canadian side is not such an issue. It's -- as you say, the U.S. is, right? So step one, what we've done is trying to explain that this vaccine is safe and try to educate our people. But in the U.S., it's -- people are free to do whatever they want, right? So you've got 2 major states in the U.S. where they see things differently. And yes, vaccine is good, but you can't really ask employees to get vaccinated. So what we're doing as a first step is we're trying to poll our employees -- to know this is what we've done in Canada so far is poll our employees to know if they want to answer the question because you can't force them to answer the question. Either that free speech and all these. So that is what we've been doing in trying to educating our people that we promote the vaccine, but we can't force no one. So it's going to be, again, part of the unknown of '22, Brian. It's what's going to be the reaction of the customer? What's going to be the reaction of our employees? It's already difficult, right, to find employees, drivers, dock workers. It's not an easy thing to do because of all this COVID thing that happened, right? So now mandate vaccine, this is going to be another rock in our shoe. Now we'll be addressing the situation when we also know the rules, Brian, because, right now, it's still the unknown, right? It's not clear.
Your next question will come from the line Ken Hoexter with Bank of America.
Can you just clarify real quick before I get to question? How many service centers are you at? And how many are you closing?
Okay. So in the U.S. right now, in our LTL division -- because, Ken, that's your question right now is the U.S. LTL, right?
Yes. Yes.
Okay. U.S. LTL, so we're shutting down before year-end about 4 centers, small: 2 in West Virginia, 1 in the Chicago area and another one, which I forgot. So small centers with -- now do we know how many are we going to still be running at the end, let's say, of '22 or '23? I can't get the answer to that. I can't answer that. But one thing I could tell you is that, Ken, is that we're not going to run a terminal with 50 bills a day. I mean this doesn't make any sense. It's too expensive. And like I said earlier, I mean, even in Canada, we don't run a 50 shipment terminal because you have 2 or 3 drivers. How are you going to manage 2 or 3 drivers in a union environment, right? Because don't forget, our LTL division in the U.S. is union and it's employee model. So you need supervisor and you need managers to manage a terminal because they're not owner-operators, right? You have to manage the employees. So when you have only 2 or 3 drivers, you're not going to have a supervisor and a manager to manage 2 or 3 employees. It doesn't make any sense, right?
No, I understand. And how many terminals are you at now? I just want to understand the scale of the 4 versus what you...
It's about 200 that we -- about 225.
225, perfect. All right. And then you noted earlier the 99% OR at the TForce Freight part of the Truckload that was added. Maybe you can talk about -- I mean you've talked a lot about cutting costs and focusing on the LTL side. What's left to do? Is that still strategic in terms of the Truckload? Is it blending it with other assets that you've got? Maybe talk a bit about what you can do on the TL side.
Yes. The UPS Truckload division that we got with the acquisition of UPS Freight was a disaster of a division because it's a dedicated division, and the pricing with customers didn't make any sense. The commitment didn't make any sense. So for instance, they committed to all freight, but they didn't have the power or didn't have the driver. So when we took over, I mean, the first thing that Greg Orr, which runs our truckload operation in the U.S. said to me, he said, "Alain, what are we going to do? I mean we're stuck with these contracts. We're stuck with all these deals that were done previously. So I mean, option one is we just give 30 days' notice to all these guys, and our reputation is going to go to the toilet. Or it will take us some time, we will lose money because of the poor management that was there previously. But that's my recommendation, Alain." So I said, "You know what, Greg? I hate to lose money, but it's even worse if we lose our reputation, right? So let's work hard at correcting the situation." And this is what Greg has done over there. So when you look at TFI Truckload U.S. division in '22, you'll see over-the-road division and a dedicated division. So the dedicated division is the old TA, Transport America, and the UPS Truckload operation that's going to be combined into one. That's what we're doing now. And then you're going to have the CFI over-the-road, where the old TA over-the-road drivers are moving to CFI as we speak. And then we're going to have the CFI Temperature Control, which is doing really well. And that will be the model for us to operate in '22.We anticipate that the profitability of this division will improve big time in '22 by correcting the situation coming from the UPS transaction with customers, addressing also the fleet because if you look at my average age of my fleet in my U.S. TL, I went from 2 years' average to 3. Why is that? Well, because the UPS Truckload division was running trucks that average about 7 years, right? So we also think that, although it's difficult because right now, as you know, it's not easy to get the equipment, but we're working on it. So it's a little bit disappointing when we look at this UPS Truckload division, but we know what to do. We're fixing it now. And I would say that probably early in '22, all this should be behind us.
