Strong demand for freight capacity is pushing up trucking profits across the board for less-than-truckload (LTL) and truckload (TL) fleets alike, according to the first round of earnings reports.
Jacksonville FL-based Landstar System, which uses mostly owner-operator equipment, said its net profits climbed 22% to $17.6 million on top of a 24% increase in revenue to a record $482 million in the second quarter compared to the same period in 2003. Overall, Landstar said its operating margin rose to 6.1% in the second quarter compared to 5.8% last year.
Chattanooga, TN-based TL carrier U.S. Xpress Enterprises said its net income soared 91.4% to $4.2 million on a 15.1% increased in operating revenue to $257.4 million, while Lowell, AR-based TL operator J. B. Hunt Transport Services said its net earnings in the second quarter rose almost 45% to $45.6 million on a nearly 12% climb in revenues to $679 million compared to the same quarter last year.
Omaha, NE-based Werner Enterprises said that its net income rose 9% to $21.6 million on a 13% increase in revenue to $411.1 million in the second quarter compared to last year, while Kansas City, MO-based LTL and TL conglomerate SCS Transportation said net income jumped 40% to $5.5 million on 19% high revenues of $248.2 million.
Even pure LTL operators are reporting robust fiscal results, with Thomasville, NC-based Old Dominion Freight Line reporting a 60.7% increase in net income to $10.4 million on 23.4% higher revenues of $202.1 million in the second quarter compared to last year.
Trucking executives noted that all of these healthy fiscal reports are occurring despite many negative pressures, including high fuel prices, a shortage of drivers, and the need to pay higher wages to drivers to both recruit and retain them.
"The accomplishments this quarter were achieved in light of significant cost increases being faced by the truckload industry," said U.S. Xpress co-chairman Patrick Quinn. "The average costs per mile of our truckload operations for the quarter increased 8% over the [same] quarter in 2003 due to higher operating costs, such as fuel prices, which were up approximately 21% over the prior year; driver pay, which reflected an 8% driver wage increase; and increased compensation for independent contractors, revenue equipment cost, plus insurance and claims expenses."
Quinn added that the high cost and lower fuel efficiencies of the new EGR engines alone increased U.S. Xpress' operating costs in the second quarter by over $3 million compared to the same period last year.
"Even though we expect to be able to sustain the improvement in margins we have achieved, growth in the truckload industry is at a virtual standstill until additional truck drivers are attracted into the industry," noted Kirk Thompson, J.B. Hunt's president and CEO. "We cannot predict when that will occur so we will utilize our limited capacity in the most efficient manner possible"