U.S. Xpress Enterprises, Inc. (NYSE:USX) Q2 2020 Earnings Conference Call - Final Transcript
Jul 28, 2020 • 05:00 pm ET
to deliver strong performance as we continued our trend of average revenue per tractor per week in excess of $4,000 for the fifth consecutive quarter.
To start, I'm very pleased with our second quarter results as we are beginning to see the tangible financial benefits of our strategic initiatives focused on utilizing technology to improve our processes, accelerate the velocity of our business, improve our customers' and drivers' satisfaction and lower costs. We achieved approximately 500 basis points of margin expansion in the second quarter as compared to the 2020 first quarter as we delivered an adjusted operating ratio of 95.9%. This improvement exceeded normal seasonal improvement and was achieved despite rate pressure in our Over-the-Road division as there continued to be excess tractor capacity relative to freight demand in the market for the majority of the quarter due in part to COVID-19. The digitization of U.S. Xpress, including our frictionless order initiative and our digital fleet contributed meaningfully to the success.
As we have spoken about on prior earnings calls, a key focus of our team has been our efforts to digitize our systems and business with the goal of delivering the frictionless order. To aid in this process, we hired a new Chief Information Officer, Bob Pischke in early 2019. With Bob's experience and expertise leading digitization efforts and multi-billion dollar companies, we have been hard at work integrating our legacy systems and utilizing existing data that is trapped across our company in order to reduce many of the manual decisions that are made on a daily basis. These manual touch points require input by our drivers and back office personnel, which is not only time consuming, but also opens the door to both data entry errors and sub-optimal decisions. Thus far, we have removed over 6.5 million annualized manual touch points with a goal of fully automating them and optimizing them over time. This is beginning to significantly reduce the level of work required by our drivers, allowing them to spend more time moving freight. It is also making our office employees jobs more efficient by removing routine work.
As discussed in the earnings supplement beginning on Slide 4, our most recently launched digital initiative was the ramp-up of our digital fleet, which is a fleet that is largely recruited, planned, dispatched and managed using artificial intelligence and digital platforms. Our digital fleet is a completely new paradigm for operating trucks in an Over-the-Road environment that is provided to the driver through a proprietary app-based driver experience. We developed the concept as a hypothesis in 2018 based in part on the business models of the digital freight brokerages. As venture capital-backed, digital brokers began to enter the market utilizing cutting-edge technology and a new operating model. We believe there was an opportunity to take this approach and apply it to our asset-based business in order to drive improved profitability and growth.
In early 2019, we launched Xpress Ventures and hired new leadership, including Cameron Ramsdell, formerly the