Appreciate that. If I could sneak one more in on a different segment. The P&C, your margins were just about flat year-over-year after kind of showing some nice gains last quarter. Was there anything in there that you'd want to highlight in terms of costs or anything going on in the P&C segment?
Yes. Yes, we're starting to see, Ken, some inflation in there. And this is also part of Mr. McGonigal's mandate. With Brian retiring, Bob takes over, working with Jim over there at Canpar and Loomis to address this situation because you're absolutely right. We're really happy to report that our OE is close to 18 points, second to none. But still, I believe we could do better than that.So -- but we have pressure. We have salary pressure as everybody knows about that, right? And with that, I mean, what can you do? You have to adjust your salaries to the market, which is fine. But then you have to turn around and discuss that with your customers. And this is probably where -- although if you look at our average revenue per shipment, I mean, we're a big time, but maybe not enough, right? So Bob and his team, his new team working with Brian as a transition, I mean, the guys are working on a plan. We've done okay. I would not say that we've done really well, but we've done okay. If you look at my peers, the 2 big peers that we can compare ourselves to, I mean, it's a little bit of an issue there, but we're working on it.
Your next question will come from the line of Ravi Shanker with Morgan Stanley.
So you addressed the vaccine mandate situation earlier. But can you just talk about the overall labor shortages that seem to be a kind of widespread issue? Are you running into that as well? And kind of what are some of the mitigating actions you're taking there?
Difficult, very difficult in the U.S., Ravi. I mean not so much in Canada yet. We're having some small issues in Canada but nothing major. But in the U.S., absolutely, our Truckload division in the U.S. Not so much the LTL. I mean the LTL, I think that our crew is okay. The way we pay our people is really very impressive for them. So -- but the Truckload, absolutely, it's a big, big issue. It's a real big problem. And this is why, if you look at our revenue, I mean it's tough. It's really difficult. So what are we trying to do? I mean we're trying to convince drivers to join the CFI team. And we're also trying to reduce our average overhead cost because if you look at our management salary for CFI, I mean, we are lean and mean -- as lean and mean as our Canadian operation. But in our dedicated, which is the old TA and UPS Truckload, there's lots that we could do there. But in terms of people, it's very difficult to find quality drivers as we speak. Everybody is looking for that now. The freight is there. Our revenue per mile is improving every day. But the problem is to find the people, right? And it's a big issue. And this vaccine thing there, I don't know if it's going to help. So another issue that creates a more headwind to bring people in, it's going to be difficult for the industry.
Got it. So maybe as a follow-up. Given everything you've told us so far on this call, clearly, it looks like there's a bunch of margin momentum in both the LTL and the TL business. The top line is growing as well. You said in your prepared remarks that you're still pretty active in M&A. Just maybe a sneak peek into 2022. And kind of -- you said you would like to be a $5 guy in '21. Would you like to be a $6 guy in '22?
It's got to be the goal, Ravi. It's got to be their goal. Now Ravi, I have to tell you that I'm in the budget season right now. So I'm starting our meeting with our executives. So I'm a little bit ahead of the game. So I hope those guys don't want to kill me with that. But to me, it's got to be a nice target for us. $6, it could be a little bit of a stretch, but we're always conservative. So I mean I think that we have the crew. I think that we have the potential. And for sure, TForce Freight is the diamond in the rough of the company. We have a great executive team there. It has been supported also by some of our Canadian executives. And we're just starting. Like I said earlier, we bought this company 5 months ago. It's a huge company, right? It's big, right? So it takes time. And it's a change of culture, too. I mean the TFI culture is different than the culture of the previous owner. I mean we're not the same. So we have to bring down the responsibility to the terminal level. If you look at TFI, our head office is small, I mean, maybe less than 100 people. Why? Because we have our operation responsible from -- everything from A to Z, right? And us, we're just there to make sure that everything is working well at office.
Your next question will come from the line of Walter Spracklin with RBC Capital Markets.
So on the labor shortage issue, can you give us some insight as to whether -- what aspect of your business is it hurting? Are you losing volume that you had previously and just can't service? Are you just not able to grow? At what level and to what degree is the labor shortage hitting you, particularly in the U.S. operations?
