Soft demand and severe winter weather nipped into earnings of prominent trucking companies in the first quarter.
Con-way, which reported revenues of $1 billion, said its profits slipped 37% to $29 million from $46 million in the same quarter last year.
Daily tonnage handled by Con-way Freight, the company’s regional LTL operation, was down 2.3% vs. 1Q 2006. Its operating ratio increased to 92.3 from 90.5 as rebranding expenses, health care and vehicular insurance costs, and adverse winter weather put a dent in profitability.
Combined results of Con-way Transportation, which consists of the company’s full-truckload and trailer manufacturing divisions, and its Freight business amounted to a 19% drop in operating income on a 2.1% revenue slide to $681.7 million.
“While operating results were down year-over-year, we saw business increase each month in the quarter,” said Douglas Stotlar, Con-way president & CEO.
J.B. Hunt Transport Services reported its 1Q profit slipped 9.8% to $44.2 million on revenues of $797 million. Softer freight volumes in its Truck and Integrated Capacity Solution segments and harsh winter weather hurt operating results, said Kirk Thompson, J.B. Hunt president & CEO. In spite of this, the company achieved an operating ratio of under 90%.
A successful quarter for its Intermodal business, which contributes to nearly half of J.B. Hunt’s total revenue, stemmed the deterioration of profits. Operating profits jumped 30% to $46.6 million for the division. The company said that segment is reducing its overall length of haul as importers direct cargo to eastern ports and the company focuses on the shorter-haul domestic market.
J.B. Hunt’s Truck division weathered a 7% reduction of loads hauled. However, in spite of a softer freight environment, the division was able to boost its rate per loaded mile, excluding fuel, by 1%. The Truck business reported its operating profit fell 47% to $11.4 million
Truckload carrier Werner Enterprise reported its profit slipped 29% to $15.7 million as revenues rose 2% to $504 million. The company said it experienced a tight freight environment as trucking companies with customers in the bearish automotive and housing sectors were competing for shippers in Werner’s core consumer non-durable market. Additionally, the company blames slower economic growth, an inventory tightening and overcapacity in trucking (due to the large truck pre-buy) for its slack quarter.
Werner did report a silver lining related to the collapse of the housing sector however, saying drivers were easier to retain as they were less likely to migrate to construction jobs.
The truckload carrier indicated that it is downsizing its 3,000-truck Van solo driver fleet dedicated to “surge” demand in favor of leveraging its brokerage services, which manages 5,000 carriers.
Operating ratios for its Truckload Transportation Services worsened to 93.6% from 90.5% in the same quarter last year. Value Added Services, which includes brokerage, transportation management, intermodal and global logistics, saw an improvement to 95.8% from 97.3%.
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