TFI International Inc

NYSE:TFII

Earnings Call Transcript 2022-Q3

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to TFI International's Third Quarter 2022 Results Conference Call [Operator Instructions] Please be advised that this conference call will contain statements that are forward-looking in nature and subject to a number of risks and uncertainties that could cause actual results to differ materially. Also, I would like to remind everyone that this conference call is being recorded on Friday, October 28, 2022.

I will now turn the call over to Alain Bedard, Chairman, President and Chief Executive Officer of TFI International. Please go ahead, sir.

[Alain Bedard, executive]

Well, thank you so much, operator, and welcome, everyone, to this morning's call. We released our third quarter results yesterday after the market closed, and we're pleased to again be reporting a strong quarter with relative stability right through September for most of our segments despite ongoing macro volatility. In 2 weeks, we'll host our first ever Investor Day at the New York Stock Exchange on November 10. During that event, we'll expand on the operating principles that drives TFI International and our plan to create additional shareholder value, Instructions on how to our SVP are in yesterday's press release.

As a result, I'll keep today's remarks more brief than usual, but suffice it to say, our continued strong growth and profitability is a direct result of our principal operating philosophies that we stick to regardless of the economic cycles, such as quickly adjusting capacity to our variable cost to match changing demand. In addition, our performance reflects the ongoing self-help opportunities we are delivering on that are entirely within our control. Most importantly, our performance reflects the skill and tireless dedication of everyone at TFI International. And at our coming Investor Day, you'll have the chance to hear from many of our talented leaders.

For the third quarter of 2022, we reported a 30% increase in adjusted net income over the prior year despite a nonrecurring charge, and we produced a 38% increase in adjusted diluted EPS. We also generated $292 million in quarterly free cash flow. That was up 73%. And given the emphasis we place on intelligent capital allocation, we view our robust free cash flow as strategically important as strategically important. Yes. Also, on a consolidated basis, our total quarterly revenue were $2.24 billion, up 7% over the prior year quarter. All 4 of our business segments produced strong returns on invested capital.

And if we exclude the nonrecurring charge in logistics, all 4 produced healthy gains in operating income -- our P&C segment represents 6% of our total revenue before fuel surcharge. We saw a 10% decline in revenue before fuel surcharge, mainly related to slower volume associated with e-commerce activity. But this was partially offset by strength in our B2B business. Importantly, due to our network density, our sharp focus on cost control and our strong execution, adjusting quickly to changing volumes. We produced a 42% year-over-year increase in operating income to $34 million with our operating margin up more than 1,000 basis points to 28.2%.

Our return on invested capital came in at a very strong $30.7 million, up an impressive 760 basis points. Turning to our LTL, which is 44% of segmented revenue before fuel surcharge, we produced $817 million of revenue before fuel surcharge that was down 5% versus the prior year quarter. However, our operating income of $101 million was up 5%, reflecting a margin of 12.3%, up 120 basis points. Within our LTL business, our Canadian operations saw just a slight decline in revenue before fuel surcharge and produced a very strong operating ratio of 72.8% marking a notable improvement at 750 basis points over the past year. Also important, our return on invested capital was 23.1%, and that was 640 basis point improvement.

Turning to our U.S. LTL business created just last year with the acquisition of UPS. Revenue before fuel surcharge was $687 million, with an adjusted OR of $9.8 million, just above flat, while our return on invested capital was 25.2%, which we view as a solid -- which we view as solid just entering our second year with this business, but clearly experiencing top line pressure due to lighter volumes. However, our pricing held up and TForce rate has meaningful room to improve. Moving right along to our Truckload segment is 27% of our segment revenue before fuel surcharge. Our third quarter revenue before fuel surcharge was $510 million, up just 4%, and over the past year as we sold CFI truckload, temperature control and the Mexican logistics business about 2 months into the quarter. Our truckload operating income still surged to $97 million, which was up 73% the past year. Similarly, our operating margin of 18.9% was up a robust 750 basis points. So let's take a closer look at what drove the strength by subsegment. First, I'll mention that specialized truckload following the sale of CFI now includes our dedicated operation that remains with us and were previously included as part of our U.S. TL. With that in mind, specialized truckload performed well, growing quarterly revenue before fuel surcharge by 9% to $355 million with our diversity and exposure to the industrial end market working in our favor. And given our focus on profitability, we're very pleased to have generated strong improvement in our adjusted OR, which at 79.9%, marks an improvement of more than 10 points from 90 just a year earlier and our specialized truckload return on invested capital at 12.7% was much improved over the prior year period of 8.8%.

Next up, our Canadian-based conventional Truckload, we saw a jump of 34% in revenue before fuel surcharge was $79 million. This is an example of TFI's diversity, in this case, our exposure to the relatively strong Canadian market, working to our advantage. Similar to the specialized truckload, we were able to leverage our network density and market share while implementing cost control and benefiting from strong end markets. As a result, our adjusted OR at 75.5% improved by 13 percentage points from 88.4% and our return on invested capital at 20.6% was up shortly from 12.4% a year earlier.

So moving on to our Logistics segment. It represents 23% of segment before fuel surcharge. We saw a 4% year-over-year growth in revenue before fuel surcharge to $424 million, while our operating income of $29 million, also reflecting the nonrecurring charge of $11.4 million compared to $33 million 1 year earlier. Our operating margin was 6.8% as compared to $8.2 million the prior year, and our return on invested capital for logistics was $21.1 million compared to $24.3 million -- with that summary of our segment, let's move on to TFI's international balance sheet and liquidity, which remain a pillar of our strength, allowing us to probably invest for future growth while returning capital to shareholders, both through our share repurchase and our quarterly dividend, which I'm pleased to announce today that our Board of Directors raised by a substantial 30%, reflecting the core strength of our business. During the quarter, as I mentioned, we generated free cash flow of nearly 300 million, up 73%. We've repurchased approximately 2.1 million shares for just under 200 million.

Also, in terms of strategic capital allocation, we've completed 4 tuck-in acquisitions during the quarter, plus 5 subsequent to quarter end. At the end of September, our funded debt to adjusted EBITDA ratio stood at less than 1x and nearly all of our debt was fixed rate. Finally, in terms of our full year outlook, we're maintaining our forecast of $8 per earnings per share with a free cash flow of 900 million. At our upcoming Investor Day will expand on our outlook, including our long-term vision and our many strategic initiatives to enhance shareholder value that are within our own control regardless of the economic environment -- all right. I thank everyone for listening.

And now operator, if you could please open the line for Q&A.

[Operator]

[Operator Instructions] Our first question comes from the line of Jordan Alliger with Goldman Sachs.

[Jordan Alliger, analyst]

Curious on the LTL tonnage front, you mentioned Colin freight is the primary factor, also some softening demand. Maybe you could give a little more color around those 2 aspects of the tonnage. And on the calling side, can you maybe give a sense for how long that will be active and what sort of order of magnitude to think about?

