Truckload Profits Increase as Rates Rise, Firms Grow
This story appears in the Feb. 2 print edition of Transport Topics.
Five of the nation’s largest truckload carriers last week said quarterly earnings rose sharply, as they capitalized on strong demand by raising rates and running more trucks.
Fourth-quarter net income rose 29% at Swift Transportation Co. to $58.5 million, or 41 cents per share, and earnings climbed 53% at Landstar System Inc. to $38.5 million, or 86 cents, excluding an asset-sale gain.
Knight Transportation Inc. re-ported 64% higher net income of $32.9 million, or 40 cents. Also, fiscal second-quarter earnings improved 67% at Celadon Group Inc. to $8.54 million, or 36 cents, and Marten Transport Ltd raised profits 23% to $9 million, or 27 cents.
“The environment is pretty strong out there,” Celadon Group CEO Paul Will said on a Jan. 29 conference call.
Will identified several reasons for Celadon’s ability to increase its seated tractor count by 5.9% despite the driver shortage.
They included increased driving school graduates, adding owner-operators and an acquisition.
Swift, which said its driver academies are full, increased fleet size 5% and Marten expanded 3%.
“During the fourth quarter of 2014, the truckload-freight environment remained strong while capacity continued to be tight,” said Dave Jackson, CEO at Knight, whose tractor fleet increased 16% with help from an acquisition.
The companies’ revenue increases reflected a combination of rates and freight-volume growth.
Swift’s revenue increased 6% to $1.14 billion, powered by 6.4% more revenue per loaded mile at its largest trucking unit, excluding fuel surcharges.
Thom Albrecht, a BB&T Capital Markets analyst, said lower fuel prices raised Swift’s earnings per share by about 10%.
On an adjusted basis, Swift’s earnings per share were 55 cents. It was helped by improved operational and financial performance at its truckload, refrigerated and intermodal businesses.
Landstar’s revenue rose 25% to $863.2 million on the strength of 14% higher revenue per load and 11% more shipments moved, re-flecting better results at both the van and flatbed units that generated 95% of revenue.
In its 2013 quarter, net income was $59.6 million before a gain on the sale of a supply chain unit to XPO Logistics.
Knight’s revenue climbed 27% to $317.5 million, reflecting results at Barr Nunn Transportation, acquired when the quarter began. Revenue per tractor growth was 9%, at Knight, also excluding fuel surcharges.
Celadon, where revenue rose 15% to $222.5 million, was helped by the acquisition of its A&S Services. Its revenue per loaded mile was 10% higher.
Revenue at Marten climbed 4.4% to $173.5 million.
Landstar, Swift and Knight forecast higher 2015 earnings as fourth-quarter trends continued early this year.
Jackson said on a conference call that the spot market remained stronger than normal in January, though it was weaker than last year’s weather-affected demand spike. He cautioned that it would be wrong to extrapolate 2015 demand from January spot market indicators.
Swift is No. 7, Landstar is No. 10 and Knight is No. 31 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers. Celadon is No. 44 and Marten is No. 45.
Last week’s results backed up the earnings at the first two carriers, which reported results earlier in January.
No. 3 J.B. Hunt Transport Services reported net income rose 20% to $110 million, or 93 cents, helped by stronger results at all four of units. Revenue rose 9% to $1.61 billion Hunt said on Jan. 22.
Covenant’s net income jumped to $13.5 million, quadruple the 2013 period. Earnings were 82 cents per share. Revenue climbed 17% to $207 million, reflecting higher rates and more freight hauled.