Yes. You see, Walter, to me, my approach to that when I talk to the operational guys is, "Guys, let's try to hire as many people as we can, train them, educate them, et cetera, et cetera." But then when everybody is looking for drivers, it's a very difficult job to do. So you've been looking at TFI for a long, long time, Walter. And you know our approach has always been when this push comes to shove, what do you do? Well, you do what we're doing now is you're buying a truckload company like we just did in Quebec. And pretty soon, you may see us buying a small truckload company in the U.S. just to beef up the team. And you get the asset. You get the trucks. You get the people. And sometimes, those small companies, their mix of customers is not where it should be. So -- and the rates are not where it should be because of -- market intelligence is not reaching those guys. And we do have market intelligence now. So that's always been our approach. It's like a hybrid model as you try to get as many drivers because it's an issue. It's not just us. It's -- everybody's got the issue. And also do the M&A. The other thing also that we're looking at doing in the U.S. is that there is some different visa permit that some of my peers are using to have drivers from outside of the U.S. from, let's say, Mexico, to be able to drive in the U.S. So some of our peers, when you look at the fact that they're adding drivers, one of the key for them has been to look at this possibility. We're doing also something similar, to a certain degree, in Canada as well from -- drivers from Eastern Europe, right? Not big but it's happening, right? So in terms of the U.S., the drivers from outside the U.S., this is something that is really important. Now our crew in the U.S. was always saying, "Well, you know what? The previous president is going to change the immigration, but it never happened," right? So right now, if you can't beat them, join them. So that's another aspect that we're looking at right now, Walter, to add more human resources into our driving fleet and to also eliminate the fact that we're losing guys because some of them are retiring. Some of them are just saying, "You know what? With COVID, I'm out," right? And now if we bring the vaccine, the mandate on the vaccine, it's just going to get worse.
That makes sense. Staying on the M&A theme. You've obviously been following the CN proxy contest. And part of -- that they provided was the possibility of divesting of their non-rail assets and intermodal assets. Do you feel that -- are you too large to be able to be in the running for those if they do come out from a regulatory standpoint? Or do you see that asset group, and I'm referring to TransX, H&R, possibly even the barge assets, as something that you'd be able to be in the running for?
Well, you know what, Walter, we always looked at everything that's possible for us to do. And for sure, like you said, we are so huge in Canada that we're not in the same position as some of our peers in Canada. But absolutely, if something makes sense, that fits TFI's mission comes out from the rail guys, absolutely, we're going to look at it. Now don't forget, the motto at TFI with the CEO, the actual CEO, is you make your money on the buying, never on the selling, right? So you got to buy at the right price. If you overpay, it affects your EPS. It affects your future, right? It's always been the story. So we'll look at it. But, again, we got to buy at the right price for our shareholders.
Makes sense. And congrats to Brian and everyone retiring, and best of luck and congratulations to the promotions. Looking forward to meeting...
Thank you, Walter. Those guys have done a fantastic job. I'm telling you. Brian and Louis, it's sad, but it's life. I mean -- like Brian has been with me for more than 20 years. So I mean -- but Brian, the decision is, "I'm going to turn 62. And, Alain, I want to do something different." I said, "Okay, Brian. Fine. Fine with me." It's too bad, but he's done a fantastic job with the P&C. And same thing with Louis with his background at GE. He really helped us with our real estate department and other small division. But like you said, Walter, those guys are nice. But again, it opens up the potential for the younger kids like Junior and Chris and, to a certain degree, also Bob.
Your next question will come from the line of Tom Wadewitz from UBS.
I guess when we look at the commentary on repricing, I think, within U.S. LTL, I think you said something like 50% or 60% of the book has been repriced. How long do you think it takes to reprice the other 50% -- 40% to 50%? Is that something that you accomplish in the next quarter or 2? Or is that something you get to a kind of year-end '22?
No, next quarter or 2 because like I said earlier, Tom, I mean, before we bought UPS Freight, I mean, already UPS had a plan in place that was called Phoenix to address the situation. So it didn't start in May when we bought the company. It really started sometimes late Q1, this process. So this is why I feel pretty good that by the summer of '22, this already should be behind us in terms of making sure that what we're getting from the customer is what we're looking for in terms of freight and in terms of costs and in terms of rates.
Right. Okay. That's helpful. I appreciate that. And then I think when -- you've done so well just quick out of the gates. I know you've kind of barely had your hands on UPS Freight for very long. But it's been so good that I think there's a lot of enthusiasm about what you could do next. I apologize for a question that's kind of looking further out -- or I don't know, maybe you like that. But what -- can you do LTL in the U.S. that's a mix of union and nonunion? Or if you did...
