Three Truckload and LTL Carriers Post Lower 2Q Earnings

Top truckload carriers Swift Transportation and Werner Enterprises reported weaker second-quarter earnings July 21 because of overall weakness in broad freight market rates, while earnings dropped at airfreight and intermodal specialist Forward Air Inc. after a $42.4 million charge based on an acquisition in 2013.

Swift Transportation reported net income dropped 16% compared with the year-earlier period. Werner Enterprises posted a 43% drop in profit year-over-year, with the truckload division reporting a 51% drop compared with the same period last year. Forward Air reported a net loss of $10.1 million, or a 33-cent loss, as compared with a $11.8 million in the prior-year period.

Swift Transportation earned $42.9 million, or 34 cents per share, down from $50.9 million in the same quarter last year. Revenue dropped 4.5% to $1 billion. When revenue from fuel surcharges is removed, the company reported earnings fell only 0.1%. The Phoenix-based truckload carrier reported the spot truckload division, which accounts for 51% of total revenue, fell 6.8% to $517.6 million. Empty miles increased 1.5 percentage points as the company eliminated 244 trucks year-over-year to deal with excess capacity.

Dedicated contract carriage, which accounts for 23% of total revenue, reported a 1.2% increase in operating revenue. The growth primarily resulted from a 7.3% increase in weekly revenue per tractor, which the company attributes to higher pricing.

“We increased our participation in the spot market to help offset the lack of available freight in certain markets. Although this decision has contributed to the year-over-year degradation in our Truckload and Swift Refrigerated Revenue per loaded mile metrics, it has allowed us to keep our trucks moving,” the company said in a letter to investors.

Werner reported profits fell to $18.3 million, or 25 cents, compared with $31.8 million or 44 cents in the year-earlier period, while revenue fell 7% to $498.6 million. The company said that spot market rates were even worse than it had forecast for the second quarter, with a 10% jump in empty miles. The truckload division accounts for more than three-quarters of the business at Werner. The logistics unit reported operating income increased $1.6 million.

“During the recent contractual bid season, we chose to exit from certain contractual business that would have required significant contractual rate decreases for the next year, since we believe that this pricing is not sustainable,” the company said in a statement.

Swift and Werner are just the latest companies in an overall tough quarter for the truckload sector. Landstar System Inc. reported second-quarter net income dropped 20% to $32.3 million on July 20, or 76 cents per share, also hurt by sluggish freight market and lower spot market rates.

Forward Air reported profits fell in the expedited less-than-truckload and truckload divisions, the two biggest units at the Greeneville, Tennessee, company. Total tonnage in the LTL division dropped 7%, but operating income increased to $24.9 million from $20.8 million in the year-prior period after lower transportation costs and salary expenses. Revenue remained unchanged in the expedited truckload division, but the company reported an operating income loss due to a fair value goodwill impairment charge stemming from the acquisition of Total Quality Inc. in 2013.

Swift reported earnings at 4 cents higher per share than analyst estimates, as compiled by Bloomberg News. Werner beat forecasts by 2 cents. Adjusted earnings per share at Forward Air, excluding the TQI charge, was at 57 cents, which fell 2 cents short of forecast.

The operating ratio deteriorated at Swift Transportation to 92.7 from 90.7, and also worsened at Werner to 94.1 versus 90.2.

Swift Transportation is No. 6 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada, with Landstar System at No. 9, Werner at No. 15 and Forward Air at No. 35.