Editorial: Some Good News, For a Change

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img src="/sites/default/files/images/articles/printeditiontag_new.gif" width=120 align=right>For the first time in a long while there was a steady stream of positive economic news from trucking companies.

Carriers reporting quarterly earnings last week told of black ink on their balance sheets as higher freight volumes, coupled with decreased fleet capacity, helped the bottom lines, especially for carriers in the truckload sector.

The good news came from lots of companies, including J.B. Hunt, Werner Enterprises, Covenant Transport, Heartland Express, USA Truck, Knight Transportation and Landstar System on the truckload side; Old Dominion Freight Line on the LTL side; and refrigerated hauler Marten Transport.

The good news came even as insurance and fuel rates continued to climb and as news about the nation’s economy continued to seesaw, sending the stock markets into more gyrations.

Covenant Chairman David R. Parker told stock analysts last week that much of his company’s recent gains was the result of the removal of some 350,000 Class 8 tractors from the market. These trucks disappeared as legions of competitors filed for bankruptcy over the past two years, losing out under by the sputtering U.S. economy.

Diminished capacity, coupled with a modest upturn in demand, has now allowed many truckload carriers to raise their rates and make the increases stick — and to forego less profitable business.

Werner Chairman Clarence W. Werner said freight volumes during the third quarter “were consistently higher” than a year ago, which has allowed the company to raise its average revenue per total mile by 3 cents a mile, a 2.5% jump.

Covenant’s Parker said his company has “gotten religion” on not overexpanding when business improves. “We don’t have to grow just to be growing. We’re going to ask what growth [in revenue] will do to our earnings.”

Covenant’s average revenue per total mile rose 1.1%, Parker said.

Several stock analysts warned that trucking isn’t out of the woods yet. The recent performance improvements, in most instances, simply bring the companies back in line with historically average rates of return.

And the recent rate increases, they say, are primarily going to pay for significant increases in expenses, especially fuel and insurance.

he key to success, the analysts say, is a healthier national economy, which is surely what we’re all waiting for.

This article appears in the Oct. 21 print edition of Transport Topics. Subscribe today.