Absolutely. I mean we could do union. We could do nonunion because if you look at our track record in Canada, I mean if you look at, for instance, Cavalier, although it's small, it's nonunion. If you look at Westfreight, although it's small, it's nonunion. If you look at TST, it's big and it's union. But if you look at Ouik X, it's also big but it's nonunion. So in Canada, we run a union shop or a nonunion shop. It's got nothing to do. I mean us -- it's union or no union. For sure, it's a little bit of a change because you don't manage this maybe the same way because with a union, you got a contract and you respect it. But in nonunion, also, you don't have a contract that's been written with a third party, which is the union. But you also live by the same kind of rules that you have in a union shop. I mean, basically, maybe a little bit less flexibility, but that's not a big deal. So for us to be growing in the U.S., once we have stability, once -- because right now, my biggest problem is I have no history of Q4 under TFI. The only thing I know is Q4 under the old management -- I mean the old ownership, right? And the same thing with Q1. So this is why we're very cautious about what may happen in 4 and in 1. But once we're done with a year, and we have a solid plan and a track record, if we do some M&A in the LTL, for us, a union or no union, it doesn't change anything.
Okay. And it sounds like that's something you would be interested in doing more of.
Absolutely. I mean if we can find another diamond like UPS Freight -- UPS Freight is a great diamond. It's just a little bit rough. And we're going to spend next year or 2 to polish this diamond. And I'm telling you, it's going to be a very bright diamond once we're done. It's got the potential. It's got the size. And we have the crew there. We have the people. So it's going to be a very shiny diamond down the road. Now I mean we like the LTL business. I mean we are the most important LTL player in Canada. In the U.S., we're small. I mean we're probably #5 or #6. So lots of potential for us to grow in. It could be a union shop, but it also can be a non-union shop.
Your next question will come from the line of Kevin Chiang with CIBC.
Maybe I could just ask on the P&C front. Sequentially, revenues were down quarter-over-quarter. And I guess I'm a little bit surprised by that just given the reopening trends we saw in the third quarter in Canada. Just wondering if there's anything you would call out as to maybe what drove that sequential decline.
Yes. That's a very good question, Kevin. And you're absolutely right. So in the summer, we made a decision to go away from some freight that we were getting from 2 specific customers that were outside of our network. And that came from all this big push on e-commerce that happened over the last 12 months. And this rate was mostly given to an agent. And those agents took advantage of the situation. So we said, "Guys, I mean, so let's make sure that the freight that we take from those customers fit the network that we operate." Yes, sometimes we can have a shipment that we have to give to an agent. If this agent is fair in his rate, we'll work with this guy. But last year, this is what happened, and we took a correction. But at the same time, Kevin, what we're doing is we're adding trucks. We're adding also drivers. So if you look at my MD&A, you'll see that I've got more trucks. And you'll see that in my expenses -- not labor expense but the other expense. You'll see that it's less because we give less freight to an agent. So we are building more. And this is going to be one of the target of Jimmy, the guy who owns Canpar and Loomis and also working with Bob, is to expand our coverage in Canada so that we have to -- we can service more of ourselves directly. So I don't know how many ZIP codes that we service right now in Canada. I would say probably 80%. Does it make sense to cover 100% like Purolator? Probably not. But can we do -- let's say that we are 80%. Can we do 82%? Can we do 83%? Can we do 85? I think so. And this is going to be really the goal so that we could go back to growth, like you just said earlier.
Excellent. That's great color there, Alain. Maybe just another question. One of your Canadian peers or competitors suggested the Canadian market, we could see an acceleration in pricing next year. The markets lag the U.S. maybe 6 to 12 months. When I look at your Canadian LTL revenue per shipment, let's say, I'm tracking about 2/3 of what you're getting in the U.S. Do you see an opportunity to see elevated pricing growth in Canadian LTL, so maybe not what you're seeing in the U.S. today?
Yes. Well, Kevin, that's a very, very important question. I've been saying that for so long. The Canadian LTL market runs at a discount versus the U.S. market in terms of quality of revenue. And that's why we're showing you the average revenue per shipment, the weight versus the U.S. And you came to the right conclusion is that we are running Canada like a bunch of discounters. Now the difference is the U.S. is way more organized than the Canadian ones, right? So as long as us and our peers, like you just talked about, are taking over more and more of these LTL company in Canada that are nice and they're happy with 2% bottom line, we will always have this problem, Kevin, because if you look at the U.S., you got companies that are really focusing with 70% ORs and 80% ORs. And those guys are doing great. in Canada, companies like us with an 80% OR and LTL in Canada, it's an exception. I know because I bought a few. So -- but if our peers and others are starting to wake up and smell the coffee and charge the right price for the service, absolutely, we could get there. But that will take time, Kevin. It's not going to happen within the 6 months. There's too many clowns in Canada, too many clowns.
