By Daniel P. Bearth, Senior Features Writer This story appears in the July 22 print edition of Transport Topics.
The largest trucking companies in the United States and Canada are hauling more freight than ever, but the slow pace of economic growth and the costs associated with increased government regulation is making it more difficult for many carriers to add capacity and invest in new equipment.
While most of the companies on Transport Topics’ 2013 Top 100 For-Hire Carriers list reported higher revenue and profits, trucking executives said business is not sufficiently robust to justify expansion of their fleets.
The latest TT100 list, based on carriers’ 2012 revenue, is published in this issue.
Many carriers also took on debt during the economic downturn and aren’t yet profitable enough to attract new investment capital.
“If a carrier is properly allocating its cost of capital, it should have a 10% operating margin,” said Derek Leathers, president of Werner Enterprises in Omaha, Neb., who noted that the average profit margin in trucking now is only 2%.
Carriers are reaching the limit of their capacity. “We are in equilibrium,” Leathers said, “but a tightening is starting to take place.”
A survey by Transport Topics shows that for-hire carriers plan to add an average of 206 company-owned tractors in the next 12 months, compared with an average of 367 acquired in the past 12 months, a drop of about 44% in planned purchases from one year to the next.
Brian Kinsey, president of Brown Integrated Logistics in Lithonia, Ga., said the trucking industry has been in a “crisis mode” for the past four years.
“I doubt that any manufacturer would consider building a new plant if the return on the investment was less than the company’s cost of capital. Most of the trucking industry has been doing that for a very long time,” Kinsey said.
Meanwhile, compliance with safety and environmental regulations is raising the cost of hauling freight and changing the way trucking companies manage their operations, industry executives said.
While UPS Inc. and FedEx Corp. remain at the top of Transport Topics’ annual ranking of largest for-hire carriers, many of the companies listed on the Top 100 this year reflect these changes in the business environment.
In February, Centerbridge Partners combined the dedicated operations of Greatwide Logistics Services and Cardinal Logistics Management to create a business with $1 billion in projected annual revenue in 2013.
Satchuk Resources, a Seattle-based holding company, added Carlile Transportation Systems to its freight group, which includes truckload carrier Interstate Distributor Co. and ocean freight specialist Tote Logistics.
Other companies making big moves on the list are Roadrunner Transportation Systems (No. 24) and Universal Truckload Services Inc. (No. 26).
Editor’s Note: The full 2013 TT100 listing of for-hire carriers, which is included in the July 22 print edition of Transport Topics, will be posted online as a PDF in the near future.
