Despite unsteadiness in the U.S. and global economy, earnings for several big-name trucking firms remained on an even keel in the third quarter, in part because capacity remains in short supply even though freight volumes are flattening in many respects.
“We continue to believe that generally favorable truckload freight trends are caused to a greater degree by supply side constraints limiting truckload capacity, as opposed to demand generated by economic activity,” noted Werner Enterprises in its third quarter report.
The company said its third quarter earnings increased 22% to over $29.5 million on a 10% jump in total revenues to over $509.5 million compared to the same period in 2010 – Werner’s seventh consecutive quarter of year-over-year earnings growth in excess of 20%.
The carrier added that average revenues per total mile increased 3% in the third quarter compared to the same quarter in 2010, though contractual rate increases and a better freight mix were the principal reasons for the rate improvement. “There was some softness in spot market pricing during third quarter, but spot market pricing improved during September,” Werner noted.
The company also pointed out that freight demand at the start of the third quarter in July began with the typical seasonal decline from June, with less strength in the latter part of July during the uncertainty of the U.S. debt negotiations in Congress.
Yet freight demand in early August returned to levels comparable to the same period in 2010, then weakened modestly in mid-August following another round of heightened concerns about the economy.
“In the latter part of August and throughout September, we experienced seasonal strengthening in demand. In the aggregate for third quarter, our daily morning ratio of loads to trucks in our one-way truckload network was nearly balanced,” Werner said.
Henry Gerkens, Landstar's chairman, president& CEO, said in that carrier’s third quarter earnings statement that recent trends in September, and thus far in October, indicate continued strength in revenue per load and load volume.
Landstar reported that its third quarter net income jumped to $30.2 million on revenues of $684 million, compared to net income of $21.8 million and revenues of $622.8 million, respectively, during the same period in 2010 – with operating margins rising to 44.7% for the quarter compared to 35.6% during the same stretch last year.
“During the third quarter, the growth rate in the number of loads hauled increased each month compared to the corresponding prior year month as we moved through the quarter [and] revenue per load continued to be strong,” Gerkens said.
Even in specialty trucking niches, freight and revenues seem to be holding steady. Bruce Campbell, chairman, president & CEO of airport-to-airport freight hauler Forward Air, noted in his company’s third quarter earnings statement that the carrier experienced “some intermittent softness in network volumes” three months ago, yet tonnage “firmed up very nicely” by September.
“We ended the quarter with system tonnage up 9.5% for the month of September as compared to September one year ago,” he added. “We would characterize current volume trends as being moderately better than normal seasonality.”
Forward Air said its net income during the third quarter increased to $12.9 million on 11.7% higher revenues of $135.7 million compared to $8.9 million in net income of $121.5 million in revenues during the same period last year.
Rodney Bell, Forward Air’s senior vp & CFO said those results are providing the carrier with more confidence concerning the last months of 2011.
“We anticipate that our fourth quarter revenues will increase in the range of 10% to 14% over the comparable 2010 period,” he stated. “We expect income to be between 47 and 51 cents per diluted share; this compares to 41 cents per share in the fourth quarter of 2010.”