Your next question will come from the line of Jason Seidl with Cowen.
I wanted to talk about a division that hasn't gotten a lot of airtime here on this call, Logistics. You almost doubled your revenue. Your profits were up nearly 50%. How should we think about growth in that division on the revenue side in '22? And also how should we think about margins going forward?
Yes. Very good question. I mean -- so you've got 2 big components in there, Jason. You've got our WW operation that we bought a year ago from Donnelley. That's finally -- finally, guys, we were able to move from their SAP to Oracle. So we did that late September into October. So we are completely off Donnelley. And Tom, the leader there, is doing a fantastic job adding customers. So we are growing there nicely. We're also growing the gross margin. So we're getting gross margin at WW. The goal is to really get to a 20-point gross margin. We're not there yet. But I think that within the next 12 months, we should get closer to 20. And then bottom line over there, we have to be closer to a 6 than a 4 or a 5, right? But the guys, they have the mission. They know what to do. And this is where we're going to go. The other major component is our Canadian and our U.S. last mile operation. So what we've been doing, let's say, in Canada is like our OE is just through the roof. We're doing really, really well. And we're adding customers. So the largest e-tailer that we had as customers -- I'll give you an example. We used to do $50 million of business with this guy in '20. In '21, we'll do only $25 million. And in '22, we'll probably do 0 because this guy likes to be partnered with truckers that don't want to make money. And at the same time, we are replacing this guy with newer customers. So if you look at my Canadian operation, my revenue because I'm losing this big customer, replacing it, so you're going to see me more flat in '22 versus '21. But on the U.S. side, that's a different story because in the U.S. side, we lost this guy like 4 years ago, right? So the U.S. side, what we've done is we brought the Canadian team to really move the OE from, let's say, a mid-single-digit kind of an operation to a low double digit. So that's where we're at now. So now we are building on that. And we're going to start growing that. So we've also split between the normal e-commerce business distribution that we do with our medical. So we have a new leader also running our medical division there in the U.S. So I would say, to make a long story short, is we believe that this division is going to keep on growing, probably low double digit like in the 10% to 12%. But more importantly, Jason, is we're focused on bottom line. And those guys will do really, really well in 2022. But more importantly -- and this has got to be stressed out. I mean look at our return on invested capital there, 24 points, trailing 12 months. This is unbelievable, right?
It was an impressive result, for sure. And I appreciate the thorough response on the logistics side, Alain. I wanted to go to -- get some clarity a little bit. I know you mentioned in TForce Freight the failure to be able to get enough trucks from the OEMs. I think you said 1,100 trucks are ordered. You only got 500. Can you give us -- I didn't hear if you gave us an update on when you expect to get the remaining 600 trucks into the number.
Yes. Jason, so what happened is that the order that we placed with the manufacturer was 1,100. Then about a month ago, they told us -- after telling us, "Don't worry. Don't worry. Don't worry," they told us, "Well, you know what, guys? We have issues with this, with that." So they have a long list of issues. So they said, "Guys, we'll be able to provide you only 500 trucks. And by the way, we're committing to provide you 160 trucks by the end of October."Well, the end of October is now, right? And so far, we didn't get the 160 trucks. So we may get probably 100 trucks by the end of October if we're lucky, right? So the first 500 trucks in my mind, Jason, won't reach us before probably the end of Q2 '22. So our approach has been, "Guys, we have to bring more supplies in." So this is what we have right now. The forecast for us in '22 is 3,000 trucks in the U.S. This is LTL and Truckload. So right now, we have commitment, talking with Greg for about 65% of that, which is 2,000 trucks and not 3,000. So that's where we're at today for '22 but with more than 1 supplier. So we got burned a little bit by the supplier that's always been our main supplier in the U.S. But he gives us a list of 40 pages of excuse that he can't deliver. So this is why for '22, we're bringing 3 more suppliers to the Truckload division and to our LTL division. So the Truckload division always run 2 suppliers, and we'll keep running that. The LTL order was only 1 supplier. So for them, we're adding 2 more suppliers to make sure that we get what we need.
Your next question comes from Konark Gupta with Scotiabank.
