A growing number of extreme “short-haul” loads, along with weaker freight demand overall, contributed to a $6.1 million net loss on 2.3% lower revenue of $100.3 million for TL carrier USA Truck in the third quarter this year, compared to a net loss of $4.3 million on $102.6 million in revenues for the same period in 2011.
“We determined that the percentage of our business comprised of very short haul loads under 300 miles was too high, which was negatively impacting equipment utilization and the ability of drivers to earn adequate compensation,”noted Cliff Beckham, USA’s president & CEO, in the carrier’s third quarter earnings statement.
“We also re-evaluated customer profitability on a lane-by-lane basis [and] as a result we accelerated the exit and replacement of specific lanes and loads that failed to meet our new criteria,” he pointed out. “The timing was not optimal given the weak freight environment, but we believed the overall benefits to our drivers, customers, and future financial results justified the timeline.”
USA also took an 11 cent per share charge against earnings to cover increases in accrued reserves for workers’ compensation and health claims incurred in prior periods, along with a 3 cent per share charge to write off of deferred debt issuance costs associated with the replacement of its credit lines in the third quarter.
Those charges aside, Beckham noted that freight demand remained relatively weak overall for a third quarter and that USA did not experience the level of increase in freight volumes during the quarter that we normally expect.
“We attribute this to slower growth in the U.S. economy, a slight contraction in manufacturing activity, and one fewer business day than in the third quarter of 2011,” he said. “In addition to tepid demand, fuel prices increased for much of the quarter negatively impacting our results both sequentially and year-over-year.”
Beckham added that shippers remain concerned about adequate truckload capacity over the medium to longer term; however, in the short-term environment, shippers proved less supportive of rate increases than in recent quarters. “In response to the more difficult environment, we maintained our fleet at 160 fewer trucks compared with the third quarter of 2011,” he noted.