[Alain Bedard, executive]

Very good, Jordan. So when we bought UPS rate, the volume was about 30,000, 32,000 shipments a day. And in there, there was about 25% to 30% of that that didn't make any sense for us, right? So what we've done so far is we got rid of a lot of that. That didn't make any sense, but it's not done. We're not complete, but we have to pause, okay? Because up to a certain level, okay, we were able to get rid of the most of the freight that really did not fit, but we still have some freight that don't fit, okay?

But right now, we're in a pause, okay, because we reached a certain level that we said, listen, I mean, let's do this pause. Let's work on our cost because if you look at our cost per shipment today, I mean we have not done a great job. If you look at the trend over the last 12 months since we've acquired, what we've done as a great job was to get rid of freight, a lot of that freight that didn't fit. But in terms -- and also adjusting rates to customers to the market. But where we haven't done really a good job is controlling our cost.

So one of our largest cost is labor, right? When we bought this company, the tools that these guys have to manage labor costs are very different than the tools that we have within all of the TFI companies. So these tools that we have in all of our LTL companies within TFI except TForce rate, as of '23, we'll be able to implement that. Why is that? Because now at the end of '22, we're moving away from, okay, the UPS Oracle system financial Oracle system into the TFI Oracle system. And at that point, we'll be able to provide our managers over their tools to be able to adjust cost to reality, cost to volume. If you look at what we do in other of the TFI division, our P&C, our Canadian LTL or truckload, I mean, you see the difference between what we do normally and what our team has done at T4.

So this volume, okay, that we dropped about 17%, 10% '17. So there's 10% that is really volume that didn't make any sense. Organically, we also lost some volume that maybe made some sense, okay, but the market has slowed down a bit. And to us, if you look at where we're going, I think that we'll see some kind of stability in terms of the volume for now unless the market starts to shrink a little bit more, but more importantly to us is really to start addressing, okay, our labor cost per shipment. That's way too high. Now I can't ask the guys to do miracles because they don't have the right tool. So by '23, okay, these guys will get slowly but surely the right tools to manage the business and manage the costs. That's why we said from day 1, okay, to bring this company to a 9, yes, we could do that between 12 to 24 months.

But to bring this company to an 80 to 85 or it will take us 2 to 3 years. Why? Because now it's a cost game, and they don't have the tools to manage the cost. We'll be providing them those tools in '23 as soon as we look up to the TFI financial system, and then we could start acting in a better way than what we're doing today. Now in terms of -- that's why -- to answer your question also, Jordan, is we see some kind of stability for now until okay, we move into '23. The other thing that we have to keep in mind is that 22 has been burdened, okay, very much so with the TSE the transition agreement we have with the seller at the same time that we're paying these costs, we also have to spend money, okay, to be able to move away from UPS into the TFI network -- financial network. So -- it's a long answer to your question, but it is what it is.

[Operator]

Our next questions come from the line of Ravi Shanker with Morgan Stanley.

[Ravi Shanker, analyst]

I'm very much looking forward to the Analyst Day in a couple of weeks, not to steal your thunder on the event, but would love your thoughts kind of as you sit here looking out to '23, what do you think the downturn is going to be like? I mean, it sounds like you and all your peers have kind of maybe lowered expectations a little bit since the last time we spoke. So what does it look like out there right now as we secure?

[Alain Bedard, executive]

We feel pretty good about our Q4. What we've seen so far in October, I mean, we feel good about Q4. We anticipate that Things will probably slowdown in '23, and then we'll definitely have to adjust to that. I mean if you exclude before rate, which is a special situation for us, the rest of our business, we have the tools and we have the management to really adjust and act and react according to the market condition. And I think that the proof is in the pudding, if you look at our last 2 years of TFI. TForce freight is a special situation whereby the guys over there are doing a fantastic job with the tools they have.

But the problem is that their toolbox is very limited in terms of financial information, in terms of how fast these guys get the information. So we will rectify that during the course of '23. So I mean as we're ready. And don't forget, I mean, we like a storm, okay? We're going to go to a storm probably in 3 there's going to be a slowdown of whatever it is. And our balance sheet is very strong. And that opens always M&A for us. We've been doing small, nice tuck-ins here and there. We did 4 or 5 in Q3. We're going to do another 2 or 3 in Q4. We'll probably do 4 or 5 in 1 and 2 of '23 because we have so much free cash flow, so we could invest.

Maybe also a larger one in '23 because the old saying at TFI is you're buying bad news and you sell on good news, right? So we feel pretty good about our Q4 so far, what we've seen, and we anticipate that there's going to be some kind of a slowdown. If you exclude the force rate TFI has fantastic tools to adjust cost, volume and everything to market condition. TForce rate -- the guys are working day and night, okay, to do this transition from UPS to Oracle as of Jan 1 of 23.

From that point, now we'll be in a position to support our team there, okay, provide them with the tools that our managers could move faster, adjust faster to volume change and adapt the cost per shipment -- our labor cost per shipment. The other thing also that didn't help us in Q3 is our CapEx. We didn't get any trucks, right? So everything that we wanted to do at TForce rate in terms of catch-up CapEx, okay, because the previous owner didn't do, okay, a lot. We were not able to do so far.

Now we have a new fleet VP that we just hired about a month ago, -- and for sure, that's his priority, okay, to move in the new equipment as fast as we can because so far, our maintenance cost per shipment is the same and even a little bit more because our age is about the same. And the only improvement that we see on our cost there is our MPG that improved a little bit, okay, because now we have about 800 new trucks in the fleet.

[Ravi Shanker, analyst]

Got it. That's great color. Maybe as a quick follow-up. You mentioned at the top of the call that your cash balance is a strategic asset for you. Just thinking of whether you're thinking about that as an offensive asset in that you can go out there and buy companies and deploy that capital? Or is it a defense of assets going into the outer...

[Alain Bedard, executive]

Yes. Yes. Right now, Ravi, the best M&A we could do is buy TFI, right? So that's why we bought 2 million shares of -- now depending on market conditions, for sure, we'll be very aggressive on the buyback. We just renewed, okay, our NCIB to 6 million shares or about just about 6 million shares. And depending on market, we will be very aggressive in Q4 and in Q1 and maybe in Q2 of '23, depending on market condition. But M&A has always been the source of creating value for our shareholders.

So this is not going to stop. So we'll do the small niche tuck-ins just look at our truckload, okay? -- fantastic because last year, we did a lot of M&A in our Truckload. And when you buy a 98 or company, it doesn't turn to do an 85 or company within a day. Right? So Brookshaw and his team have done a fantastic job. And this is what you see in Q3 now, okay? So we'll keep with Steve and his team doing some M&A. Our Canadian team as well. Our logistics team also in the U.S., we bought Unit in California about 3, 4 months ago. So M&As and TFI's blood. We've done that for 25 years. We're not going to stop that. Maybe in '23 because market condition will help us doing a larger deal, a significant transaction at a fair price, but that could be interesting.

