Some major truckload carriers have announced gangbuster earnings for the first quarter. Lowell, AR-based truckload giant J.B. Hunt Transport Services, Inc. announced “record” earnings for the first quarter of $47 million— a 44% leap year over year (YOY).
Tight capacity, robust rates, and safe operations have more than offset a decline in freight activity, J.B. Hunt said.
“While demand for the first quarter of 2005 was not quite as strong as the record-setting pace for the same period of 2004, we did produce 44% more in net earnings during the first quarter of 2005,” said Kirk Thompson, J.B. Hunt president & CEO. “We would characterize freight demand in the first quarter of 2005 as better than any year in the last ten years with the exception of the abnormally strong 2004.”
The company’s truck segment, which posted a 66% operating income jump YOY, carried earnings to record levels while its dedicated and intermodal segments increased 41% and 18%, respectively.
“Pricing in all three operating segments remains strong reflecting the unchanged fundamentals in our business: namely, a serious driver shortage, tight rail capacity, a limited number of trucks and the resulting disequilibrium in the balance of supply and demand,” Thompson said.
Jacksonville, FL-based truckload carrier Landstar System, Inc. also reported record-breaking first quarter earnings-- which more than doubled at $17.9 million compared to $8.1 million YOY.
“Landstar's 2005 first quarter's performance was the best first-quarter operating performance in its history,” said Landstar president & CEO Henry Gerkens. “Consolidated revenue increased by 19% to the highest first-quarter revenue in Landstar history.
“This increase reflected strong growth at the carrier segment and a 34% increase in revenue at the multimodal segment,” Gerkens continued. “Additionally, revenue generated through other third-party truck capacity providers (truck brokerage) increased 63% over the 2004 1Q. The significant increase in utilization of other third-party capacity combined with the outstanding improvement in operating margin clearly demonstrate the ability of the Landstar system to source capacity and profitably satisfy customer demand,” Gerkens said.
Coralville, IW-based truckload carrier Heartland Express, Inc. said first-quarter earnings increased 15% to $13.1 million year-over-year.
Like J.B. Hunt, Heartland stresses safety as among its major goals. “For the second year in a row, the company increased driver pay during the first quarter by 3 cents per mile in an effort to attract and retain experienced drivers who meet the company’s safe driving requirements,” stated Heartland’s news release.
Landstar was bullish for the second quarter, projecting revenue growth to be 14% to 18% YOY. J.B. Hunt expressed optimism for the remainder of 2005, and noted that prospects for a downturn in its operations are remote.
“Barring a downturn in the economy, something current forecasts are not suggesting, we would expect the remainder of 2005 to follow the normal seasonal patterns and to continue to reflect demand outpacing supply,” said J.B. Hunt’s Thompson. “In fact, early indications for demand in April have been quite encouraging and our expectations for the balance of 2005 remain strong.”
So far this year, there have been mixed signals as to whether tonnage has expanded or contracted compared to the same period last year.
For example, Chattanooga, TN-based long-hail truckload carrier Covenant Transportation Inc. expects to see a loss in the 1Q because it has not been able to pass along higher rates as scheduled due to a softer market. J.B. Hunt also noted weaker freight activity, but was able to maintain its pricing structure anyway due it said to favorable supply and demand conditions.
On the other hand, the American Trucking Assns.’ most recent tonnage index in February was 3.9% higher YOY, while its January index was up 6.4% YOY.