Fleet Financials
Revenues up, capacity down.
Patricia Smith
Senior Editor
Revenues and profits are generally up for the fourth quarter and for 2002, but few carriers are promising easier times ahead. The bankruptcy of LTL giant Consolidated Freightways was widely credited for strong fourth-quarter results by less-than-truckload carriers. Rates and revenue miles are creeping up for truckload carriers, but they're still squeezed by high insurance costs, high driver turnover, and uncertainty regarding fuel prices.
Arkansas Best
ABF Freight System's fourth-quarter revenues were $344.9 million compared to $302 million a year earlier. Operating income was $27.1 million versus $16.5 million. Fourth quarter LTL revenue per hundredweight, excluding fuel surcharge, was $22.56, up 5.9% from a year ago. Operating ratio was 92.2%.
"The closure of CF has strengthened overall pricing stability in our industry," said Arkansas Best President and CEO Robert Young. "ABF's ability to secure customer rate increases has improved. In fourth quarter, the average percent of rate increase on deferred pricing agreements was the best since third quarter 2000 and almost a full percentage point better than fourth quarter of 2001," he said. Fourth quarter LTL tonnage per day was up 6.5% from a year ago.
"During the first eight months of 2002 — prior to the closure of CF — ABF's LTL pounds per day was 7% below the same eight-month period in 2001," noted Young. "During the four-month period from September through December of 2002, following CF's closure, ABF's LTL pounds per day was 6% above the same four-month period in 2001. Comparing these two time periods results in an increase in tonnage trends of 13%."
But he added that it's difficult to distinguish the exact amount of business ABF has obtained directly from the CF closure. "Additional factors, including the economic environment and the settlement of the longshoremen's West Coast labor dispute, also impacted ABF's fourth-quarter tonnage levels," he said.
ABF's 2002 revenues were $1.28 billion, essentially the same as in 2001. Its operating ratio was 94.6% versus 93.8%. Operating income was $68.8 million versus $79.4 million. Total tonnage per day decreased 4.2%. LTL tonnage per day decreased 2.8%. Truckload tonnage per day dropped 9.6%.
Arkansas Best's Clipper intermodal marketing company had fourth-quarter revenues of $30.3 million versus $29.7 million a year earlier. Operating ratio was 98.9% versus 101.9%. Clipper's 2002 revenues were $118.9 million compared to $127.3 million for 2001. Its operating ratio was 99.1% compared to 99.6% last year.
Consolidated fourth-quarter revenues for Arkansas Best Corp. were $375.2 million versus $331.7 million a year earlier. Net income was $14.5 million versus $9.5 million.
CNF Inc.
CNF's Con-Way Transportation Services reported fourth-quarter operating income of $36.7 million compared to $35.7 million fourth quarter 2001. Revenues were $525.1 million, up 13% from a year earlier. Operating income for 2002 was $147.2 million versus $157.5 million for 2001. Revenues were $2.01 billion versus $1.91 billion.
Menlo Worldwide had a fourth-quarter operating income of $18.2 million versus a $372.4 million operating loss in fourth quarter 2001. Revenues were $753.3 million versus $679.3 million. Emery Forwarding reported fourth-quarter operating income of $4.5 million, versus an operating loss of $355.4 million a year earlier. Revenues were $497.4 million, up 8%. Menlo Worldwide Logistics' operating income was $8.6 million compared to an operating loss of $2.8 million a year ago, and revenues of $255.9 million, up 17%.
CNF consolidated fourth-quarter net income from continuing operations, after one-time charges and gains, was $24.2 million on revenues of $1.28 billion. This compares with a loss of $215 million on $1.14 billion in 2001. Operating income was $54 million compared with an operating loss of $337 million. Net income for 2002 was $106.0 million versus a net loss in 2001 of $402.9 million. Operating income was $181.8 million versus an operating loss of $660.7 million. Revenues for the year were $4.8 billion compared with $4.9 billion in 2001.