[Operator]

Our next questions come from the line of Brian Ossenbeck with JPMorgan.

[Brian Ossenbeck, analyst]

So just going back to TForce for you. Can you talk about the broader competitive dynamic. There is one of your peers, you announced a large contract win at the lease for them. Did that have anything to do with the tonnage trends and the volume throughout the quarter? And maybe you could also give us a little context of how that trended throughout the quarter? Was it a steady decline? Or was it a significant drop.

[Alain Bedard, executive]

No, I would say, Brian, that if you look June was great in Q2, okay? And then things starts to soften a little bit in July, in August, and we see the same thing in September, okay? But I had a chat and a meeting with our team there last week at TForce right. And I lean, the sales leader we have there has come up with some nice features that we're doing. What we're trying to do on the sales side at TForce rate is to be smart in the sense that try to grow volume with existing customers that we already service to reduce the cost per pickup, right?

Because instead of picking up one shipment, if you pick up 2, while your costs are picking up is divided by 2 instead of being just on one shipment. So that's the focus of [ Alen ] and his team focus #1. -- focus #2 is guys try to grow business around our service center. We don't like to really do pickups at 80 miles away from our service center. This is very expensive or deliver for 8 miles from our service center. So refocused guys on this.

So this is a major change in the approach of T4, that was not the same kind of focus as the TFI focused. Because if you look at why is TFI so profitable on the Canadian LTL on our P&C because we are density maniac, -- that's us, okay? We're not going to service a customer that's 150 miles away from our service center ourselves. We could do it with a third party that's got lots of volume in that area, maybe if the price is reasonable and we can make money on it. So this is not something that was in the blood of TForce free. So this is on the sales side, okay? This is really what they're trying to do.

At the same time, as, okay, we're unloading, okay, we did a lot of that, okay, in the first year, freight that does not fit. So as an example, freight that we have to deliver 150 miles away from the terminal, that's not for us. That's for someone else, not us, right? So what we've seen in Q3 is a little bit of softening. We anticipate 4 is going to be probably the same and in '23. So this is why it's been urgent that we walk away from the financial system of the old company and moving to the TFI financial system so that we can provide them information not a month after, but the same day. So what's going on, guys, so that they could act and adjust.

[Brian Ossenbeck, analyst]

Any comments on the competitive dynamics? Has that affected your tonnage trends at all?

[Alain Bedard, executive]

Not so far. So far, what we're seeing is that is like the industry in the U.S. is very aggressive in adjusting rates with 3PL, okay? So like the CH and guys like that. But so far, with the competition, our peers, I don't see that, okay. We don't see any pressure on quality revenue, revenue per shipment. If you look at our revenue per ship and it was up a little bit, ex-fuel, about 6% year-over-year. So, so far, so good. It's really -- Brian, we've got to win this war at TForce way within the next 2 years by reducing our cost by doing more with less. And this is something that us we have to do. It's got nothing to do with the market. It's us. I mean -- but when I say it's us is we've got to give the guys the tools right now. They don't have the right tools.

[Brian Ossenbeck, analyst]

And just one quick follow-up on the cost side. With the tools you mentioned, is there anything from a labor flexibility perspective that would be limiting? Or is the vast majority of what you're looking to do here really based on information in tools. Just curious because, obviously, you have a union workforce at rate and wanted to see how that would play into tail.

[Alain Bedard, executive]

No Brian. The contract we have today, if we are smart okay? We could do wonders. It's just that right now, we don't have the tools to be acting smart. So you cannot blame okay, a driver, if you don't manage this work properly, right? You can't blame the cost on a shipment. If you service an account that's 100 miles away from your service center, it's us. We have to do the job. It's got nothing to do with the contract we have with our employees. Contract we have where our employees is okay. We're going to be working with them. And for sure, in terms of flexibility, it's a little bit different than the nonunion carrier.

But look at UPS. I mean, they are the king and they are teamsters, right, union, team stores. Look at what we do at San Canada, our P&C is 90% union, and look at the results we have. So the job is us -- it's not the union. It's -- no, no, it's us. We have to do the job at TForce right, and we will do the job. It's not a question, can we or can we not? We will do the job. It's just that the team there wants to do better, but they don't have the right tools. They have tools of 1965, and we're in 2022. So we'll change that...

[Operator]

Our next questions come from the line of Konark Gupta with Scotiabank.

[Konark Gupta, analyst]

I just wanted to understand in, like targeting Courier had kind of still very sticky 28%, 29% operating margin, which I think is your best ever, doesn't change here. So good to see that trend continue in the third quarter. Your truckload margin as well improved quite a lot. I'm not sure if it's just 1 month of CFI and makes that difference or not. But I just want to gather thoughts on like how sticky are the margins in those 2 signs, BIC and truckload?

[Alain Bedard, executive]

Yes. On the P&C side, I think that it's not really a question. I think that it's sticky. And I think I said it on Q2 call that to run a 28% OE in our P&C is exceptional. And I would say that if you look at the margin that we believe at TFI that we can accomplish on average -- okay, on average over 10 years is between -- with today's technology, with today's tool that we have because when I talk about TForce right tools that they don't have, I mean, the guys at P&C, they have tools, right?

They have a terminals now that 4 years ago, we didn't have. So that really helped our management team to deliver these kinds of results. So if you were to say, Ian, could you do 28 for the -- over the next 5, 10 years? I cannot say that. But what I can say is, on average, I think that between 20% to 25%, okay, it should be the average. So we will have peak like we have maybe now -- we could have troughed at 22, okay, depending on market condition. But on average, I think that 25% is what we could deliver with that P&C division.

In terms of our truckload, that's a little bit more tricky because right now, okay, we are getting a lot of action, okay, that our guys are doing in Canada, okay, with our Truckload division, whereby with, again, our tools, our management tool that we have there, the guys are able, okay, to really do a better job of matching the head haul with the backhaul and also because now we have more unification of our Canadian operation under one management team, you'll see that this is going to be even better for us in the future.

Now -- if you say, well, could you do an OE of 20%, 25% in Canadian truckload over an average of 10 years, I would say, 25%, I think, is a little hard to accomplish on 10 years. But can we do 15 to 20, I think this is doable. And most importantly is our return on invested capital. I think it's the key is we should be able to play in that 15% mark on that 10-year average.

[Konark Gupta, analyst]

That's a very great color. My quick follow-up is just on the M&A front. I'm sure like you probably discussed that at the Investor Day. But in terms of competition from private equity, do you see that lessening at all given the interest rates are rising here or no change?

[Alain Bedard, executive]

No. I think that with the interest rates, I mean, PE, those guys, they love with interest rates are low because their cost of funding is really cheap, so they could do all kinds of things. Right now, with interest rates moving up and up and up, I mean, they're getting a little bit more skittish. And that's really helping us because on larger deals, our competition is not really strategic. Is most of the time PE. And those guys don't view things the same way as we do. Our philosophy, and I've said it many times at TI, you make your money on the buying never on the selling. So you got to do M&A very aggressive by at the right price, not overpay because this is going to burden you for years to come.

