With only a couple of exceptions, this week carriers reported significant to severe drops in earnings due to a glut of new trucks loosening up capacity and a downturn in automotive, housing and holiday freight.
Knight Transportation Inc. was among the few that boosted 4Q earnings, reporting they increased 8.7% to $20.1 million from $18.5 million for the same quarter in 2005 on a 8.1% boost in revenue, before fuel surcharges, to $152.1 million.
Also Celadon Group Inc. said its earnings jumped 27.1% to $6.1 million from $4.8 million in 4Q 2005.
“We are pleased with the results of the December quarter, during what turned out to be a more challenging freight environment than the industry has seen in the past several years,” said Celadon chairman & CEO Steve Russell.
Werner Enterprises Inc. reported its 4Q profit fell 16.6% to $24.0 million from $28.8 in 4Q 2005. This occurred even as revenues excluding fuel surcharges increased 1% to $453.8 million.
“An increased supply of trucks competing in [Werner’s] primary market segments was principally caused by huge, industry-wide accelerated purchases of new trucks,” stated Werner. “[It] disrupted the supply and demand balance in the second half of 2006, contributing to a more challenging freight market for truckload carriers.”
The company added that the 4Q 2006 truckload market was “softer” than the same quarter in 2004 and 2005. “The recent softness in the housing and automotive sectors not principally served by Werner Enterprises caused carriers that depend on these freight markets to more aggressively compete in other freight markets served by the company,” Werner stated.
Swift Transportation reported 4Q net income fell 40.5% to $23.4 million from $39.3 million in 4Q 2005. Excluding fuel surcharges, net revenue slid 5.1% to $679 million.
“The quarter reflects one of the most challenging freight environments in recent memory, and the normal holiday surge did not materialize for a variety of reasons,” said Swift president & CEO Robert Cunningham. “We were also impacted by the downturn in the housing and automotive markets, and the increase in Class 8 truck builds prior to the new 2007 EPA requirements, both of which added capacity to the market.
Arkansas Best Corp.’s 4Q net income was $14.2 million, a 52% drop from $29.5 million in 4Q 2005. The company called the quarter “a challenging economic environment.”
“In October and continuing into November, traditionally among the busiest months of the year, (Arkansas Best Freight) experienced a sudden and dramatic reduction in business that mirrored conditions throughout the trucking industry,” said Robert A. Davidson.
Marten Transport Ltd. said its 4Q earnings fell 27% to $5.2 million from $7.1 million in 4Q 2005.
“We believe the freight market in the fourth quarter was characterized by less robust shipping demand and greater truck capacity than in the fourth quarter of 2005, with the among of surge freight significantly lower than in the last two years,” said Randolph Marten, chairman, president & CEO of Marten.
USA Truck reported its 4Q profit was slashed 71.5% to $1.2 million from $4.3 million in 4Q 2005.
Covenant Transport Inc. swung an $894,000 loss in the fourth quarter from earning $4.0 million in 4Q 2005. This came in spite of the fact freight revenue, excluding fuel, increased 7.3% to $159.3 million.
“The main factor affecting the quarter was the lack of a normal peak shipping season,” said David Parker, chairman, president & CEO of Covenant. “Demand during the quarter was much less than expected, especially when compared to the strong fourth quarter of 2005.
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