ArcBest's Strategic Path to Doubling Earnings by 2028: Operational Leverage and Freight Optimization as Catalysts

ArcBest Corporation (ARCB) has set an audacious financial target: to achieve non-GAAP diluted earnings per share (EPS) of $12 to $15 by 2028, effectively doubling its current performance. This ambition, unveiled at its 2025 Investor Day, is underpinned by a dual strategy of operational leverage and freight optimization technologies. While the company faces headwinds in a soft freight market, its recent financial results and technological advancements suggest a plausible path to meet these goals.

Operational Leverage: Cost Discipline and Efficiency Gains

ArcBest's operational leverage strategy hinges on reducing costs while maintaining or growing revenue. In 2025, the company has already demonstrated progress: city route optimization and trailer utilization improvements have delivered $13 million in annual savings, according to an Investing.com report. These initiatives are part of a broader portfolio of 70+ optimization projects, nearly half of which are fully implemented.

The Asset-Based segment, which accounts for the majority of ArcBest's revenue, is targeting a non-GAAP operating ratio of 87% to 90% by 2028. While Q2 2025 results showed an operating ratio of 92.8%—a slight increase from 89.8% in the prior year—the segment's per-day revenue grew by 0.9%, and tonnage per day rose by 4.3%. This suggests that ArcBest is balancing cost control with volume growth, a critical factor in achieving operational leverage.

Meanwhile, the Asset-Light segment, which reported its first non-GAAP operating income since Q2 2023, saw a modest profit of $1.1 million in Q2 2025. Despite a 12.9% decline in per-day revenue, the segment's ability to turn a profit in a challenging market underscores ArcBest's capacity to leverage its asset-light model for resilience.

Freight Optimization: AI and Digital Transformation

ArcBest's investment in freight optimization technologies is central to its long-term strategy. The company has piloted AI-driven tools to automate tasks such as appointment scheduling and load booking, reducing planning hours for managers from four hours to 45 minutes in some service centers. These productivity gains are not just incremental—they represent a fundamental shift in how logistics operations are managed.

A standout innovation is Vaux Vision™, a 3D perception technology introduced in early 2025 that transforms forklifts into intelligent mobile dimensioners. By enhancing warehouse efficiency and safety, this tool addresses a critical pain point in supply chain operations. Additionally, ArcBest is developing a routing tool for near-real-time route customization, which will further reduce delays and fuel costs.

The company's upcoming ArcBest View platform, set for a 2026 launch, aims to unify quoting, booking, and visibility across its logistics solutions. This digital platform is expected to streamline customer interactions and reduce operational friction, potentially unlocking new revenue streams.

Financial Performance and Market Challenges

ArcBest's Q1 and Q2 2025 results highlight both challenges and opportunities. Revenue declined year-over-year in both quarters, with Q2 revenue at $1.0 billion compared to $1.1 billion in 2024. Non-GAAP net income also fell, from $47.4 million in Q2 2024 to $31.2 million in Q2 2025. However, the company's operating income for the Asset-Based segment remained robust at $51.0 million, and the Asset-Light segment transitioned from a $2.5 million loss to a $1.1 million profit.

These results reflect ArcBest's ability to mitigate soft freight conditions through productivity gains. For instance, AI and predictive analytics enabled real-time optimizations in labor planning and routing during Q2 2025, as reported by TTNews. Such measures have cushioned the impact of declining freight volumes, a trend that is expected to persist in the near term.

The Road to 2028: Feasibility and Risks

ArcBest's 2028 targets—$12 to $15 non-GAAP EPS and $400 to $500 million in operating cash flow—require sustained operational improvements and successful scaling of its technology initiatives. The company's progress in 2025, including $13 million in savings and early-stage AI pilots, provides a strong foundation. However, risks remain: macroeconomic volatility, rising operating expenses (up 3.3% year-over-year in Q2 2025), and the pace of technology adoption could all impact the timeline.

That said, ArcBest's strategic pillars—profitable growth, efficiency, and innovation—are aligned with industry trends. The logistics sector is increasingly adopting AI and automation, and ArcBest's early mover advantage in tools like Vaux Vision™ and ArcBest View positions it to capture market share.

Conclusion

ArcBest's path to doubling earnings by 2028 is ambitious but achievable. By leveraging operational leverage to reduce costs and deploying cutting-edge freight optimization technologies, the company is addressing both immediate challenges and long-term growth opportunities. While the soft freight environment poses risks, ArcBest's focus on productivity and digital transformation provides a buffer. For investors, the key will be monitoring the pace of technology implementation and the company's ability to maintain cost discipline as it scales.