[Operator]

Our next questions come from the line of Tom Wadewitz with UBS.

[Thomas Wadewitz, analyst]

I wanted to ask you a bit about how you envision the progression on LTL operating ratio. I think third quarter, you explained the decline in shipments. I know the market is a bit weaker. But I guess the path is a little bit off from where we thought it was going to be. So how do you think about LTL margin in 2023? Is it reasonable to expect a couple of hundred basis points of improvement given the comments on Oracle and kind of managing costs better? Or is that too optimistic given that you've got a maybe weaker freight backdrop.

[Alain Bedard, executive]

Yes. Yes, that's a very good question. I mean it's hard for me to answer because we don't know how fast these guys will be able to act based on the new tools that will -- financial tools that we'll be providing them. This is why we're adding some of our Canadian folks helping our U.S. management team, okay, to really start moving and addressing situation faster, et cetera, et cetera. It's difficult to say what we could deliver in '23.

What we could say though is that within our LTL, we have a diamond that's called GFP. -- that's really helping us, which is the asset-light -- we believe that our CapEx in '23 will be way better, okay? The new trucks coming in will be way better, okay, than what we've seen in '22 because now we're the leader -- the new leader of our fleet at TForce Freight, that should help us, okay? Because don't forget, until we sold CFI, it was our CFI team that was there to help us get the new equipment in, even with all the supply chain issues.

And then don't forget that in '23 also our TSA costs, okay, that's costing opportune because it's normal. UPS, I mean, they're the able to support us, but they want us out. So they charge us an arm and a leg, a fortune to support us. And as of Jan 1, we believe that once we have the financial system away from UBS the saving in '23 is going to be maybe a basis point, okay, of OR, just that, right? So we have some tailwind, okay, in 2023. We have also some headwinds.

Like you just said, maybe volume is going to keep under pressure. But on the other side, like I said earlier on the call, we have Eileen and her sales team focused on shipment and freight that makes more sense for us, okay? So we should also see some improvement into the average mile per stop. Why? Because we're trying to pick up freight closer to our service center, not chase rate 100 miles away from our terminals because that was not an area of focus in the past, right? So it's very difficult to answer black and white on that.

But I could tell you that our team is very motivated. They understand the challenge, okay? They look at their sister company in Canada, and they say, "Hey, I mean these guys are running a 72 OR in Canada. The Canadian market, the quality of the revenue is the shift, sterile compared to the U.S. And those guys can run a 72 than there, 73%. Wow, it's fantastic. So -- but these guys have tools. us, we have nothing, right? Oh, well, you guys will get the tools next year.

For sure. And then the proof is going to be in the pudding. So if it's hard to quantify or come up with the right kind of ballpark for what it is, are you confident in saying or will improve? Or is that may be hard to say, too. It's hard to say right now, okay, because we don't have the right tools to have these guys manage.

But that doesn't change the thing, okay? Like I said many, many times that we buy this company, it loses money. Within a year, we should be a year to 2 years, we should be at a 90 ore, which we are basically there now. Okay. Now within 2 years, we will bring this company to an 80 25 OR, okay? Why? Because we know that with all the financial tools that will provide them, okay, these guys will do the job. Now what's going to happen in '23? It's hard to say because you got the tools that these guys don't have.

Number one, there's a market condition that is changing, okay, a little bit more softness in the market. But we also have some tailwind, right? So if you look at '22, we have lots of costs for that transition that will disappear in '23. You have also our sales team that's more focused on freight that is logic, intelligent to us versus just chasing freight for the sake of freight. So you got plus and minuses. We'll see how it turns out, right? Yes. And then that's great.

[Thomas Wadewitz, analyst]

Just a quick follow-up. What about the timing of the Teamsters contract? I think people focus for UPS on had some concern that just maybe pent-up inflation when the contract expires, so you get a bit of a step-up in your cost structure. Is that something that would be of concern for you as well? Or how do we think about kind of contract changes at all...

[Alain Bedard, executive]

No. No, no, no. The contract that we're going to have with our employees is going to be fair. So we want to be clear with them and the salaries will be for everything is going to be fair. And I think it is fair today, and we'll just make sure that the next contract, hopefully, is 5 years, okay, that it will reflect market condition, right?

Now if you just look at what we've done in Canada with Loomis, I mean, Loomis, which is part of our P&C, we just renewed the contract for 5 years with these guys. And this is the unit for a union again, everybody will say, "Oh, these guys are these, these guys are that, no, no, no, no. I mean, Unifor, you sit down, you make a deal, and now we have a 5-year deal with them. We have a 5-year deal we can part with the steel workers, right? So we'll sit down, okay, with the group of people that represent our employees, and we'll come up with something that is reasonable and fair, right?

And then -- the all this is on us, okay, the management team to organize the work so that it's efficient and profitable for our shareholders, delivering freight that fits, right? So we have a huge job to do at T4 trait on that. And like I said, with financial tools that we are using in all of our TFI division that will be supported -- we'll be supporting them next year. These guys will be in a position now to deliver and to deliver and reduce costs. Now how do you reduce cost is having the word better organized, okay, not by reducing the salary of the employee...

[Operator]

Our next questions come from the line of Jack Atkins with Stephens.

[Jack Atkins, analyst]

So let me kind of start. I think we've been getting some questions on this, and I'd love to get your take on it. This may be a difficult one to answer, just given all the uncertainty out there. But you guys are obviously very, very good at managing your business. It sounds like there's a lack of visibility maybe into 23 at this point within the U.S. LTL segment based on some of the systems.

But if we were to see a more challenging freight market in '23 kind of materialize, given all the levers that you've got in the business across the different segments, do you think you'd be able to grow or at least hold earnings flat? How are you thinking about that? I'm not asking for '23 guidance at this point, but just trying to think directionally, how we should maybe think about that opportunity.

[Alain Bedard, executive]

You know what, Jack, I mean me, I feel pretty good. Like I said earlier on the call, I mean we went through storms. I've been in this environment, Jack, for 25 years. And if you look at TFI's track record, good time, bad times, I mean we always perform really, really well. And we take advantage. When there's a storm, it's time to do things that sometimes you can't do when it's nice and sunny right? So you could do things on the cost side that when it's nice and sunny the guy says, why is something that doesn't seem to be broken. So there's a lot of opportunity in a storm, okay, a small storm like we probably will get in '23.

So me, I'm not worried at all. I mean we have a very strong balance sheet. Our debt is fixed at 3.45. Our average tenure on our debt is 8 years. I mean our leverage is less than one -- we have a fantastic team and tools. But the only rock in my shoe right now is the forefather by these 4 guys are trying to do a job that too bad that they don't have enough tools to have them look at the situation and make some adjustments. But we'll provide them the tools.

