Summary
American Trucking Associations (ATA) freight index is a good indicator of trends with their major fleet members. As said in the past by premier ATA forecaster Bob Costello, it’s good for showing increasing / decreasing trends over time. Their current readings show things are flat - and allows for a quick review of some of the major players recent performance, along with some comments.
Analysis
Since February of this year as written in these articles, we have been seeing freight in the trough. Our planning work with shippers and truckers don’t show that things are going to change much well into next year. A quick look at some second quarter numbers gives insight into the marketplace and some predictions about the future.
In the Less-Than-Truckload (LTL) sector, we still have a notable demand-capacity imbalance. Con-Way reported that revenue was down 21% with profit off 35% from last year. I’m bullish on them for many reasons, including that shared by others with respect to YRC Worldwide issues (with expected poor results to come).
Old Dominion Freight said its earnings were down 55%, along with a drop in tonnage of 15%. Arkansas Best, experienced a per-day decrease in revenue by 28%, per-day tonnage reduction of 17% and an operating loss of $26.8 million (versus income of $25.5 million in 2008).
Vitran Corporation saw their LTL OR go from 94.9% last year to 99.1% with shipments and tonnage declining 7.9% and 12.6% respectively. Daily shipment count and daily tonnage improved 9.3% and 6.1% respectively over the first quarter (but first quarter is always slower).
UPS numbers are off as recently noted by our colleague John Schultz in his GLG article. Also of note, fuel surcharge has played a bigger role in the LTL sector than within others. In other words, good LTL operators make money off of fuel surcharge when it is higher - and is therefore another downdraft with today’s lower fuel prices.
On the Truckload (TL) side, Werner Enterprises Inc. said revenues and profits were off 30%. They have cut its fleet size by 10 percent and does not expect to cut it further, but predict no freight improvement. Swift is reportedly profitable and hitting their plan. Knight Transportation revenue before fuel surcharge decreased 6.8%, but net income stayed pretty much the same and last year (around 13%).
Covenant Transport Group said revenue declined 31% and they continue to lose money, but rates bottomed in June and have since stabilized. They also said tonnage was improving, but could not pin down how much of it was inventory adjustments.
In the reefer sector, Marten Transport Ltd.'s net income was up 29% even on a decrease in revenue of 21%. This is a sector (and company) I have always liked, and they continue to do a good job.
Similar to the numbers we see from freight air carriers, Forward Air Corporation saw their revenue drop 18%, but the good news was that their core airport-to-airport business showed signs of stabilization. Port container business is down around 20%, similar to that through rail terminals as see within JB Hunt numbers who saw a profit decline of close to 50%.
It’s mostly about consumer spending, housing and autos - so ones we work with expect us to stay in the freight trough. We also see capacity in the TL, reefer, tank and other specialty in line with demand due to reductions already in place - or as well as it will get - while LTL remains a problem.
In the Less-Than-Truckload (LTL) sector, we still have a notable demand-capacity imbalance. Con-Way reported that revenue was down 21% with profit off 35% from last year. I’m bullish on them for many reasons, including that shared by others with respect to YRC Worldwide issues (with expected poor results to come).
Old Dominion Freight said its earnings were down 55%, along with a drop in tonnage of 15%. Arkansas Best, experienced a per-day decrease in revenue by 28%, per-day tonnage reduction of 17% and an operating loss of $26.8 million (versus income of $25.5 million in 2008).
Vitran Corporation saw their LTL OR go from 94.9% last year to 99.1% with shipments and tonnage declining 7.9% and 12.6% respectively. Daily shipment count and daily tonnage improved 9.3% and 6.1% respectively over the first quarter (but first quarter is always slower).
UPS numbers are off as recently noted by our colleague John Schultz in his GLG article. Also of note, fuel surcharge has played a bigger role in the LTL sector than within others. In other words, good LTL operators make money off of fuel surcharge when it is higher - and is therefore another downdraft with today’s lower fuel prices.
On the Truckload (TL) side, Werner Enterprises Inc. said revenues and profits were off 30%. They have cut its fleet size by 10 percent and does not expect to cut it further, but predict no freight improvement. Swift is reportedly profitable and hitting their plan. Knight Transportation revenue before fuel surcharge decreased 6.8%, but net income stayed pretty much the same and last year (around 13%).
Covenant Transport Group said revenue declined 31% and they continue to lose money, but rates bottomed in June and have since stabilized. They also said tonnage was improving, but could not pin down how much of it was inventory adjustments.
In the reefer sector, Marten Transport Ltd.'s net income was up 29% even on a decrease in revenue of 21%. This is a sector (and company) I have always liked, and they continue to do a good job.
Similar to the numbers we see from freight air carriers, Forward Air Corporation saw their revenue drop 18%, but the good news was that their core airport-to-airport business showed signs of stabilization. Port container business is down around 20%, similar to that through rail terminals as see within JB Hunt numbers who saw a profit decline of close to 50%.
It’s mostly about consumer spending, housing and autos - so ones we work with expect us to stay in the freight trough. We also see capacity in the TL, reefer, tank and other specialty in line with demand due to reductions already in place - or as well as it will get - while LTL remains a problem.
Jay Thompson consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
