LTL fleets have posted soaring profits across the board in the recent wave of first quarter reports.
Yellow Roadway Corp., the nation’s largest LTL carrier, posted earnings of $49.9 million compared with $18.2 earned year-over-year (YOY). Con-Way, a CNF Inc. company, netted a 31% increase in operating income (profit before interest and taxes) to $62.9 million. Old Dominion Freight Line earned $9.3 million net income versus $5.7 million YOY. ABF Freight System, which is owned by Arkansas Best Corp., earned $17.2 million in operating income—almost double YOY from $8.7 million. Vitran Corp. netted a $2.8 million-profit compared with $1.6 million during the same period last year.
USF Corp. was a major exception. It was hit with instability related to the USF Red Star shutdown, and was then acquired by Yellow Roadway. The carrier reported a loss of $5.8 million compared with a $7.1 million profit YOY.
Many of these carriers credited tonnage growth and higher rates as the primary reasons for the dramatic leap in earnings.
“Although year-over-year LTL tonnage level increases slowed throughout the quarter, ABF improved its first quarter operating ratio by 2% compared to last year’s first quarter,” said Robert A. Young III, Arkansas Best chairman & CEO.
“During the quarter, ABF benefited from a combination of firm pricing and additional tonnage to produce improved operating margins,” Young continued. “The LTL pricing environment remains competitive and is consistent with last year. We think overall pricing is still good.”
“Old Dominion’s revenue growth for the quarter reflects a 21.5% increase in LTL tons and a 3.1% increase in LTL revenue per hundredweight, excluding fuel surcharges,” said Earl E. Congdon, Old Dominion chairman & CEO. “We maintained our pricing discipline during the quarter while increasing our volume and market share.”
Old Dominion noted that its operating ratio was 92.7%, an improvement from YOY’s 94%.
Yellow Roadway has also been successful at achieving wide margins through its acquisitions and synergies, with its Yellow Transportation subsidiary achieving an adjusted operating ratio of 94.2% and Roadway Express and New Penn Motor Express posting operating ratios of 95.2% and 87.7%, respectively. Yellow Roadway noted that it would continue to establish a strong next-day presence through its acquisition of USF.
“Our first quarter results reflect the strong and sustained performance of all our operating companies supported by a good economy, cost synergies and firm pricing,” said Bill Zollars, Yellow Roadway chairman, pres. & CEO.
Old Dominion noted it has reaped the benefits of widening the scope of its operations. “With a service center network covering over 90% of the U.S. population, our primary focus is to leverage our investment in this network through increased freight density by increasing market share,” Congdon said. “During the first quarter, we benefited from our expansion activities in 2004, which included opening 12 new service centers, expanding our direct service into Oregon and Washington and initiating full-state coverage in Michigan and Wisconsin.”
“The bottom line is LTL utilization in assets is good, pricing is firm and they’re making good money,” Chris Brady, president of Commercial Motor Vehicle Consulting, told Fleet Owner. “They haven’t seen this in years. For them it’s a pretty good market to continue expanding. As long as freight keeps going and the focus is on expanding profitably— and not getting overly aggressive— earnings should be good going forward.”