So me, I feel really good. So our guidance for '22 is $8. I haven't seen our plan, our budget for '23. But when we have the Board approved a 30% Jack in our dividend, I think that this sends a message that, guys, the CEO and his Board really are feeling good even if there's a storm coming into '23 because we have the tools, we have the team, and we will take advantage if there's a storm of all the M&A that we could do -- and look at our track record. I mean it is what it is.

[Jack Atkins, analyst]

Absolutely. Absolutely. I appreciate that comment, Alain. I guess for my follow-up, just on [ PeakForce ] freight, maybe looking at it a little bit differently, the Mastio survey results came out a couple of weeks ago. TForce Freight was sort of in the bottom quartile there of national carriers. I know kind of improving the freight mix is important to the strategy moving forward. How do you improve the service level there to be able to extract the freight that you want?

[Alain Bedard, executive]

Yes. Yes. You're absolutely right, Jack. I mean, our service is not -- we're not like the top tier of the LTL company in U.S. No way. It's impossible. There's many reasons to that. Okay. Reason number one is that we have so much equipment, okay, that is not proper to do a good job. So if you look at the best in class in the U.S. Do they run Trucker on average that are 8 to 10 years old, they don't. Why? Because you've got all kinds of issues. So the guy breaks down on the road, the services, not there, et cetera, et cetera.

Our customer service, our pricing, okay, was not under our control, right? So now the Richmond team has customer service and pricing master file now finally under our control. It will take time, okay? But if we don't build the customer properly because you're so disorganized, that your master files been upkeep by a bunch of guys that don't know what they're doing, okay, in the Philippines as an example. Well, for sure, the customer is not going to be happy because you can build the guy properly. And then he's got another issue with you because then you're trying to collect something that don't make sense, right?

So we're going through all this as we speak in '22 and into '23. So this will improve. There's lots of actions that have been taken to improve the satisfaction of the customer dealing with us, not just delivering the freight but also on the admin side, right? So it's also a pride thing, right? So if you have drivers that for years and years are running into a terminal that is terrible, okay? Because everything is falling apart and the guys got a 2008 truck, and it's like a piece of shipset expression. I mean that doesn't help the pride of your employee, and that reflects also to the customer to a certain degree.

So we are also correcting that. That will take time, okay, the fleet and the -- also the facility. So we just started talking with [ Elen ], our sales leader, to have customer in some of our terminals, the nicest one, bring customers in to see what we do. Our claim ratio per dollar revenue, okay? It's a major improvement. We used to be at 1% of revenue, which is a disaster, okay? But the guys told me, well, we used to be at 2, now we're at 1. I said one is terrible. -- okay?

You got to be at 0.2, 0.25. So now we're under 5. After a year, we're under 5. So that also improved the customer experience with us, right? So we don't break this stuff, we don't lose it as much as we used to do. So all of that, Jack, is actions that Paul and his team are taking to improve the customer satisfaction. It will take time, okay? But we'll keep working on it and improving it because like you said, I mean, it's hard for our sales team to get more freight, quality freight, quality customer, if the service is not there. or par.

[Operator]

Our next questions come from the line of Scott Group with Wolfe Research.

[Scott Group, analyst]

I want to help you set a give us record for same tools. So I'm going to ask a follow-up there -- the equipment has been delayed. What's the risk that this new system gets delayed? And then maybe just bigger picture, you said at the call -- at the beginning of the call, one of the pillars of the model is we're an asset-light model, we can be really flexible. Is this a lack of tools? Or is it just that, hey, this is an asset-based business that has more operating leverage when things slow.

[Alain Bedard, executive]

To answer your question on the financial tools, the hookup to TFI Oracle, I think that we're testing right now. And when I talk to David and all of our team, our IT team, I mean we feel really good. I mean, that's not going to be an issue. I mean equipment, it's out of our control. We place the order and those guys have so many issues with their supply chain that they can't deliver. So that is out of our control. But IT is us. It's our control. And so far, what the guys are telling me is we're going to be there. No question about that, right? So what was the second part of your question, Scott?

I was wondering, is this ultimately just -- this is a more asset-based business, the rest of your business is more asset-light? Is that just a more difficult business to manage in a downturn? No. I don't take so, Scott. I think that once we provide the tools to the guys and just look at our Canadian LTL 5 years ago, 7 years ago, and what we do now. I mean it's the same company. It's the same asset intensity, but the results are [ dannight ] -- right? Why is that? Well, because we, over the time, over the years, we build tools.

We've got P&L by terminals. We've got all kinds of tools that help those guys to do that job, right? So we believe that once we provide those guys with the right information, that's not a question the job will get done. We believe that 2 years, it's long, but it's also short. I mean, we'll get there. Okay. And then just a quick follow-up. The revenue per hundredweight ex fuel is up about 4%, which is good, but maybe others are going to be -- are trending a little bit better.

Do you think there's more pricing opportunity for you? A little bit more. But don't forget, we are -- we don't have the same reputation as the peers, the best peers, right? So as the #1 peer in the U.S., I mean, we're not there at all, right? We -- in Canada, it's a different story in the U.S. So we did okay on that. To do great, it will take us some time to improve, like I was discussing with Jack is we have to improve service. We have to bring a lot of different cultural things over there.

I mean, at TForce rate, it's not the TFI culture yet. We're going to get there, but it's not there. The culture of doing more with less is not there, right? It will get there. So all this -- and I don't want to say tools again, Scott, because I said it too many times. But to me, this is -- the guys are not going to sit on their hands. Once they have the info, when they have the proper information exact fast, they're not going to sit in there. They're going to start moving and acting.

[Operator]

Our next questions come from the line of Walter Spracklin with RBC Capital Markets.

[Walter Spracklin, analyst]

So I'd like to go back to the LTL division, particularly on the revenue per shipment. You're up 6.5% on down 17% in shipments. And I know you were shedding a lot of underperforming business. So was the 6.5% increase mainly the average going up as opposed to price increase and a -- whether it's a mix, right? Because if you see low revenue shipments, I mean, it helps your average, right?

[Alain Bedard, executive]

So it's also a mix because we've been correcting rates, okay, adjusting rates. So as an example, the largest e-tailer a year ago that we were dealing with them about 1,400, 1,500 shipments a day losing 25%, right? That was a year ago. We in Today, we do about 150 shipments with him. So we've lost 1,300 shipments. -- volume-wise with per day. But instead of losing 25% now, we make maybe 5 or 6. Okay. And so what I'm looking to get here is kind of unpacking the mix and really drill down on the price environment. If we do go into a weakening environment, do you still have room because you're priced below -- kind of below market to bring prices up if we do go into a weakening environment in the first half of the year? Or is -- yes, for sure, Walter, we are not priced at the market at all, okay? So -- but that is easier to fix when the market is solid like it was last year, okay? But we could not fix everything in the same day. So we still have a lot of adjustment to rates to get to market of our peers. But like we were talking earlier, okay, there's also a service issue, right? So you want to sell your service as good as the best in the class, but your service is not as good. So for sure, you always be a discount and cut a guy, right?

