As publicly held trucking companies prepare to release their first-quarter 2002 financial statements, there are already signs that higher insurance costs may be affecting earnings.
Mondovi, WI-based truckload carrier Marten Transport said it expects to report net income for its first quarter to be in the range of 13 to 16 cents per diluted share, compared to net income of 39 cents per diluted share for the first quarter of 2001. Marten chairman & president Randolph Marten said that decline reflects a combination of increased costs and pressure on freight rates.
The big factor, he said, was that insurance costs rose to approximately 5% of revenue in the first quarter of this year, compared with 2.6% in the same period of 2001.
A survey by lobbying group American Trucking Assns. earlier this year found that insurance rates for trucking companies have jumped anywhere from 37% to 120% following the September 11 terrorist attacks.
The survey of 1,000 carriers showed that general liability rates increased by 32% for those renewing in 2001, with carriers renewing their policies after September 11 paying an average 37% more. Renewal rates for umbrella insurance in 2001 were pegged at an average 74%, yet went up 120% after September 11.
The National Tank Truck Carriers Inc. (NTTC) also reported that premiums for bulk haulers' liability insurance have been skyrocketing, and that the worst is yet to come for many of its carriers.
NTTC president Cliff Harvison said a recent survey of 107 members showed that carriers renewing after October 1, 2001 have seen premium increases averaging 130% while those who renewed after January 1 saw hikes averaging 146%.
"The business reality is that tank truck carriers have no options beyond either rate increases or surcharges," Harvison said "The fact that only 15% of our carriers have renewed since the first of this year translates to the fact that the worst is yet to come."