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Higher operating costs hurting carriers

April 24, 2008
Higher operating costs have led many carriers to report far lower net income than for the first-quarter of 200

Most trucking companies have announced increased revenues in their first-quarter reports, but higher operating costs have led many carriers to report far lower net income than for the first-quarter of 2007.

Con-way Inc. reported a 2008 first-quarter net income of $22.5 million, down from $24.9 million in the first-quarter of 2007—despite an increase in revenue from $1.00 billion to $1.20 billion.

The company’s less-than-truckload operation, Con-way Freight, increased its revenue 9.4% from the previous first-quarter, but operating income decreased 24.3%, falling from $47.7 million to $36.1 million.

"We're operating in a challenging and uncertain economic environment, which continues to restrain demand and place pressure on pricing and margins,” said Douglas W. Stotlar, Con-way president & CEO. “Based on current economic data and feedback from our customers, there appear to be few catalysts to accelerate demand in the freight markets, at least in the short term."

Celadon Group, Inc. announced revenue growth of 15.4% for the quarter, from $120.4 million to $138.9 million, yet its net income fell 74.3%, from $17.1 million in 2007 to $4.4 million in 2008.

However, Celadon chairman & CEO Steve Russell sees a light at the end of the tunnel. “There have been, however, meaningful positive developments,” he said. “Rates have stabilized after four quarters of declines, and showed a slight increase sequentially, with the March 2008 quarter at $1.501 from the December 2007 level of $1.499. We believe that an increase in competitors exiting the business, a major decline in new truck builds, and the continued export of relatively new trucks overseas has begun to reduce supply in the industry.”

Knight Transportation, Inc. reported revenue of $176.4 million in the first quarter of 2008, a 5.9% increase from the first quarter of 2007. However, net income fell from $16.6 million to $11.4 million during that time.

Werner Enterprises, Inc. announced a 2% increase of revenues from $503.9 million to $512.8 million, but earnings per share decreased 43% from $.21 in first quarter 2007 to $.12 per share in first quarter 2008.

However, some carriers have been able to increase profits despite sky-high diesel prices and other high operating costs. Landstar System, Inc. reported 2008 first quarter revenue of $609 million compared to $577 million in 2007, and its net income grew from $21.6 million to $23.7 million.

Arkansas Best Corp. announced an increase of 78% in net income, increasing from $4.8 million during the first quarter of 2007 to $8.5 million in first quarter 2008, with revenues increasing from $427.8 million to $447.5 million. The company’s largest subsidiary, ABF Freight System, increased its revenue from $412.6 million to $427.7 million in that span.

About the Author

Justin Carretta

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