So thanks for sharing all the details, Alain. Best wishes for retirees and congrats on all the promotions. Good to see some changes there, for sure. My question is really kind of big picture here. I was kind of thinking like you've been in this business for so many years. You have seen many cycles. I don't know if this cycle is way too different. Like a lot of people would suggest that than the prior cycles clearly. Where -- like how do you see the cycle evolve going into 2022 and maybe coming out of 2022? like where do we see this end? And how does it end? Are we going to see other pricing power in the industry because there is cost inflation, because capacity drivers are short and supply -- fleet is short on supply? Or do we see -- because of these inflationary pressures, do you guys want to be incrementally focusing on the cost structures? Because pricing is good today, but it may not come back tomorrow. Like how do we see the whole picture here? Where is your crystal ball?
Yes. Very good question. I think that this -- what we're going through now is unprecedented. I mean if you look at the cycle over the last 25 years, so market was great. So the trucker is being stupid. We were adding trucks. We were adding drivers. And then at one point, the demand starts to slow down. Then the price just went to the shed. And then the truckers didn't make enough money, et cetera, et cetera. And then, oops, after a few years, market comes back, the economy. It's been going on like that for the last, what, 30, 40 years since the market was deregulated in Canada or in the U.S. The big change that I see is that with people just retiring. We see more and more of that early retirement. And the fact that this COVID thing that really affected a lot of the way people think about working now. And everybody is looking for people, I mean not just our industry, everyone. You're talking hospitals. You're talking transportation. Every sector of the economy in North America, everybody is looking for people. And it's an issue. So I think that -- I don't have a crystal ball, but I think that we're going to have a lot of pressure on wages. And we're going to have a lot of pressure on recruitment. And retaining our people is going to be the key to reduce this turnover. And this is where some of the TFI division, because they're union, they have got some tools because of the bennies, the fringe benefits that are so interesting like pension fund and medicals and all that. So we see less turnover in the sector than others, right? So I think it's going to be a big story over the next probably 5 years that it's going to be hard to find people. Now technology will help us probably to do more with less down the road. So for sure, there's going to be a solution down the road. When? I don't know. But this situation that we're going through right now, to me, is absolutely sure we're going to live through that probably until the end of '23.
Yes. No, that makes sense, Alain, definitely. Can you suggest like in terms of what you are seeing right now in terms of pricing dynamics as you reprice some of the contracts or head into some discussions with new customers? What kind of pricing are we looking at in 2022? Like right now in '21, I think a lot of the U.S. guys would say we are in the teens. Is double-digit possible in '22? Or is it more like high-teens?
Yes. See, Konark, right now, when the customer calls, they don't talk about price. They talk about, "Can you provide the service, please? Can you help me?" See, the dynamics has changed so much in the last 2 years. It's unbelievable. I mean when you talk -- and us, we don't want to be aggressive and to have the customer feel that we're taking advantage of them. So this is why we're going one step at a time. We're trying to explain to the customer that this is a situation that is completely out of our control, that we have to pay our people more. But the pricing pressure on shippers is not going to end in '22 and probably not in '23. I mean -- because right now, the shippers -- the first question is not price; it's service. Can you provide the service, please? And just look at the mess at the Port of LA. This is a real mess, right? If the supply chain is all messed up and they are now working, what, 24 hours a day, 7 days a week, and the question is, "Please, get this right in," right? So the price of a container is just going through the roof. If you try to ship something air, I mean it used to be $2 a kilo; now it's $5 a kilo. It's -- the pressure is all over. So this is why we're starting to see inflation, right? And if you listen to the guys that know about that, they say, "Well, it should be short term." We'll see.
Your next question will come from the line of Benoit Poirier, Desjardins.
Congrats for the quarter. Yes. So my question is on the US TL. You addressed a list of action with Transport America CFI [indiscernible] going into 2022. I would be curious to get more color about the objectives in terms of improving the OR, improving also the return on invested capital. And at one point in time, is there an opportunity to maybe divest the same way you did with Matrec a while ago? Just wondering if you have received some inbound calls and if there is an appetite, too, for your U.S. TL, Alain.