So it's a 2-phase kind of approach. So Paul and his team are working hard to improve the quality of our service, et cetera, et cetera. But at the same time, we're also moving slowly into getting closer to market because if you compare, okay, what we do, we still have some room to go. The other thing that we are not there at all is the weight per shipment, right? So that's another aspect that we're talking to our sales team is that us, we like to carry very low weight shipment. That is not what we should be doing, right?

Because if you look at my peers, they all shipments that are 1,500 pounds on average, 13, 14, 15, 16, and us, we're stuck at 1.75. If you look at our Canadian division, we're heavier. Why? Because we focus on heavy freight because there's more money, right? Over there, because of the past focus, they were not focusing on that. They were focusing more on retail, okay, LTL, which is lighter than industrial LTL.

So we are -- the same thing as I was explaining about trying to get more freight per shippers, when you pick it up, try and get more shipment per stop, try to get more freight around a 30-mile radius of your service center. So it's cheaper to operate. and get more of your shipment because you get more dollars per shipment, right? So it's a combination of all of this, Walter, that's going to help us move the average revenue per shipment because you're paid by the weight by per 100 weight. So why would you haul 10.75 versus my peers, my best peers all in 1,300 to 1,500. So they get more money per shipment.

[Walter Spracklin, analyst]

That's great. Good color. My follow-up question here is on acquisitions. I hear you on a weakening environment. And when there's a storm out there, you can buy small tuck-ins because of kind of desperate sellers, that kind of thing. I'm with you on that. My question is really on the larger transactions. Does the weakening environment pushback negotiations because of the base on which the EBITDA is being negotiated? Or do you worry at all that some of the larger deals that you're contemplating might not get done because of a weakening environment? Or are you kind of settling in? Are you looking at more of a normalized EBITDA and kind of the weakness will not be as big a factor in negotiating with a larger potential acquisition?

[Alain Bedard, executive]

Yes. So if you look at what we've done with CFI, Walter, a discussion I had with the buyer is that let's do a reasonable deal for both parties. And we were able to come to an agreement in an environment that was not maybe the best for the seller, which is me, right? -- we apply the same kind of reasonability once we get to an environment that is to the buyer's advantage, but it takes 2 to dense. So if you try to squeeze the seller because market conditions are in your favor so much, like you just said, there's not going to be a deal, right? But it's also a philosophy there that we want to have a fair deal.

But my experience, Walter, is that we normally get a better deal, okay, when the market is difficult because there's less buyers showing up with stupid pricing. That doesn't change the reasonable price. What it changed is like -- I'm just thinking about the housing market in Toronto, right? So now it's way more reasonable, it was like 6 months ago. So the same story could be true of a company when you have 15 buyers of a company, well, then the price goes up, right? So when the market is tough, you have less buyer, so the reasonable price gets more in line with what I like to do.

[Operator]

Our next questions come from the line of Jason Seidl with Cowen.

[Jason Seidl, analyst]

I want to focus on sort of through the store here, if we will, because I think it's pretty obvious to anyone that's been following the markets that we're headed into a little bit of a downturn here. How long it will take and no idea. But I want to look at your LTL business because it sounds like right now, you're sort of running a 6-cylinder car without 3 cylinders firing, right? You have your fleet that you want to refleet but you can't because the OEMs, you have a facility footprint, which is probably not rightsized to your liking, and you're a little bit behind in the technology. So can you talk to me about the opportunities that exist or forget about '23, but '24 and beyond and then where would that put you in terms of sort of the rankings in your head for some of the national carriers once you get rightsized..

[Alain Bedard, executive]

Once we get rightsized, Jason, and this is what -- why I say, within 2 years, I think that we'll be in a net to an 85 or company, which is normal in the U.S. I mean the exceptional guys are at 70 OR. I'm not saying -- I'm not talking about that. This is -- a company has been built in a great management team over years and years of success. I mean, I'm not saying that about our company, what -- this is what we do in Canada. But this is not attainable for us within the next 2, 3 years.

What we're just saying is that by providing everything that these guys need okay, in '24, in '25, I think that we should be in a normal environment of an 80 to 85 OR. I think that 80,85Rin U.S. LTL is just normal. It's not exceptional. 70 OR is exceptional, but 80% to 85% is just normal. No, that makes sense. And can you get a little bit of an update on the fleet? Obviously, you mentioned you're not there yet where you wanted to be. That was sort of one of the things you called out when you purchased [ Forsee ].

Where do you think you're going to be -- in other words, where do you think you're going to be in terms of your original target by the end of '23? Yes. So the story, you always put the oil on the wheel that squeaks and the wheel that squeaks did not happen at TForce right. Why? Because it was CFI, our Truckload division that was in charge of making sure that we get the CapEx in as fast as we can. But -- those guys have been gone for 3, 4 months because as they known that we were making a deal with another company, well, they focus more on CFI than on TForce rate.

So this is why we just hired about a month ago, a leader, and now this guy is making calls, okay? He is now the wheel that squeaks and calling those supplier and making sure that we're going to get the equipment ASAP. So far, okay, one supplier is probably laid by maybe a month, 1.5 months, but we've diversified in '22, okay, because of the failure of '21. But the second supplier, just started giving us the equipment about a month ago, right? So this guy is 3 months behind this schedule. -- the third supplier that we have.

He hasn't delivered anything. So, so far, what we're seeing is that the delivery is supposed to start the end of October, which is now into November. So he's already about 3, 4 months behind the schedule. And the fourth supplier, which was supposed to start in the fall now is in Q1 of '23. So I mean we're still behind hopefully, okay, with this new leader that we have, which is really important to them that we get the equipment in. Hopefully, if supply chain issues with the OEMs start to improve, okay, we could get the stuff.

Now the price of the equipment, okay, is creeping up for the last, what, 8, 9 months, big time. So maybe the demand, okay, will start to shrink, not ours. -- like I said, to the TForce team said there's no way we're going to reduce our CapEx at all at TForce rate in '22 or in '23 or in '24 because we need a lot of CapEx catch up, right, to bring this age of the fleet. So if something happens in our CapEx in '23, '24, it's never going to be TForce rate. So if the other carriers are buying less, maybe that's going to help us expedite okay, get our equipment faster. We'll see.

[Jason Seidl, analyst]

I wish you guys good luck there. It sounds like you're about 3 to 6 months...

[Alain Bedard, executive]

We need that. I mean it's going to improve the driver satisfaction. I mean it's such an important thing for a transportation company to have a fleet of normal age.

[Operator]

Our next question comes from the line of Ken Hoexter with Bank of America.

