Carriers expand rolling stock as export market expands and shippers rebuild inventories. Motor carriers posted slight improvements in 1996 over 1995, despite grappling with high fuel prices and an economy that started slowly. The slow start can be attributed to inventory corrections and low shipments. And by the second quarter -- just as the economy began to strengthen and shipments increased -- fuel prices, which make up 5% of carriers' annual expenses, went through the ceiling.
Fuel surcharges in the third quarter helped many carriers recoup some of their lost revenue, but all were squeezed to show profits for the year. Results for the 124 carriers that submitted reports to the Dept. of Transportation showed very little change from results of the previous year.
As a group, truckload carriers exhibited little improvement over 1995, posting a 1% increase in revenue per mile, but no movement in profitability. However, several carriers were able to take advantage of the improved economy. Heartland Express Inc. increased revenues and expenses by almost 20% and more than doubled net income year-over-year. Werner Enterprises Inc. also posted strong returns: a 2% increase in revenue per mile and an 11% growth in revenues, while its operating ratio remained below 90%.
J. B. Hunt was able to increase revenue per mile by 4% and bring its operating ratio up to 96.2%. The carrier benefitted in part by utilizing intermodal operations more frequently than other carriers. Carriers need to continue to improve productivity, reduce empty miles, and control fleet additions to afford increased driver wages and operating expenses.
Most of the nonunion less-than-truckload carriers with greater than $100 million in revenues posted double-digit growth in all areas, yet maintained steady operating results. For instance, Old Dominion Freight Lines grew revenues and expenses by 18% and 17%, respectively, showed an increase in revenue per ton of 5%, and improved its operating ratio to 95.6%, while net profit margins increased to 2.1%. Estes Express Lines increased revenues by 22%, revenue per ton by 8%, and kept expenses under control -- operating ratio stayed well below 90%. The majority of these nonunion carriers posted a 5% increase in revenue per ton.
The four national less-than-truckload carriers have begun to bounce back from the Teamsters strike three years ago. Roadway and Yellow successfully brought operating ratios below 100% for the first time since the 1994 less-than-truckload strike, ending the year with 98.7% and 98.4%, respectively. As a group, net income improved in 1996 over 1995. And results for the first quarter of 1997 suggest that they could be in the black for the year. A strong economy, greater shipper activity, and a restructuring of their operations away from regional activity will continue to help carriers in the next six months.
Last year's fourth quarter set for-hire carriers up for a strong first half in '97. Carriers are expanding their rolling stock to keep up with increasing exports and with shippers that are restocking inventories. Many carriers have announced higher cents-per-mile rates and additional compensation packages to lure qualified drivers. While this means that carriers need to keep tight control over expenses, it should help reduce claims costs in the long run. Oil prices will continue to decline slightly, providing some relief to carriers as they renegotiate fuel contracts.
Although traffic is a long way from achieving the level of growth that was evident in 1993, it should continue at a steady clip.
ATA Trucking Information Services publishes a variety of reports on the financial and operating status of the motor carrier industry. For more information on available data and services, contact ATA at 703-838-1978.
(For more information, see charts listed on page 32 and 37 of FLEET OWNER's June 1997 issue.)