No. No, to answer your question, easy, I mean in terms of selling the division, nobody called us yet. But that being said, what we're trying to do there is CFI over-the-road business has always performed really, really well, right? And we're still running in the low 80s OR at CFI. The problem we always had was TA, always been an issue. And now UPS Truckload is even worse than TA because of the way this company was managed with the previous management team. So what we're doing right now is that from TA, the over-the-road guys are moving to CFI. So CFI is growing in terms of drivers with their over-the-road division, and TA is getting smaller. So let's say, by the end of '21, TA will be a 500-truck company with dedicated freight only. And this will also be combined with UPS Truckload, which is about 700 to 750 dedicated truck. And that will become into one. So in 2022, you're going to look at our Truckload division. You're going to have CFI over-the-road. You're going to have CFI dedicated. And you're going to have CFI Temperature Control and CFI Logistics. So this is all going on as we speak. So Greg and his team are doing a fantastic job because this is not easy to do. I mean move a driver from TA to CFI, it's a different environment. It's not the same TMS, et cetera, et cetera. So we're doing that now. And once this is all done -- so by Q1 of '22, this is all done. Now we're going to be moving on to the McLeod software, the TMS that has been chosen to be unified with our dedicated and over-the-road division. Now by doing that, where are we going to be more efficient is we're going to have -- we're going to be doing more with less people. So for sure, in terms of the overhead, in terms of the staff, by combining and doing all of that and then also into one only TMS by the end of '22, then we'll be in a position to probably shave globally 2 or 3 points on the OR, not affecting the customer but just by shedding costs within our own operation. The other issues we have is UPS Truckload fleet was really, really old, a piece of ship running 2014, 2015. No safety in the truck, no cameras on the truck. I mean nothing. It was like a ragtag fleet. So we are also working on that now to reduce the maintenance cost because it's just killing us right now, the equipment that we have over there coming from the acquisition of UPS Freight. So all these actions should help us with also some tailwind from the customer in terms of pricing to bring the global U.S. TL operation closer to a mid-80, 85, 86, something like that in '22. Now in terms of return on invested capital, absolutely, Benoit, it's been a concern of ours. I mean we're running about 5 points -- 5, 6 points. For sure, once we fix that, we'll probably be closer to 6, maybe 7. It's too low. So what we are trying to do is to build our Logistics division so to help us bring more profit to the bottom line with less capital, right? We're trying also to fix the issue with [indiscernible] but that takes time. So for sure, I mean it's -- this is why we're showing return on invested capital. So within the stable of TFI, you've got guys at 23, our P&C and our Logistics. But you got our LTL at 15 to 16, the Canadian one. And you'll see probably the U.S. is in the same ballpark, more than 15, right? And then you got the Truckload guys, which is the U.S. TL at 5, 6. And you got the Canadian guys at, let's say, 12 -- 10, 12, 13, right? So for sure, if you are less than our capital cost, it's a problem, right? So we're working on trying to fix it. And then let's see what happens in '22, Benoit. But for now, to answer your question, nobody has called me to try to buy our U.S. Truckload division. They're probably busy making money doing something else.
That's great color, Alain. And my follow-up question is, obviously, when we look in terms of M&A, you ended the quarter with a very strong balance sheet. UPS integration also is doing well. So are there any particular segments in terms of M&A you would pay more attention to in 2022? And you made some comment about the fact that the Canadian LTL market is maybe less organized in Canada versus the U.S. So do you see an opportunity maybe to make a bolder move on Canadian LTL and maybe try to organize similar to the U.S., Alain?
Yes. Yes, for sure. LTL, we love LTL. I mean LTL is 47% of our revenue today. We love LTL. That's -- 25 years ago, that's where I started, with LTL, right? So for sure, both U.S. and Canada. U.S. is different because we need to be more stable with TForce Freight. We have to know more. But for sure, the U.S. LTL, if we could find the right fit, we'll be looking at that. On the Canadian side, we passed on 1 transaction because we were too busy with TForce Freight at the time. And it's been taken over by one of our peers. It's okay. It's fine. If we -- if there's another one, absolutely, we're going to look at it. And we're on the lookout. I mean -- but you'll see us -- you've seen us very active on the M&A side in Canada in Q3. You'll see us finish very strong in Q4. We have a lot of good stuff on the pipeline on M&A that will be closing in Q4 on the Canadian side and even some on the U.S. side. Small transaction but very, very interesting and also creating value for our shareholders because remember what I said all the time, you make your money in the buying, never on the selling.
Your next question will come from the line of Cameron Doerksen with National Bank Financial.
So I just had 2 quick questions for you. One is just with regards to how we should think about the -- I guess the less than Truckload or the TForce Freight, how the revenue in Q4 is sequentially relative to Q3. I mean there must be some history there. But I'm just wondering what was -- I'm assuming it's obviously a seasonally weaker quarter. But how much of a percentage drop would you typically see from Q3 to Q4?
Yes. So what the guys have told us on that, Cameron, is about 8%.