[Ken Hoexter, analyst]

Maybe talk a bit about your review on truckload, obviously, now that post CFI, what else needs to be done on the truckload side, you made continued acquisitions on the specialized side. What's your thought for the business? How should we think about that with the low 80s, 70s margins going forward? And any impact on what's going on in the market now on price...

[Alain Bedard, executive]

That's a very good question, Ken. I mean, for sure, I mean we love specialized truckload us. We're a big fan of that. We are second to none in Canada, where we're so big. Our approach with the team there is that we're trying to grow east of Mississippi in all sectors. So we did 2 acquisitions in the U.S. in Q3 on our specialized truckload our team is heavily involved in the U.S. right now to keep growing that.

And our Charcoal division now, including TA dedicated now is under one leadership, which is Mr. Brookshaw, right? So this is something that will continue to grow, not the van, okay, but really the specialty like the flatbed, like the stainless steel, like the dump operation, Mt, Absolutely [ Esa ], Mississippi we're in.

[Ken Hoexter, analyst]

Okay. And then just to clarify on the LTL discussion a bit more on your shedding of the customer. Maybe just trying to parse what is the macro deceleration that you've already seen in the quarter? I don't know if you were kind of breaking that up before when you were answering the question? Or is there a way to decide for how fast you're seeing the impact of this decelerating economy versus what you talked about getting rid of the customer?

[Alain Bedard, executive]

I would say that if you look at our 17% year-over-year drop in volume, at least 65% to 60%, 70% of that is really freight that we had to get rid of. I mean, like I was talking this guy that was giving us about 1,400 shipments now he is giving us 150. Well, that's over 1,000 shipments a day that just disappear with this guy because it didn't make any sense, we were losing 25%.

There's another customer that we shed more than 60% of its business. That was also an important shippers. We've also lost a lot of volume with 3PLs, right? Because those guys, they will give you freight, but we offer to make money, not just all freight, right? So I would say at least 70% of that 17% that we plus is really related to just freight that didn't fit the system at all.

[Ken Hoexter, analyst]

Okay. And so that's flowing through on the pricing on the -- in terms of -- again, in your answer before.

[Alain Bedard, executive]

Yes.

[Operator]

Our next questions come from the line of Bascome Majors with Susquehanna.

[Bascome Majors, analyst]

So we're 2 weeks out from the first time that you've done a formal Investor Day with the investment community. As we sharpen our pencils and get ready for that of it, can you tell us a little bit about what this is and what isn't just -- what are your objectives? And what's the kind of information that you do plan to share? And maybe what will this not be as far as guidance or near-term expectations, that sort of thing.

[Alain Bedard, executive]

Yes. We were trying to accomplish with that is really to show the team at TFI, all deep of a bench we've got in our EVPs, right? So it's a big company, and we have a lot of talent, and we just want to have the investors and the analysts really not just be talking to the CEO or the CFO. That's why we want these guys, our EVP being talking to investors and all so that you guys get a better feel of how deep our bench is right, the quality of our talent. So really, that is goal #1.

And because of the timing, okay, for sure, we'll probably be in a position to say, "Hey, guys, this is what we think so far, based on our budget that we've seen okay, that this is what we think that may happen for TFI in '23 in terms of guidance, right? But the most important thing for us, being the first is that we want to show our team, we want to show the culture. I mean how strong these guys are, right? That is really the key of all this...

[Operator]

Our next question comes from the line of James Monigan with Wells Fargo.

[James Monigan, analyst]

I wanted to follow up on the commentary you had about specialized trucking just sort of understand how you guys are thinking about the REIT environment going into 2023 and sort of like you see strength in the end market. Like would it be less economically cyclical going through this? Like is you still look for great expansion? Just trying to understand your thought on how you're thinking about sort of rates and specialized through into the next year?

[Alain Bedard, executive]

Yes. So our vision on that is that infrastructure, both Canada and U.S. have suffered investment for a long, long time. We believe that both on the Canadian and U.S. side, I mean you'll see some major investment all over the place on the infrastructure. And that helps our specialized division, right? There's still an issue housing in Canada and housing in the U.S. I mean, we lack a lot of housing.

Now housing is very expensive because of interest rate now. I understand that. But we still need to build a lot of homes in Ontario and in Quebec, as an example, and the same in the U.S. population is growing. So to me, when we look at the specialty tackle that we do for the commodity market for the building material for the chemical, for the food, okay? I mean that is where we want to be positioned, okay, in the U.S., not so much the van. This is why we made the deal, okay, of selling I because there's way more players in that field, number one. And on the specialty side, there's less and less players. So we see a lot of opportunity.

The other thing, too, is that we're so big in Canada that a lot of our Canadian customers are coming from the U.S. So a lot of these are going to say, "Hey, are you guys thinking about moving out and we say, yes, we're coming, right? So this is really the plan for us on the specialty truckload side, both on the East Coast in Canada and on the East Coast in the U.S. is we're going to keep growing that through a lot of small, nice tuck-ins here and there that we do.

[James Monigan, analyst]

Got it. That's helpful. And actually just a quick follow-up on. I mean you've been calling for just any sense of the sort of seasonality of the OR shipments heading into the fourth quarter from here?

[Alain Bedard, executive]

On the U.S. side, yes, for sure, December and January are not good months for us in terms of volume. But it is what it is. I mean it's always been the situation. And we've asked our team to be even more proactive than what they were used to do in terms of adjusting, okay? So yes, there's cyclicality Absolutely.

[Operator]

Our next questions come from the line of Benoit Poirier.

[Benoit Poirier, analyst]

You mentioned that some softness should be expected in 2023. And obviously, the company is quite different versus '08, '09, much less exposure to energy, PL, stronger balance sheet. So just looking at 2023, what are the segment that should be the most resilient and the one we might see some volatility or softness? And how would you prepare for a potential software environment, are?

[Alain Bedard, executive]

Well, it's hard to predict, Benoit, okay, which one will be affected. What we know one thing is that the guys, the management team we have and everything that we have at TFI helps us adjust. So if you just take an example, without the recession, what happened in our P&C is that e-commerce start to come down, B2B start to come up, okay. But we're still sort the volume, right? Now if I look at October, my P&C, I'm down only 1% in volume, okay, year-over-year, okay? But more than that into Q3. But the guys have done a fantastic job. So to say that the volume drops, okay, means that you're going to get killed.

Well, it depends how good your teams are, and it depends how fast they can turn around and adjust, right? So it's hard to predict. But one thing we always do in a downturn is because we are so active in M&A is that we could lose organically in our base business, but then we complement that with some M&A that we buy at reasonable price, okay, that keeps our revenue, okay, at something at the same level if there was no storm. I don't know if you understand what I'm saying or I'm explaining that correctly, is that with a small downturn, we lose revenue, okay, fine. Well, with M&A, because our balance sheet is so strong because we have lots of experience doing M&A. We do that all the time. We could beef up our revenue through M&A to get back to where we were before this recession that may come?