OVERNITE
Citing its "finest year since 1994," Overnite reported 2002 net income of $55.1 million, up 16.2% from 2001, on revenues of $1.33 billion, up 5% from the previous year. The numbers include pro forma effects of the November 2001 acquisition of Motor Cargo Industries. Operating income was $71.2 million, up 11% from 2001. Operating income for the fourth-quarter was $16.8 million, up 19% from fourth-quarter 2001. Revenues were $346.3 million versus $305.5 million. Overnite's fourth-quarter operating ratio was 95.2% compared to 95.8% a year earlier.
Roadway Corp.
Roadway Express and New Penn posted combined fourth-quarter revenues of $1.07 billion, up 25.7% from fourth-quarter 2001. Income from continuing operations was $25.9 million compared to $13.5 million.
Chairman and CEO Michael Wickham noted that 2002 started with the lowest tonnage levels in 15 years and the economy "never shifted into the long awaited recovery mode." But the September closure of Consolidated Freightways and the resulting drop in industry capacity "was a turning point that led to record fourth-quarter revenues."
Wickham also said that Roadway's system wasn't overly taxed by the addition of CF freight and that the company doesn't anticipate the need to add capacity until the general economy reaches a 5-6% annual growth rates.
Fourth-quarter Roadway Express LTL shipments totaled almost 2.1 million tons, up 16.6% from a year ago. Revenue per LTL ton was $444.74, compared to $431.10 a year ago. The carrier's operating ratio was 95.4% for the quarter versus 96.9% last year. New Penn LTL shipments totaled 257,973 tons, compared to 54,892 tons for fourth-quarter 2001. Revenue per LTL ton was $245.77 versus $242.00. Operating ratio was 86.7% versus 93.4%.
Combined revenues for the year were $3.01 billion, up 8.3% from 2001. Income from continuing operations was $35.14 million, up 14.6% from 2001. The earnings numbers do not include truckload carrier Arnold Transportation Services, which Roadway sold last December.
USFreightways
USFreightways had fourth-quarter income from continuing operations of $13.6 million, a 27% increase from fourth-quarter 2001. Revenues totaled $580.7 million, up 8%. Revenues for the year were $2.25 billion, up 1.3% from 2001. Income from continuing operations was $33.3 million versus $50 million.
Fourth-quarter operating earnings from the LTL group were $29.2 million, up 16.5% from a year earlier. Revenues were $478.2 million, up 11.1%. Revenue before fuel surcharges was up 9.8%. Operating ratio was 93.9% versus 94.2% in fourth-quarter 2001. LTL shipments were up 9.3%, tonnage increased 9.2%. Revenue per shipment was $115.42, including fuel surcharges, versus $113.51 a year earlier. Revenue per hundredweight was up 1.7%.
USF Reddaway's fourth-quarter revenues were up 11.4%, its operating ratio was 87.5% versus 90.1% a year earlier. USF Bestway's revenues were up 14.4%, operating ratio was 93% versus 95.6%. USF Holland's revenues were up 11.6%, operating ratio was 91.8% versus 91.7%. USF Red Star's revenue increased 7.1%, operating ratio was 103.1% versus 101.7%. USF Dugan's revenues were up 10.9%, operating ratio was 101.1% versus 100.1%.
Truckload carrier USF Glen Moore's revenues were $30.7 million, up 19.6% from fourth quarter 2001. Operating earnings were $1.3 million, up 64%. Operating ratio was 95.7% versus 96.9% a year earlier. Revenues from USFreightways' logistics group were $74.3 million, up 3.7%. Operating profits were $5.4 million versus $1.7 million.
Yellow Corp.
Yellow reported consolidated operating revenues of $717 million for the fourth quarter, up 19% from a year ago. Operating income from continuing operations was $25.5 million compared to $6.3 million. That doesn't include SCS Transportation, which was spun off last September. Consolidated revenues for 2002 were $2.62 billion, up 4.8% from 2001. Operating income was $55.3 million, up from $43.6 million.
