The lion’s share of earnings reports released this week by LTL and TL carriers show substantial year-over-year growth, and even record second quarters. Despite high fuel prices and other rising operational costs, most of the big trucking firms continued to report strong profit levels in the second quarter over the same period last year.
LTL carriers have only posted good news so far:
Richmond, VA-based Overnite Corp., which in May announced plans to be acquired by United Parcel Services (UPS), announced a record-setting second quarter as profits soared 37.4% over 2Q 2004 to $23.1 million.
“This improvement over second quarter 2004 is a significant achievement given we were overlapping last year's very strong growth,” said Leo H. Suggs, chairman, CEO & president of Overnite. “With the continued enhancements in our customer mix, we were able to achieve record top-line growth.”
Thomasville, NC-based Old Dominion Freight Line Inc. posted a 33% jump in profits to $13.9 million on revenues gains from its aggressive coverage expansion while implementing higher rates.
“Old Dominion's strong profitable growth for the second quarter of 2005 reflects the Company's continuing development as one of the country's leading LTL transportation companies,” said Earl E. Congdon, chairman & CEO of Old Dominion. “The expansion of our geographic coverage to 42 states, with full-state coverage in 31 states, and the ongoing improvement in our comprehensive capabilities and service quality metrics, have steadily enhanced our opportunities to increase our market share and operating leverage.
“The combination of increased weight per shipment and revenue per hundredweight resulted in a 5.7% increase in LTL revenue per shipment, excluding fuel surcharges,” Congdon continued. “We intend to strengthen our market differentiation through continuous improvement in service and geographic coverage capabilities.”
Toronto-based Vitran Corp., which specializes in LTL but offers truckload, logistics and brokerage services, reported record 2Q profits of $4.8 million, a 9% lead over 2Q 2004. In May it had closed its acquisition of Chris Truck Line, a move that will “further expand our U.S. freight coverage in the Midwestern and Southwestern U.S. by four new states and an additional 19 terminals,” said Vitran president and CEO Rick Gaetz.
And there have been a mix of reports coming from TL carriers:
Phoenix, AZ-based Knight Transportation Inc. reported an excellent quarter and commented on its bullish expansion plans in 2005. Net income increased 31% compared to the same quarter last year to $15.0 million.
“We are encouraged by another quarter of record revenue and earnings as we continued to execute our operating model focused on leading growth and profitability,” said chairman & CEO Kevin P. Knight. “With 20% growth in revenue before fuel surcharges and an operating ratio (operating expenses, net of fuel surcharge, as a percentage of revenue, before fuel surcharge) of 79.3%, this ranks as one of our better quarters in recent memory.
“Revenue growth came from a combination of higher revenue per tractor and expansion of our fleet and network of operations centers,” Knight continued. “We anticipate growing our fleet by an additional 200 to 250 tractors over the remainder of 2005.”
Omaha, NE-based Werner Enterprises reported net income gains of 17% to $25.3 million on 18% higher operating revenues of $485.8 million in the second quarter compared to the same period last year.
Coralville, IA-based Heartland Express said its net income in the second quarter increased 12.3% to $17.6 million on 13.5% higher gross revenues of $128.9 million compared to the same period last year.
However, there are some truckload carriers that reported shrinking profits and softer freight as well.
Phoenix, AZ-based Swift Transportation said net earnings in the second quarter totaled $29.8 million—a 13.9% reduction from $34.6 million in the same period in 2004. Excluding fuel surcharges, revenues increased 9%.
“Freight demand in the second quarter of this year was lower relative to a very strong second quarter of 2004.” said Jerry Moyes, Swift chairman & CEO. “Volumes strengthened in June but are still below 2004 levels.”
Covenant Transport had net income of $652,000, which represents about an 85% drop compared with net income of $4.4 million for the second quarter of 2004 on “softer than expected freight demand.”