In The News
First Quarter Results Point to Clearer Skies Ahead
While the first quarter of 2010 still proved to be tough, most carriers were off to a good start this year. Even thought most didn't see significant improvements in the figures, they're not looking back and are hopeful that the rest of 2010 will bring some positive change in their businesses and the freight environment.
"We are pleased to have this quarter in the rearview mirror and look forward to more operational progress in the quarters to come," said Clifton R. Beckham, president and CEO of USA Truck.
In their first quarter earnings reports, carriers were optimistic about what the future holds, and many said they've started to see some signs that the worst is over and things are looking up. Volumes are starting to grow; revenues are rising; and rates are improving. Companies finally started to see some of the fruits of their cost-cutting efforts and operational changes.
"By quarter-end there were signs of improvement evidenced by increased freight demand, tightening capacity, and stabilizing freight rates," said Heartland Express. "While the Company is uncertain if these trends will continue throughout the year it is positioned to add capacity and increase utilization to take advantage of increased shipments if the growth in the truckload marketplace is sustained."
Tough Environment Continues
First quarter reports from trucking companies recognized that the industry is still coming out of the recession, and that not all of the news was good.
Dry van truckload carrier USA Truck reported a wider loss than the first quarter of last year, although revenue grew 7.7 percent.
"Unfortunately, our model is not yet strong enough to withstand the combination of seasonal low freight volumes and the exogenous impact to our cost structure brought on by steadily increasing fuel prices and the most severe winter weather in recent years," Beckham said.
Truckload carrier Heartland Express posted lower earnings and income in the first quarter, a result of weak freight demand and continued downward pressure on rates.
"Operating revenues for most of the quarter continued to be impacted by lower freight demand due to overall economic conditions and the related pressure on freight rates," the company said.
Arkansas Best Corporation came out of the first quarter with a net loss of $21.4 million, or 85 per share, compared to a net loss of $18.2 million, or 73 per share in the first quarter of 2009.
"Despite some signs of improvement in our nation's economy resulting in the stabilization of our business, Arkansas Best's first quarter results illustrate the ongoing effects of low freight levels combined with a weak pricing environment," said Judy R. McReynolds, Arkansas Best president and CEO.
Fuel Prices and Weather
The first quarter was characterized by rising fuel prices and extreme winter weather, factors that greatly affected performance.
Although Werner Enterprises saw year-over-year improvements in earnings and revenues, the company said the severe winter weather and high fuel prices had a negative impact on operations.
"The extreme weather conditions that occurred during January and February 2010 negatively impacted our miles per truck, increased our maintenance costs, and lowered our miles per gallon due to increased engine idling," the company said. "In addition, the significant year-over-year increase in the price of fuel negatively impacted results."
According to Werner, diesel prices were up 72 cents a gallon over the first quarter 2009, and 8 cents per gallon higher than fourth quarter 2009.
C.H. Robinson said its truckload net revenue, which was down 5.7 percent, was impacted by higher transportation costs, higher fuel prices, and lower pricing to our customers, exclusive of the impact of fuel.
"The U.S. average cost of diesel fuel per gallon during the first quarter increased 31 percent to $2.85 from $2.19 for the same period last year," said Kevin P. Knight, chairman and CEO of Knight Transportation. "This significant increase in fuel prices resulted in a $0.02 per share negative impact to our net fuel expense."
Some Positive Signs
Despite this 2-cent per share negative impact, truckload carrier Knight managed to boost revenue by 11.4 percent and increase net income by 5.1 percent from the year-ago quarter. This is one sign that the truckload sector is on its way to recovery.
"The operating environment grew increasingly positive during the first quarter 2010," Knight said. "We appear to be firmly in a recovering truckload freight market."
Other earnings reports pointed to positive signs in the freight industry.
Truckload carrier J.B. Hunt Transport Services saw a 21 percent increase in intermodal volumes, positive truck operating income and improved results in its Dedicated Contract Services segment.
"We made significant strides in the current quarter as overall business demand strengthened, which allowed selectivity among available loads, higher spot prices and encouraging trends in new contract pricing," the company said.
Truckload carrier Marten Transport said operating revenue gained 3.2 percent in the first quarter; the company has a rosy outlook for future performance.
"As the trucking industry begins to experience some slight volume improvements, we believe that we are well-positioned with our ongoing transformation into a multi-faceted business model focused on growth in our regional, intermodal and brokerage business services," said Randolph L. Marten, chairman and CEO.
Landstar System's Chairman, President and CEO Henry Gerkens said the worst is behind us, and we can expect at least some smooth sailing ahead.
"The freight environment continues to improve," he said. "Recent trends in March, and thus far in April, indicate that both the revenue per load and the number of loads hauled remain strong compared to the corresponding prior year periods. I expect these trends to continue throughout the 2010 second quarter."
www.TruckingInfo.com