Yellow Transportation fourth-quarter revenues were up 17.1% from a year ago, to $692 million. Operating income was $29.9 million compared to $12.4 million. Its operating ratio was 95.7% compared to 97.9%. LTL revenue per day was up 18.3% . LTL tonnage per day was up 13% and LTL revenue per hundred weight was up 4.6% (3.4% excluding fuel surcharges.) Revenues for the year were $2.55 billion, up 2.2% from 2001. Operating income was $71.1 million, up 21.2%.
Meridian IQ, a web-based transportation management service started last year, had fourth-quarter revenues of $26 million, up 20% from third quarter. Operating income was $300,000.
Covenant Transport Inc.
Covenant's fourth quarter operating revenue increased 4% from fourth quarter 2001, to $146.7 million. Net income was $3.4 million compared to a net loss of $8.3 million a year earlier. For 2002, operating revenue decreased 2% to $564.4 million. Net income increased to $8.3 million, compared to a net loss of $6.7 million for 2001. Excluding extraordinary items, net income for 2002 was $11.2 million, compared with $2.9 million for 2001.
During the fourth quarter Covenant replaced about 600 older tractors with new 2003 models but held its fleet size essentially constant while raising average revenue per tractor per week by approximately 2.8%, to $2.859. Average revenue per loaded mile was $1.232, up 1.1%. Average miles per tractor was 32,801, up 1.6%. After-tax cost per mile was $1.12 compared with $1.13 for the fourth quarter of 2001
Heartland Express
Heartland Express Inc. reported fourth-quarter revenue of $92 million, up 25.1% from fourth quarter 2001. Net income was $11.2 million, up 13.4%. Operating ratio was 82.3%. For 2002, revenue was $340.7 million, up 15.7% from the previous year. Net income was $42.8 million, up 13.7%. Operating ratio was 81.8%. The company noted that its balance sheet continues to be debt-free.
J.B. Hunt Transport Services
J B. Hunt Transport Services reported record annual net earnings of $51.8 million for 2002, compared with $32.9 million for 2001. Operating revenues totaled $2.25 billion, compared with $2.10 billion in 2001. Operating income rose 40%, to $101 million in 2002. Fourth-quarter net earnings were $14.7 million versus $18.2 million for fourth quarter 2001. Operating revenue was $597.7 million, compared with $546.2 million in 2001.
Fourth-quarter operating ratio for J.B. Hunt's truck segment was 96.3%. The company said rates were up 4.9% from fourth quarter 2001 "continuing a trend of the last several quarters." Empty miles were 9.3% versus 12% a year earlier. Revenue per truck per day was $564, up from $525 last year. For the first time ever, revenue per truck per day surpassed a targeted $600 per day achieving $601 in November of 2002, the company said.
The intermodal segment had a fourth-quarter operating ratio of 91.1%. Hunt said conversion of its container fleet to stackable 53-foot units plus "outstanding railroad service" allowed the company to record the best asset velocity in the segment's history. Box turns, which measures the number of loads per month per container, rose 4% in the fourth quarter. That, plus a new incentive compensation package for intermodal drivers, was credited for a 14% improvement in productivity.
Operating ratio for Hunt's dedicated contract carriage segment was 97.9%. Higher accident and claims costs increased the ratio by about 180 basis points. Start-up costs on a number of major projects also drove up the ratio. But revenue per tractor per day was up 6.3% for the quarter. The dedicated tractor fleet finished the quarter with over 300 more power units than the fourth quarter of 2001, and achieved an all-time high revenue per truck per day, resulting in a 14% increase in top-line revenue.
Knight Transportation
Knight posted fourth-quarter revenues, before fuel surcharges, of $76.4 million, up 17.4% from fourth-quarter 2001. Net income was $8.2 million, up 20.6%. Its operating ratio for the quarter was 81.3% which Chairman and CEO Kevin Knight said was the best in 18 quarters.
