Firm says not only are shippers likely losing visibility to 42 of their loads they are likely paying 8 margin for that lost visibility Photo by Sean KilcarrFleet Owner

Study: Biggest trucking firms outsource over 42% of their freight

May 3, 2016
Old Dominion Freight Lines and Heartland Express keep the most in-house though.

A recent LaneAxis Virtual Freight Management study of some of the biggest trucking companies in U.S. revealed 13 of the largest publicly-traded motor carriers outsource an average of 42.29% of their freight shipments; a figure based on the percentage of their total revenue spent on "purchased transportation" recorded in their annual reports, which is essentially subcontracted freight shipment services, according to Rick Burnett, the founder and CEO of LaneAxis.

"Our findings are clear – many shippers likely aren't getting the visibility they think they are," he explained in a statement. "Large shippers and carriers may be able to manage their own fleets effectively, but with so much freight being outsourced to small carriers with six trucks or less – which is 97% of the trucking industry – that's a problem. There's very little visibility into that network."

Burnett noted that those 13 large carriers – which includes J.B. Hunt Transportation Services, YRC Freight, and Swift Transportation – spent $17.8 billion on "Purchased Transportation" in 2015, according to their annual earnings reports.

When measured against the total combined revenue of $42.2 billion, that averages out to 42.29% of total revenue being spent on freight outsourcing.

Is Your Freight Being Outsourced?

Company

Annual revenue

Purchased transportation

Percent outsourced

JB Hunt

$6,188,000,000

$2,994,992,000

48.40%

YRC Freight

$4,832,400,000

$561,100,000

11.61%

Swift

$4,229,322,000

$1,180,403,000

27.91%

Hub Group

$3,525,595,000

$3,112,900,000

88.29%

TransForce Inc.

$2,842,937,000

$1,868,196,000

65.71%

Landstar System

$3,321,091,000

$2,551,343,000

76.82%

Old Dominion

$2,972,442,000

$116,300

<1%

ArcBest Corp.

$2,666,905,000

$614,835,000

23.05%

XPO Logistics

$7,623,200,000

$4,171,400,000

54.72%

Werner Enterprises

$2,093,529,000

$480,624,000

22.96%

Heartland Express

$736,345,000

$34,389,000

4.67%

Marten Transport

$664,994,000

$118,030,000

17.75%

USA Truck

$507,934,000

$161,370,000

31.77%

TOTAL (weighted average)

$42,204,694,000

$17,849,698,300

42.29%

Source: LaneAxis Virtual Freight Management

The data analysis by LaneAxis did note, however, that LTL carrier Old Dominion Freight Lines and TL carrier Heartland Express outsource some of the lowest amounts of freight from their networks – less than 1% and 4.67%, respectively.

The firm’s research also revealed that average margin percentage for those carriers – the percentage difference between operating income and operating revenue – is around 8%.

“So not only are shippers likely losing visibility to 42% of their loads, they are likely paying 8% margin for that lost visibility,” Burnett noted.

“Many Shippers turn to large carriers, brokers, and third party logistics services (3PLs) to save on costs and hassles, but often the opposite is happening,” he explained. “We know small carriers are the backbone of trucking – and that's a good thing – but many of those [small] carriers lack the tracking units and back-office technology to deliver real-time visibility to shippers. That often leads to lost loads, inefficiency, and confusion.”

About the Author

Fleet Owner Staff

Our Editorial Team

Kevin Jones, Editorial Director, Commercial Vehicle Group

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