Given the latest round of earnings announcements, it appears trucking and transportation companies are continuing their trend of posting expanding profits and revenues.
The increasing revenues posted by large trucking, package and rail companies indicate that tight transportation capacity is nudging shippers to utilize all modes of transportation. This has led to new profit records for some companies while others report turning 2004 losses into 2005 profits.
In general, these companies are anticipating growth in 2006, consistent with expectations for an expanding U.S. economy.
Package delivery giant United Parcel Services posted a 25% gain in earnings per share, with a net income of $1.05 billion, on a 21.5% gain in worldwide revenue of $11.95 billion.
Heartland Express announced a 30.7% jump in net income to $21.6 million as operating revenue increased 17.3% to $140.1 million for the quarter ended Dec. 31 compared to the same period in 2004. Its operating ratio was 77.6% during the fourth quarter, compared to the full year’s 80.1%.
Knight Transportation said profits rose 27.3% to $18.5 million while revenue was up 29.8% to $164.6 million for the quarter ended Dec. 31 compared to the same period in 2004. Its operating ratio improved to 78.2% versus 78.9%. The carrier reported plans to aggressively expand its equipment.
“Looking forward to 2006, we plan to continue to grow our fleet by approximately 15% and, assuming GDP growth remains favorable, we believe that our markets will continue to offer an environment for rate increases to offset the additional costs associated with driver pay, fuel and the introduction of the federally mandated 2007 engines,” said Knight chairman & CEO Kevin P. Knight.
Old Dominion Freight Line said net income increased 38.5% to $14.7 million as revenue increased 27.3% to $285.2 million for the fourth quarter compared to the same period last year. The carrier’s operating ratio improved to 90.8% compared to 91.4% in the fourth quarter 2004.
Celadon Group posted a staggering 71.8% jump in profit in the quarter ended Dec. 31 to $4.8 million on a 12.5% increase in revenue to $120.3 million compared to the same period in 2004. The company said it achieved a higher rate per mile, which helped improve operating ratios to 92.4% from 94.6%.
“Our results for the quarter were assisted by a favorable relationship between freight demand and truckload capacity,” said Celadon chairman & CEO Steve Russell. “We believe capacity growth in our industry continues to be constrained by a shortage of qualified drivers.”
Truckload carrier Werner Enterprises netted a 12% gain in profit to $28.8 million on a 16% advance in revenue to $526.3 million. The operating ratio for its truckload transportation services in the fourth quarter was 88%, compared with 89.6% for the full-year 2005.
U.S. Xpress Enterprises said net income rose 20% to $7.1 million as revenue increased only 1.8% to $312.3 million fourth quarter of 2005 compared with the same period in 2004. This turned around the trend of losses reported in the first quarter of 2005, when the company cited soft demand and rising operational costs.
“The record earnings were driven by strong truckload freight demand comparable to what we experienced in the fourth quarter of 2004, improved truckload pricing, decreasing fuel prices, and the reduction in operating losses at our Xpress Global Systems operation,” said U.S. Xpress co-chairman Patrick Quinn.
Covenant Express, which also warned of softening freight in the first quarter, turned around their results. The company announced that profits increased to $4.4 million from a net loss of $6.5 million in the same period last year. Freight revenue, which excludes fuel surcharges, increased a modest 0.8% to $148.4 million.
“Although we still have a lot of work to do, I am very pleased with the progress that we made during the second half of 2005 to stablilize our freight base and improve our revenue per tractor,” said Covenant chairman, president & CEO David R. Parker.
On the rail side, Norfolk Southern posted a gang-buster quarter as profits soared 37% to $362 million as revenue increased 16% to $2.3 billion for the fourth quarter compared with the same period in 2004.
“Demand for rail transportation was strong throughout the year, and our 2005 financial results reflect record levels of performance throughout our organization,” said NS CEO Wick Moorman. “Railway operating revenues were the highest of any year in Norfolk Southern’s history. All our commodity groups set revenue records. We posted our best-ever income from railway operations, net income and earnings per share. We set new carloading records, and we continued to significantly improve the railway operating ratio.”