Revenues for the year totaled $279.4 million, a 15.6% increase from 2001. Net income was $27.9 million, up 25%.
Empty miles in the fourth-quarter were 10.3% versus 10.7% in fourth quarter 2001. Average transportation revenue per mile, excluding fuel surcharges, was $1.266 versus $1.222. Average number of tractors in the fleet was 2,115 versus 1,886. Miles per tractor was 28,443 versus 28,105.
Landstar System
Landstar System reported fourth-quarter net income of $14.5 million, compared to $11.6 million fourth quarter 2001. Fourth-quarter revenues totaled a record $394.0 million, compared with $347.8 million. The carrier group had revenues of $299.4 million versus $278.2 million a year earlier. The multimodal services group had revenues of $87.7 million versus $63.6 million. Operating margin was 6.1% in the 2001 fourth quarter, up from 5.9% a year earlier.
Net income for 2002 was a record $49.2 million, compared to $42.8 million for 2001. Revenues were a record $1.507 billion versus $1.393 billion. Carrier group revenues were $1.178 billion, compared with $1.098 billion in 2001. Multimodal services group revenues were $301million versus $271 million.
Fourth quarter consolidated brokerage revenues were up 34% from the same period in 2001. Rail intermodal more than doubled and revenue hauled by Landstar "business capacity owners" increased more than 3%, the company said.
Marten Transport
Marten Transport reported record revenues of $293.1 million for 2002, compared with $282.8 million in 2001. Revenue net of fuel surcharges increased 5.5% from 2001. Net income was $6 million, compared with $6.5 million. Operating income was $11.9 million, compared with $15.1 million in 2001. Marten's operating ratio was 96.0% versus 94.7% the previous year.
Fourth-quarter revenues were $76.3 million, compared with $70.4 million a year earlier. Revenues net of fuel surcharges increased 6.8%. Fourth-quarter net income was $579,000, compared with $1.3 million a year earlier. Operating income was $1.4 million versus $3 million for the same period of the previous year. Operating ratio was 98.2% versus 95.7%.
Chairman and President Randolph Marten said they were pleased to report record revenues despite a "distinctly unfavorable operating environment for our industry generally," but noted that the impact of "rising operating costs within a prolonged economic slowdown is reflected clearly in the increase in our operating ratio and decline in earnings." Insurance and claims expense rose sharply during the year and Marten faced intense competition for qualified drivers, he said.
The time- and temperature-sensitive truckload carrier increased its fleet last year to 2,078 tractors and 2,676 trailers, all 53-footers. At the same time, said Marten, they were able to reduce $11.5 million from its long-term debt, strengthening its balance sheet and contributing to a 32% reduction in interest expense.
SCS Transportation
SCS Transportation, spun off from Yellow Corp. last fall, reported fourth-quarter revenues of $194.3 million, up 5.1% from fourth quarter 2001. Operating income increased 40%, to $7.5 million. Net income was $3.0 million, a 68% improvement. Full-year revenues were $775.4 million in 2002 versus $771.6 million in 2001. Operating income was $27.2 million, compared to $15.7 million. Net income, excluding one-time charges, was $12.1 million versus $800,000 in 2001.
Saia fourth-quarter revenues were $123.2 million, up 4.2% from fourth quarter 2001. Operating income was $5.7 million, up 18% from a year earlier. Operating ratio was 95.3% versus 95.9%. LTL tonnage was up 6.7%. LTL yield, excluding fuel surcharges, was down 2.6%.
Jevic fourth-quarter revenues were $71.1 million, up 6.7% from a year earlier. Operating income was $2.1 million, almost double the $1.1 million a year earlier. Jevic's fourth-quarter operating ratio was 97.0% versus 98.4%. LTL tonnage increased 3.7%. LTL yield, including fuel surcharge, improved 3.3%.