[Benoit Poirier, analyst]

Perfect. That's great color. And just quickly on a follow-up question. In terms of CapEx, obviously, we'll be facing a catch-up year 2022, 2023. But now that CFI has been sold, what could be kind of a normalized net CapEx we might see in 2024 and beyond once the -- it gets more normalized.

[Alain Bedard, executive]

Okay. I've been seen our plan Benoit yet for '23, but I would suggest that you take our '22 numbers and you reduce that by about $75 million, which was the share of CFI, net CapEx of CFI.

[Operator]

Our next questions come from the line of Ari Rosa with Credit Suisse.

[Ariel Rosa, analyst]

So I wanted to ask about the sale of part of the truckload business, I guess. It was one of the larger transactions that you've done in some time and certainly pretty rare to see you guys selling assets as opposed to buying assets. So I'm just curious what your thinking was there and kind of how you were thinking about that truckload business and why now was the right time to exit?

[Alain Bedard, executive]

Yes. So key number one for us is that our return on invested capital, okay, has always been too low for us. If you look at the average return on invested capital today in Q3 of TFI is 20 points right, 20% which is great. Now our average return on invested capital in our regular van division was about 5% or 6%, maybe 7%. So this is why discussing with the Board, it was -- no, we have to do something else.

And we'll use this cash to invest into a business that will produce a better return on invested capital. And you'll see that probably once we do the next major transaction, okay, you should see why we switched from, let's say, 5% to 20%, right? Now I mean, for the buyer, okay, this is a great transaction because he's buying -- first of all, -- he has a lot of knowledge, the buyer of CFI. He has a fantastic team, and I'm convinced that the buyer will do a better job than me with CFI, right? So to me, I'm looking at that, and it was a win-win for the buyer. It was also a win-win for us because we got our capital back, okay?

And then come '23, maybe the end of '23 or in 2024, we'll use this use capital influx $500 million, $550 million, okay, of the sales, and we'll use that to invest in something that has got a better return. And you got to look at the track record of TFI. That's what we've done for 25 years since I've joined this company 25 years ago, right? So it's a swap. So the idea was, okay, we sell this asset to a great buyer. It's going to be good for our CFI team. It's good for the buyer. It's good for us. It's good for our shareholders, okay? And you guys have to wait until we do the next major deal, which may happen next year. It's never going to happen in '22, what may happen next year. And then you'll understand why we did that.

[Ariel Rosa, analyst]

That makes a lot of sense. It will be exciting to see what you guys do with that capital. Just for my second question, I wanted to ask, the parcel revenue per shipment was down sequentially. Just wanted to get a little bit of color on what drove that decrease? Was it FX related? And kind of how much of a headwind was FX also, but then specifically for parcel, was there a mix effect or something else going on there?

[Alain Bedard, executive]

Yes. The Canadian market is very different than UPS or what UPS or FedEx could do in the U.S. I mean those guys are lucky to be in the U.S. market. It's really a fantastic market in terms of being able to get pricing power, okay, with the shippers. In Canada, our competition is government-owned, it's called Puro and it keeps a tab on what we could do in terms of improving the quality of our revenue.

This is why the gain that we have in Canada. It's been like that for years and years, it's never been on trying to get more money from the customer to be more efficient and to do more with less. And that's how we're able to come up. And I mean, to me, when I was looking at what Jim and Bob have done, I said, "Guys, this is, wow, this is really fantastic. I mean, 28 with no volume growth, okay? No growth in revenue per piece, it's all about costs.

And this is the guy that's run our P&C [ Mecanica ]. He's also involved with Paul, the guy that runs [ Steve Forcepad ] in the U.S., helping those guys to be more in line with our cost, right, our cost reduction being more efficient. So this is why I feel good that Paul and the rest of our U.S. team with the support of our Canadian team, okay, we'll be in a position to deliver some great results within 24 months. I think that we'll get to that 80 to 85 OR.

[Operator]

Our next questions come from the line of Tim James with TD Securities.

[Tim James, analyst]

I'm just wondering if you could talk through the implications for profitability and returns on capital from the good growth that we've seen in ground with freight pricing in the U.S. LTL business?

[Alain Bedard, executive]

Yes. Yes. Well, that is a diamond that we have -- GFP has grown the revenue 25% year-over-year so far. -- right? So this is -- the goal is to keep growing that by about 20%, 25% into '23. I haven't seen Paul's plan, but the last discussion we had was, is there a possibility that we could do that? And absolutely. We have a product there that is second to none. We have a partnership with UPS. This is one of the greatest assets that we have within our U.S. LTL business today.

[Tim James, analyst]

Absolutely. Then my second question, you've done a great job of describing the transition that the TForce Freight business has gone through from the time you acquired it until today and kind of your strategy there. The transition from culling freight and focusing on freight that fits to now thinking about the cost side and getting the tools deployed in that business. I just want to confirm maybe that this transition was all part of the original plan.

[Alain Bedard, executive]

This is kind of in with when you bought the business, this is playing out the way you expected. I believe... Absolutely. For sure. It's always the same. What we do is always the same. So the issues thing to fix okay, is freight that does not fit because you just have to talk to the customer and say, Mr. customer, I'm sorry, but we can't do it, right? Adjusted rate is not that easy to do to market because the customer doesn't like that, okay, that you move right up. So this is more difficult. So this is why year 1, okay, to start from a company that was losing money to a company that's got a, let's say, a -- that was the easiest thing to do.

The most difficult thing is to do more with less, to organize the work of our drivers or dock workers or a line haul in a more efficient way, okay, that it reduces our cost. So this is why we said listening guys. I mean, when we bought it, we say, "Hey, I think that within 12 to 24 months, we'll fix that to bring it to a 9, a 100, okay? But it will take more time to fix the cost because you've got to change the culture I don't want to say it again because Scott is going to kill me with the tools, but you've got to provide the right information to those guys so that they're not going to sit in their hands, but they will fix the issue, right? They will get the job done in a better way. But also at the same time, you need the support of sales not to commit to a customer that we're going to deliver a shipment 100 miles away from a service center. It's not for us, right? So it's a complete plan, okay?

Now for sure, day 1, if you ask me, any did you encounter some surprises, I would say, yes. I thought that the technology that was there was better than what it is. The problem is that the previous owner for them, it was like not very important, so they didn't spend time or energy or money, okay? So the tools that we have, the equipment, the technology we have there is very old, right? So this is why we're moving the financial system to our own, which is brand new, okay? And then we'll be in a position to provide the right information so that the guys could do the job, right? Great debt.

[Operator]

There are no further questions at this time. I'd now like to hand the call back over to Alain Bedard for any closing comments.

[Alain Bedard, executive]

All right. Thank you very much, operator. So I appreciate everyone being on the call this morning. And again, I look forward to seeing many of you at our Investor Day on November 10. When you'll have a chance to meet many senior leaders of TFI International, we appreciate your interest and hope you enjoy the weekend. Thank you again. Thank you.

[Operator]

This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.