Profits Rise at Four Truckload Fleets, Despite Fuel Costs, Flat Economy

This story appears in the Jan. 28 print edition of Transport Topics.

Four of the largest publicly traded truckload carriers in North America posted higher earnings in the final three months of 2012, despite higher fuel prices and an uncertain economic environment.

J.B. Hunt Transport Services and Marten Transport both reported record fourth-quarter profit, with J.B. Hunt’s net income rising 15.7% to $84 million and Marten’s earnings edging up 0.7% to $7.7 million.

Swift Transportation Co. said it boosted its fourth-quarter net income 27.3% to $46.9 million, while Celadon Group’s earnings jumped 35.3% year-over-year to $7.4 million in its second fiscal quarter ended Dec. 31.

Heartland Express Inc., however, didn’t follow the trend, as its net income slipped 16.5% to $14.3 million.

“Although the overall economic environment, as well as the general freight market, was not what many predicted at the outset of 2012, we are very pleased with the results our organization has been able to deliver,” Swift said in its Jan. 23 earnings report.

Celadon’s Paul Will, who succeeded Steve Russell as CEO late last year, said “cost controls and operating efficiencies continued to positively impact results” at the company, which also reported earnings on Jan. 23.

J.B. Hunt, Lowell, Ark., said intermodal volumes for the quarter increased 11% from a year earlier, and improved network balance led to greater container and drayage fleet utilization.

The company said rates per mile at its truck division, excluding fuel surcharges, increased 8.9%, due in part to Superstorm Sandy relief efforts. The division’s rates from consistent shippers improved 1.6% from a year ago, J.B. Hunt said.

Three of the four carriers that reported full-year earnings said net income rose.

Swift’s profit for the year climbed 26.5% to $114.6 million, while J.B. Hunt’s increased 20.8% to $310.4 million. Full-year profit at Marten rose 12.3% to $27.3 million, the highest in its history.

Conversely, Heartland Express’ earnings dropped 12% to $61.5 million for the full year. Heartland Express, North Liberty, Iowa, said it continues to experience “significant swings” in fuel expense, which rose 8.2% in the quarter. Fuel displaced labor as the No. 1 expense at Heartland for both the quarter and the year.

Marten’s “continued solid results” were driven by growth in its regional, intermodal and brokerage businesses and its operations in Mexico, Chairman and CEO Randolph Marten said in the company’s Jan. 22 announcement.

Operating income in Marten’s truckload operations declined 3.9% to $10.8 million in the quarter, but that decrease was more than offset by 39.7% higher profit in its logistics division, which earned $2.4 million.

In its earnings release, Swift provided new information on its business segments.

The company said its truckload revenue rose 3.1% to $591.1 million in the quarter, but declined 2.3% to $2.28 billion for the full year. Dedicated segment revenue improved 7.8% to $188.2 million in the quarter and rose 15.8% to $724.4 million in 2012. Intermodal revenue jumped 34.2% to $97.7 million in the quarter and 40.4% to $333.9 million for the full year.

Swift said its 2012 truckload revenue declined largely due to an 8.8% reduction in the average size of its fleet, which had 1,046 fewer trucks than in 2011. The company said it could expand its fleet by about 200 to 300 tractors in its truckload segment during 2013, depending on business conditions.

All five carriers generated year-over-year revenue growth in the quarter, and three improved their operating ratios.

Swift’s revenue rose 7.2% to $922.6 million in the fourth quarter, while OR improved to 88.4 from 88.7 in the fourth quarter of 2011.

J.B. Hunt’s revenue rose 11.1% to $1.34 billion for the quarter, and operating ratio improved to 89.3 from 89.9.

Heartland increased its quarterly revenue 3.8% to $136.2 million and posted an operating ratio of 81.9, compared with 79.5 a year earlier.

Marten’s fourth-quarter revenue rose 5.1% to $166.4 million, but operating ratio was 92.1, up from 91.8.

Celadon, Indianapolis, said its revenue for the fiscal quarter increased 2.7% to $148.1 million, while its operating ratio improved to 89.2, from 91.5.

Russell, who remains Celadon’s chairman, said on a Jan. 24 call that “25% of the industry is the bigger guys and 75% the little guys who are suffering with 5% to 6% [a year] increases in costs.”

Russell and Will said Celadon and other large carriers are in a better place to spend money to lower costs in the long run.

Celadon, for instance, now has an average age of 1.1 years for its tractors and two years for trailers, 80% of which are outfitted with auxiliary power units, trailer skirts and other aerodynamic features for better fuel mileage.

J.B. Hunt ranks No. 5 on the Transport Topics 100 list of the largest U.S. and Canadian for-hire carriers. Swift ranks No. 7, followed by Marten Transport at No. 41, Celadon at No. 44 and Heartland Express at No. 47.

Associate News Editor Jonathan S. Reiskin contributed to this story.