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Truckload gaining rate, surcharge relief

Aug. 1, 2005
Though demand for freight services has softened to a degree this year compared to 2004, many truckload carriers contend that capacity remains tight enough for them to charge higher rates and fuel surcharges

Though demand for freight services has softened to a degree this year compared to 2004, many truckload carriers contend that capacity remains tight enough for them to charge higher rates and fuel surcharges. And those two critical components have kept many carriers in the black as driver wages and diesel prices continue to rise.

“Increased freight rates more than offset increased operating cost in the second quarter, even though on three occasions since the third quarter of 2004 we have increased driver wages in response to the market,” said G. Larry Owens, president & CEO of Ft. Dodge, IA-based Smithway Motor Xpress. “Also, though average fuel prices increased 32% to $2.15 per gallon this quarter compared to $1.63 per gallon in the second quarter of 2004, our increased fuel surcharge revenue mitigated approximately 87% of this price increase.”

For the second quarter, Smithway’s net earnings improved 104% to $1.4 million on 18.6% higher revenues of $55.4 million compared to the same period in 2004. For the first half of 2005, net earnings improved 580% to $1.9 million on 16.4% higher revenues of $105.1 million compared to the first half of 2004.

“That resulted from a 5.6% increase in weighted average tractors and increased truck production,” Owens noted. “For the quarter, average revenue per seated tractor per week increased by $87 or 3% compared to the second quarter of 2004 primarily due to a 10-cent increase in average revenue per loaded mile.”

“The key components continued being to focus on customer service, which allowed us to increase rates and produce solid utilization and keeping our trucks seated with drivers,” said Randolph “Randy” Marten, chairman and president of Mondovi, WI-based refrigerated carrier Marten Transport. “[Though] we remain cautious because of high fuel prices, a tight driver market, and the uncertainties of year-end demand, we still expect [our] fleet growth in the range of 5% to 10% for the full year.”

For the second quarter, Marten’s net income increased 40.5% to $6.8 million on 22.7% higher operating revenues of $112.8 million compared to the same period last year, with earnings for the first half of 2005 climbing 53.4% to $11.6 million on 22.3% higher operating revenues of $215.7 million compared to the first half of 2004 – with fuel surcharges worth $12.7 million in the second quarter and $22.4 million for the first half of 2005 dampening the impact of high diesel prices on the bottom line.

“[Freight] pricing was also favorable as we increased our average freight revenue 8% per total mile to $1.385,” he said.

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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