Truckload Firms Post Earnings Gains on Tight Capacity, Higher Rates

Six of seven publicly traded large truckload carriers delivered strong second-quarter profit increases last week, as capacity constraints helped to boost rates and margins.

Net income at Werner Enterprises Inc. rose 31% from a year earlier to $27.5 million as earnings per share reached 38 cents, a record for any quarter.

Swift Transportation Co., the largest carrier to report last week, produced $19.6 million of net income, reversing a $23.1 million loss in second quarter of last year.

Meanwhile, Heartland Express Inc., North Liberty, Iowa, improved net income by 35% to $22.5 million from a year ago, while Marten Transport Ltd., Mondovi, Wis., boosted net income by 20% to $6.2 million.

Forward Air Corp., Greeneville, Tenn. raised net income by 51% to $12 million, and Landstar System Inc., Jacksonville, Fla., said its net income increased 22% to $29.6 million.

The only carrier to report lower results from a year earlier, USA Truck, Van Buren, Ark., said its net income fell 34% to $598,000.

The broad theme that most fleets emphasized was that improved earnings were tied more to rate increases than freight growth or economic strength.

“We continue to believe that favorable truckload trends are caused to a greater degree by industry capacity constraints than economic recovery,” Werner, which reported a 3.1% increase in revenue per total mile, said in its July 20 statement.

Werner, Omaha, Neb., ranks No. 11 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada.

“Our tonnage volumes, while positive each month of the quarter, saw some periodic softness,” said Bruce Campbell, CEO of Forward Air. “Our yield remained strong, which was driven in part by our June 6, 2011 general rate increase along with continued pricing discipline.

Henry Gerkens, CEO of Landstar, No. 8 on the for-hire TT 100, echoed those views, while reporting revenue per load increases of about 8% on truck shipments that accounted for 92% of revenue.

“Pricing continued to be strong,” he said on July 21. “I would characterize the overall second-quarter freight environment as a little choppy but moving in an upward direction.”

At Marten, truckload revenue, excluding fuel surcharges, rose 11% to $89.6 million, even though miles driven rose less than 1%.

Swift, Phoenix, reported a 4.7% increase in rates. Its second-quarter 2010 loss was tied to interest costs that were reduced by about $40 million after Swift’s initial public stock offering last August.

Swift ranks No. 7 on the for-hire TT 100 list.

“The demand for freight services improved due to capacity issues in the industry,” Heartland’s July 19 statement said.

USA Truck’s net income dropped to 6 cents a share from 9 cents in the second quarter last year. All but 2 cents of the results last year derived from a fuel-hedging contract gain. USA Truck said its costs were raised by 3 cents a share due to higher pay for drivers.

The latest reports were consistent with J.B. Hunt Transport Services Inc.’s record quarterly net income of $63.7 million, riding the strength of a 4.4% increase in revenue per load in its intermodal business.

Revenue trends similarly were positive, reflecting fuel surcharge collections in all cases except Landstar’s business-capacity owners, who received $78.1 million in fuel surcharges that were excluded from revenue.

Swift’s revenue rose 15.5% to $850.5 million, while Landstar climbed 5.2% to $675.6 million and Werner rose 11% to $515.9 million.

Likewise, Marten improved 20% to $151.1 million, and Forward Air gained 8.3% to $132.2 million.

USA Truck’s revenue rose the most, 22%, to $139 million.

Revenue growth was slowest at Heartland at 7.7% to $137.2 million from $127.4 million. Heartland’s fuel surcharge revenue of $10 million exceeded the revenue growth.

However, fuel surcharge collections didn’t keep pace with the $11.3 million increase in fuel costs as diesel rose 32% during the quarter.

Heartland’s improvement year-over-year was helped by the equipment gains that totaled $11.7 million in 2011 and just $2.0 million in the year-earlier period.

Heartland’s report said that “operating results were negatively impacted by a combination of tight driver availability and escalating fuel prices.”

Werner and USA Truck also noted growing pressure to find qualified drivers.

Robert W. Baird & Co. analyst Jon Langenfeld said in a report that Heartland equipment sales were tied to difficulty in finding drivers to fill its trucks.