Truckload Companies Post Lower Profits in 4th Quarter
This story appears in the Jan. 30 print edition of Transport Topics.
Several large truckload companies suffered from inconsistent fuel prices and lower freight revenue per truck, leading to steep declines in net income in the fourth quarter, but executives remain cautiously optimistic that industry conditions will improve in the second half of 2017.
• Swift Transportation earnings plummeted 30% in the fourth quarter to $50.4 million, or 38 cents per share. The Phoenix-based carrier earned $72.5 million, or 51 cents, in the same period the year before. Revenue dropped 4.7% to $1 billion companywide. The Swift Truckload unit’s revenue for the quarter dropped 6.5% to $521.2 million, and total loaded miles driven decreased 3.8% year-over-year.
Swift Dedicated revenue grew 6.7% year-over-year to $257.3 million and weekly revenue per tractor improved 6.5% year-over-year. Swift Intermodal revenue declined 5.4% to $95.3 million in the quarter and Swift Refrigerated revenue dropped 10% to $84.5 million.
• Knight Transportation Inc. profits slid 24% in the fourth quarter to $22.5 million, or 27 cents per share. The Phoenix-based company generated $29.2 million, 36 cents, in profits the year before.
Revenue dropped 0.6% to $289 million in the fourth quarter.
“[In] November, we did see some continued spot market activity, but maybe did not see the acute tightness that we were expecting. Now, it was certainly better than 2015 but maybe not as strong as 2014 or 2013,” said Knight Transportation Chief Financial Officer Adam Miller. “In December, that spot market began to loosen up a little bit, and we did not have nearly as many opportunities as we were hoping for.”
It’s encouraging, he added, that when you find pockets of the country that are exceptionally tight, “but it was just too short a period in too few places to move the needle as much as maybe we would have hoped for. But we think that day is coming.”
CEO Dave Jackson said: “We expect rates to inflect positively in the second half of 2017, with an increasing likelihood of materially stronger rates in the fourth quarter of 2017.”
Knight’s consolidated segment reported that operating income dropped 20% to $34.7 million. The trucking segment’s operating income fell 22% to $30.6 million, and the logistics segment’s operating income fell 3.6% to $4.2 million.
• Heartland Express Inc. posted a 23% decline in earnings to $13.1 million, or 16 cents. In the 2015 fourth quarter, the North Liberty, Iowa-based carrier generated $17 million in profits, or 20 cents. Revenues dropped 20% to $140 million, which CEO Michael Gerdin blamed on “shippers attempting to capitalize on short-term excess capacity in the industry.”
• Covenant Transportation Group Inc. reported that net income fell nearly 55% to $5.98 million, or 33 cents, compared with $13.2 million, or 73 cents, year-over-year. Its revenue dropped 8.2% to $191 million, consisting of a 7.3% decline in the trucking division and a 19% drop in the non-asset-based division at the Chattanooga, Tennessee- based carrier.
• Marten Transport was the only truckload carrier to avoid double-digit declines in profits. The Mondovi, Wisconsin, carrier reported a 5.5% drop in net income to $8.3 million, or a quarter, versus $8.8 million, or 26 cents one year ago. However, revenue improved to $172.7 million from $168.8 million a year ago.
• Patriot Transportation Hold-ing Inc. reported $912,000 in net income for the quarter, or 28 cents, down from $1.4 mil- lion, or 42 cents, a year ago. But those 2015 figures in- cluded a $1 million settlement, or 31 cents per share, in connection with the Deepwater Horizon disaster, boosting profits on a one-time basis. Revenue at the Jacksonville, Florida, carrier dropped 2.1% to $28.8 million.
Swift Transportation ranks No. 6 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers. Knight ranks No. 29, Heartland No. 41, Covenant No. 43, and Marten No. 47. Patriot Transportation isn’t on the list.
