Werner Enterprises Inc.
Wern Truck 1

Werner CEO sees 'checkmark' recovery from recession

June 7, 2023
If supply falls further and peak season brings a bump, Derek Leathers said, there will be ‘an opportunity for a more normalized or even possibly robust fourth quarter’ of 2023.

The trucking sector is likely to see a measured recovery from its current downturn rather than a quick snap back, Derek Leathers, Werner Enterprises chairman, president, and CEO, told investors at a conference June 5.

Speaking at the UBS Global Industrials and Transportation Conference, Leathers said that spot rates have been flat—and “scraping the bottom”—for nearly two months, showing that there will be no V-shaped freight recovery in 2023. Omaha, Nebraska-based Werner ranks No. 13 on the FleetOwner 500: Top For-Hire Fleets of 2023.

“Maybe a checkmark is a better way to think about it,” he said. “It’s going to be a slow, gradual lift.”

Leathers and newly named CFO and Treasurer Chris Wikoff told attendees that they still expect revenue per ton-mile for the first half of this year to be down between 3% and 6% compared to the first six months of 2023. There’s been a slight seasonal uptick, Leathers said, “but nothing to get too excited about” and pricing on both the spot and contract markets hasn’t yet meaningfully improved.

Total spot-market rates for the week ended June 2 were almost 22% below the same 2022 week and 0.1% below the five-year average, according to Spot Rate Insights, a weekly gauge of the market produced by load board Truckstop with analysis from FTR Transportation Intelligence. Another indicator, the U.S Department of Transportation's own Freight Transportation Services Index, on June 7 showed that the index fell 1.2% in April from March and dropped 2.5% year-over-year from April 2022. North American transborder freight between Canada to the north and Mexico to the south also was down 0.3% in March from the same month in 2022, according to DOT.

Key to recovery: Dwindling of supply

A key to proper recovery, Leathers added, is a continued dwindling of supply—the sector has recorded net license deactivations 36 weeks in a row—throughout the summer. If that's coupled with a possible inflection point around the beginning of peak season, he added, Werner (and at least some peers) will have a solid chance to prosper in the second half of 2023.

See also: Exodus of fleets reaches historic levels

"It sets up an opportunity for a more normalized or even possibly robust fourth quarter," Leathers said. "We think the likelihood of that is as great as really any of the other choices on the menu."

Leathers' assessment of the freight market jives with that of analysts at ACT Research, who recently said activity appears to be near a bottom as that price leverage remains with shippers. But the ACT team also said "the seeds have been sown for a rebalancing" between supply and demand.

Trucking headwinds remain strong

The Werner executives at the UBS event made it clear they are still setting aside some contract capacity until that turn becomes clear and that their business continues to face headwinds. New data from several other carriers show that some of those headwinds remain strong:

  • XPO (No. 12 on FleetOwner for-hire 500) executives updated investors with their May numbers, saying tonnage during the month was down 2.3% from a year earlier, half a percentage worse than in the first quarter of this year, even though shipments ticked up 1.8%.
  • The leaders of Old Dominion Freight Line (No. 10 on FleetOwner for-hire 500) released far gloomier numbers, saying their May revenue per day was down nearly 16% with shipments down 11.4% year over year and tons per day off more than 14%.
  • Forward Air (No. 39 on FleetOwner for-hire 500) update was more in line with Old Dominion's than XPO's: Shipments quarter to date are down 12% from 2022 levels with revenue per hundredweight off 6.3%.

Shares of Werner (Ticker: WERN) rose more than 2% June 6 to about $44. Over the past six months, they are essentially unchanged, leaving the company's market capitalization at roughly $2.8 billion.

About the Author

Geert De Lombaerde | Senior Editor

A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications FleetOwner, Healthcare InnovationIndustryWeek, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.

Sponsored Recommendations

Reducing CSA Violations & Increasing Safety With Advanced Trailer Telematics

Keep the roads safer with advanced trailer telematics. In this whitepaper, see how you can gain insights that lead to increased safety and reduced roadside incidents—keeping drivers...

80% Fewer Towable Accidents - 10 Key Strategies

After installing grille guards on all of their Class 8 trucks, a major Midwest fleet reported they had reduced their number of towable accidents by 80% post installation – including...

Proactive Fleet Safety: A Guide to Improved Efficiency and Profitability

Each year, carriers lose around 32.6 billion vehicle hours as a result of weather-related congestion. Discover how to shift from reactive to proactive, improve efficiency, and...

Tackling the Tech Shortage: Lessons in Recruiting Talent and Reducing Turnover

Discover innovative strategies for recruiting and retaining tech talent in the trucking industry at our April 16th webinar, where experts will share insights on competitive pay...

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!