Trucking still looks strong in first half ’06

Trucking still looks strong in first half ’06

The most recent roundup of earning reports from various trucking operations generally indicate that trucking operations are profitable

The most recent roundup of earning reports from various trucking operations generally indicate that trucking operations are profitable.

For last week’s quarterly roundup, see Trucking in the black

Old Dominion Freight Line, an LTL multi-regional carrier, reported that its second-quarter profits jumped 55.3% to $21.6 million on $331 million revenue (including fuel surcharges) compared to 2Q 2005. The carrier’s operating ratio improved to 88.3% from 90.4%.

ODFL said increased freight density gave the company the leverage to raise rates, with an 11.2% increase in shipments and a 5.8% boost in weight per shipment.

“We believe our success is increasingly driven by our ability to provide single-source solutions for our customers’ logistics needs in regional, national and international markets,” stated Earl E. Congdon, chairman & CEO.

Most of its revenue growth was generated by its existing service centers but “geographic expansion also contributed to Old Dominion’s revenue growth for the second quarter,” Congdon added. During the quarter ODFL opened five new service centers in San Jose, CA; Fort Myers, FL; Pendergrass, GA; Fargo, ND; and Tacoma, WA.

P.A.M. Transportation Services Inc., a national TL dry van carrier, said its earnings increased 42% to $5.24 million on $89.7 million of operating revenue.

“Good utilization and steady demand combined with favorable pricing produced record results for the company,” stated Robert W. Weaver, president of PAM.

In spite of the gangbusters results, Weaver said several concerns remain. “Fuel volatility coupled with the cost of hiring, compensating and retaining safe, qualified drivers are currently our most challenging concerns pertaining to operating costs.”

Covenant Transport Inc., a TL giant heavily vested in team driver operations, swung a loss of $398,000 from a $652,000 net gain in 2Q 2005 on $139.3 million in revenue excluding fuel surcharges.

According to the company, the second quarter marked the end of the first year of its business realignment. This changed the company’s freight mix, which “expanded portions of our business with longer lengths of haul, more miles per tractor, and generally lower rate structures, while shrinking the regional service offering, which had the highest rate structure but significantly lower miles per tractor,” stated Covenant president & CEO David R. Parker.

United Parcel Service Inc., the package delivery giant, said its net income rose 7.6% to $1.06 billion on $11.7 billion in total revenue.

UPS was able to bolster its revenues and profit significantly from its Supply Chain and Freight segment, thanks to its acquisition of LTL carrier Overnite in August. For the segment, revenue jumped to $2.04 billion from 1.25 billion, while operating profit increased to $47 million from $34 million.

Although UPS said its earnings were “solid,” it didn’t impress Wall Street, which had predicted stronger earnings. According to The Wall Street Journal, UPS said fuel costs and a slowing economy constrained growth.

However, this explanation was met with skepticism as rival package delivery firm FedEx Corp. reported its earnings increased 27% to $568 million on $8.49 billion in revenue for its quarter ended May 31.

Ryder System Inc.,a provider of leasing, rental, maintenance and logistics solutions, reported net income for the quarter increased 10% to $70.3 million on $1.1 billion of operating revenue in 2Q 2006.

Of Ryder’s three divisions, Supply Chain Solutions—which offers logistics management—saw the biggest operating revenue boost, up 17%. This was driven by an increased volume of managed subcontracted transportation. The Dedicated Contract Carriage segment, which provides customers contracted vehicles and drivers, saw operating revenue increase 7% on new and expanded business. Its Fleet Management Solutions division, which provides outsourced fleet services, saw operating revenue expand 2% as service lease contracts grew 3%.

To comment on this article, write to Terrence Nguyen at [email protected]

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