Okay. And the second, I guess, sort of outlook question here is really with regard to the CapEx. I mean you gave us a number for Q4. But with all the -- I guess the truck buying kind of push to the right here, what does CapEx look like for 2022 now?
Well, that's a very good question. And it's hard to answer that, Cameron, because we get commitment from those guys, but they don't deliver right now, right? So it's very, very difficult to see. So what we're saying about Q4 is about 100. We hope that we get 100. That's what's supposed to happen but we never know. They can call us and say, "Oh, we have an issue with it, da da da da." And finally, the trucks don't come in. But that being said for '22, so far, we know we have commitments for about 2,000 trucks from suppliers, different suppliers. Our demand is 3,000. So we're still short. And the guys are trying to get more, but we may end up buying only 2,000. So 2,000 trucks, net of disposal, you're talking about USD 190 million, right, of disposal, net CapEx just for the trucks in the U.S., right? So if you add to that the trailers, and if you add to that the Canadian operation, normally in '22, if everybody says yes to what we're requesting, you're going to be talking probably closer to $300 million, $325 million net of disposal.
Your next question comes from Tim James with TD Securities.
Just wondering if you can -- you sort of talked about some of the initiatives or actions you've been able to take to deal with the labor challenges -- I mean it's always there. You talked about the special visas. And you've kind of covered the opportunities in U.S. TL. I'm wondering if there are any other areas of the business -- just given how large TFI is now and how diversified you are, are there other areas where you're able to kind of take advantage of the scale of the business in helping to offset some of the labor challenges?
Yes. You see -- I mean you're absolutely right. Because of our scale and also because of -- TFI has always been a best employer in terms of what we offer our employees. But this is on the Canadian side because on the U.S. side, I mean, until just a few years ago, Tim, I mean, we were not really well known, right? So I mean that's why if you look at labor, if you look at staff on the Canadian side, we're not in the same position as we are in the U.S. So the Canadian operation, if you -- if we look for people in Canada and you say, "Well, it's TFI," I mean, everybody wants to be part of TFI. Now on the U.S. side, if you say TFI, who is TFI? Now for sure, we have way more notoriety today than 2 years ago, but it's still not the same cloud as we have in Canada, right? So this is what we're trying to build now more and more with all the investment that we made in the U.S. The acquisition of UPS Freight was really helpful for us to have people in the industry in the U.S. to say, "Wow. Well, now these guys are becoming a significant player." But we don't have the track record of some of our peers like UPS or FedEx or OD or whoever have been in the business for a long, long time, right? So it's a little bit of a handicap that we have in the U.S. versus some of the good peers that we're competing with but not an issue at all in Canada.
Okay. That's helpful. I guess one more quick question. If you look at each of the 4 segments independently, and we think about on the one side, there's been cost pressures for a number of reasons well documented throughout North America. On the other side, a lot of those same sort of events are providing pricing power on that front. As you look at each of the 4 segments, can you say -- and maybe it's not possible to. Do you feel the overall blended environment has been a net benefit or a net negative in terms of profitability?
No. I would say, Tim, it's been a net benefit. Just look at our P&C. Although we've not been growing in Q3 as much as we were in 2 3 last year and all that, but e-commerce is really a huge benefit for TFI on the Canadian side and also on the U.S. side with our last mile operation. So that being said, if you look at our LTL, the same story. Same story. We have fantastic stability in Canada with our people in our LTL. U.S. is still not clear because, I mean, we own the company just for 5 months. And on the Specialty Truckload, our Canadian operation are really solid. I mean we have a dominant presence in Ontario and in Quebec and growing more into Western Canada now, I mean, big time. So I mean if you ask me, go back to 2019 and now look at '21, I mean if you compare the TFI of 2019 with the '21, I mean, we made huge improvement in our costs and the way we service customers. And all the M&A has been a real, real benefit to our shareholders. So I mean '22 is going to be another challenging year for us because there's still this vaccine thing. There's still this shortage of people. There are still a lot of issues that we're going to have to address. But this is the fun of being in that business. I mean every day it's a different story. It's never boring.
At this time, there are no further questions. Do you have any closing remarks?
Yes, operator. So well, thank you, operator, and thank you, everyone, for spending time with us this morning. So we appreciate that very much. And as always, we thank you for your interest in TFI International. We're looking forward to sharing our full year results in February. And in the meantime, please don't hesitate to reach out with any questions. Thank you again, and I hope that you all have a wonderful day. Bye.
Ladies and gentlemen, thank you for participating in today's TFI International's Third Quarter 2021 Results Conference Call. You may now disconnect.