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Profits, pay and benefit boosts predicted for 2005

Dec. 29, 2004
Profits, driver compensation set to rise in 2005

A spate of year-end fiscal reports from a variety of transportation companies indicate most feel profits from freight demand would continue into next year – as well as continuing pressure to raise pay for truck drivers.

Miami-based Ryder System is forecasting full-year 2005 earnings to be in the range of $3.20 to $3.30 per share. This would mark an increase of 11% to 15% over previous earnings estimates.

“We are forecasting Ryder's 2005 revenue to grow by 4%," said Ryder chairman, president & CEO Greg Swienton. “Transactional business, such as commercial rental and used vehicle sales, should remain strong and we expect to drive additional growth from long-term contractual business, including full service lease, dedicated contract carriage and supply chain services.”

Phoenix-based truckload carrier Swift Transportation believes its fourth quarter 2004 earnings should exceed analyst estimates. With profits projected to be between 27 cents and 40 cents per share, this bodes well heading into 2005.

Swift said its anticipated results are due to strong freight demand, which has improved pricing, reduced its percentage of empty miles, and an improvement in its fuel cost recovery via its revised fuel surcharge program. This improvement occurred despite an increase in excess of 40% in the national average of fuel prices during the fourth quarter to date of 2004 as compared to the fourth quarter of 2003, said Swift.

Memphis-based FedEx Corp. is bullish on earnings at the midpoint of its fiscal year. The company said its revenues in the second quarter of fiscal 2005 were up 24% to $7.33 billion compared to the same period of fiscal 2004, with its operating margin rising to 8.2%, up from last year’s 3.1%, as net income increased $91 million to $354 million.

Total average daily package volume at FedEx Express and FedEx Ground combined grew more than 8% year over year for the quarter, led by double-digit growth in ground and FedEx International Priority shipments and a return to growth in U.S. domestic express shipments, the company said. It added that FedEx Freight’s average LTL shipment volume increased 12% for the second fiscal quarter as well.

“We have very strong momentum across our business segments,” said Frederick Smith, FedEx’s chairman, president & CEO. “Global and U.S. economic conditions remain favorable, and businesses are replenishing inventories and investing at a healthy pace. The demand for FedEx services is strong and we are highly optimistic about our growth and profitability during the second half of our fiscal year.”

Yet many trucking carriers plan to continue raising driver pay and other benefits heading into ’05 as the demand for freight capacity seems to be holding steady.

Coralville, IA-based truckload operator Heartland Express said it is planning to offer another 3 cent per mile pay raise for all of its “system” and regional drivers in stages during the first quarter of 2005, moving Heartland’s top solo and team company driver pay from 43 cents to 46 cents per mile, with owner operator solo and team pay rising from 88 to 91 cents per mile.

Mondovi, WI-based refrigerated carrier Marten Transport is offering several driver pay boosts starting January 1. All company drivers will receive a 1-cent per mile wage increase for trips picking up on or after the first of the new year, with a second base-rate increase added effective April 1 of another 2-cents per mile for trips that pick up on or after that date.

Carriers are even planning to boost fuel compensation programs to attract and keep independent operators. Granger, IA-based truckload carrier Barr-Nunn Transportation, Inc., for example, is expanding its Fuel Protection Guarantee for its owner-operators into 2005. Their current program guarantees 99 cents per gallon of fuel through the end of this year, with the new program raising that guarantee to $1.04 per gallon of fuel for the first six months in 2005.

“Our owner operators are now able to eliminate the worries of rising fuel costs through the middle of next year,” said Bob Sturgeon, chairman and owner of Barr-Nunn Transportation.

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