This story appears in the July 29 print edition of Transport Topics.
Several of the country’s largest publicly traded truckload carriers reported a mixture of modest profit declines and some gains for the second quarter, with most citing a soft freight market.
Werner Enterprises Inc., Forward Air Corp., Knight Transportation Inc. and Landstar System Inc. all posted lower quarterly earnings than a year ago.
Conversely, net income increased year-over-year at both Swift Transportation and Heartland Express Inc., while USA Truck Inc. narrowed its loss for the quarter.
Swift posted the largest profit gain, with net income rising 27.4% to $42.9 million from $33.7 million a year earlier. On a per-share basis, earnings rose to 30 cents from 24 cents. Revenue increased 2.9% to $898.1 million.
The company’s earnings grew despite “a relatively lackluster freight environment,” Swift said in a July 24 letter to shareholders.
“This quarter, freight demand was generally soft in April and May before improving in June, with the strength coming primarily in the Southern and Southeastern portions of the United States,” the Phoenix-based company said.
Swift said asset utilization in its truckload segment improved, and its dedicated unit captured new business as it worked to improve or remove less profitable accounts.
The fleet’s overall operating ratio, or expenses as a percentage of revenue, improved to 89.7 in the second quarter from 90.1 a year earlier.
However, four of the seven carriers reported lower earnings.
Landstar’s net income declined to $30.4 million, or 66 cents per share, from $35.9 million, or 76 cents, a year earlier. Revenue for the quarter ended June 29 declined 7.7% to $679.3 million.
“Consistent with the 2013 first quarter, the company experienced softness in both the number of loads and revenue per load on loads hauled via truck,” Landstar Chairman and CEO Henry Gerkens said.
Landstar, based in Jacksonville, Fla., posted an OR of 92.7, compared with 92.1 a year ago.
Werner’s net income fell to $25.8 million, or 35 cents per share, from $30.7 million, or 42 cents. Revenue slipped 2.9% to $506.6 million.
Werner said freight demand was softer than a year ago in April, in part because of unfavorable weather, but improved during May and June to a level comparable to a year ago.
Base rate increases “showed modestly positive momentum” as the second quarter progressed, the Omaha, Neb.-based carrier said.
Knight Transportation said its net income slipped 1.8% to $18.9 million, although earnings per share were flat at 24 cents. The Phoenix-based company said its revenue grew 3.6% to $244.8 million.
CEO Kevin Knight said July 24 in a conference call that the company expects rate growth to continue throughout the year, but he added that it will be “very tough” to get to the 2% to 3% rate increase range the company targeted in the previous quarter’s conference call.
“With the cost inflation we are facing as an industry, we absolutely have to continue to improve our rates,” he said. “If not sooner, certainly later, we should find ourselves in a situation where rates will increase.”
Forward Air, a provider of ground transportation for the air cargo industry, said its earnings slipped to $13.8 million, or 45 cents per share, from $14.2 million, or 48 cents, a year earlier. Total revenue at the Greeneville, Tenn.-based carrier climbed 7.7% to $159.8 million.
Chairman and CEO Bruce Campbell said “the overall tepid macroeconomic environment, the loss of a large customer . . . and our continued pricing challenges all conspired to make for a difficult second quarter. Fortunately, we believe that each of these headwinds will be short-lived.”
The company also believes the “irrational pricing behavior of some of our competitors is not financially sustainable,” Campbell said in the July 18 report. “Those who maintained pricing discipline will ultimately be rewarded.”
Heartland Express, North Liberty, Iowa, reported a second-quarter profit of $19.1 million, or 23 cents, up from $18.2 million, or 21 cents, a year ago. Revenue declined 4.1% to $134 million.
Meanwhile, USA Truck’s second-quarter net loss narrowed to $1.04 million from a loss of $3.49 million a year earlier. On per-share basis, the company’s loss was 10 cents, compared with a loss of 34 cents in the same quarter last year, it said July 24. The carrier, based in Van Buren, Ark., said its revenue increased 7.8% to $139.7 million.
Senior Reporter Rip Watson contributed to this story.