Swift Transportation
Swift Transportation had fourth-quarter revenues, including fuel surcharges, of $560.1 million, fourth quarter 2001. Net earnings were $20.0 million, compared to $13.0 million a year earlier. Revenues for 2002 totaled $2.1 billion compared to $2.112 billion in 2001. Net earnings for the year were $63.5 million versus $27.2 million.
Fourth-quarter revenue per loaded mile was $1.4221 versus $1.4214 a year earlier and 1.3 cents higher than third quarter. Revenue per tractor per day was $528 versus $512. Deadhead was 13.79% versus 15.12% in the fourth quarter of 2001. Swift's unmanned truck count at year end was 156, down from 650 at the end of first quarter 2002. Its operating ratio in fourth quarter was 93.5% versus 95.4% a year earlier.
U.S. Xpress
U. S. Xpress enterprises posted fourth quarter net income, before one-time charges, of $1.4 million compared to a loss of $599,000 in the fourth quarter of 2001. Revenues for the quarter were $229.4 million, up 13.8%. Net income for the year, before extraordinary charges, was $3.2 million compared with a loss of $1.1 million in 2001. Revenues were $862.35 million versus $798.03 million.
Truckload revenue, excluding fuel surcharges, increased 11.9% to $200.6 million for the quarter. Revenue miles per tractor was 28,605, up 3.8% from a year ago. Average revenue per mile was $1.263, up 2.4%. Empty miles dropped from 10.43% to 9.75%. Average number of tractors in the fleet rose 4.1% for the quarter and 3.6% for the year. Operating income of the truckload operations was $6.3 million for the fourth quarter, almost double the $3.2 million posted fourth quarter 2001.
Xpress Global Systems (formerly CSI/Crown) had fourth-quarter revenues of $31.8 million with a 23% increase in the floor covering logistics operation and a 32% increase in the airport-to-airport operation.
USA Truck Inc.
USA Truck has fourth-quarter operating revenues, before fuel surcharges, of $67.29 million, a 9.7% increase from fourth quarter 2001. Net income decreased 15.6% to $526,746. For 2002, operating revenues, before fuel surcharges, increased 9.9% to $268.5 million. Net income increased 139.3% to $2.6 million.
"We saw continued top-line growth during the fourth quarter," said Chairman and CEO Robert Powell. "Freight demand remained relatively strong throughout the quarter, though Christmas week brought diminished volume due to the mid-week holiday."
Average revenue per mile was $1.245 versus $1.176 a year ago. Average miles per tractor per week dropped slightly, from 2,397 to 2,271. Powell said they lost some ground in equipment utilization due to the mid-week holiday, unmanned tractors and other operational factors. The empty-mile factor dropped from 10.25% a year ago to 8.71%. Average number of tractors in the fleet was 1,919 versus 1,755. Operating ratio was 96.75%, the same as fourth quarter 2001.
Powell said their efforts to reign in driver pay have yielded steady cost reductions over the past several quarters. USA Truck adjusted about a third of the existing driver fleet to a lower pay scale in mid-December, which had some impact on the fourth quarter but will have a much greater impact in 2003. He also noted that driver recruiting expense have gone up due to the company's strict safety standards, and are likely to remain higher than usual in early 2003.
Werner Enterprises
Werner posted $17.6 million net income on operating revenues of $352.4 million for the fourth quarter, compared to $13.7 million on $320.5 million for fourth quarter 2001. For the year, operating revenues were $1.34 billion versus $1.27 billion in 2001. Net income was $61.6 million, compared to $47.7 million.
Chairman and CEO Clarence Werner said freight demand for the quarter continued to be consistently better than the same period a year ago, but much of Werner's improvement was attributed to the company's plan to limit fleet growth and maintain a diversified freight base emphasizing consumer non-durable goods. Werner said it raised its operating margin to 7.9% compared to 7.1% and increased revenue per mile by three cents, to $1.257. Average revenue per loaded mile was $1.39 versus $1.36.
The truckload carrier's daily ratio of "loads available to trucks available" improved beginning in mid-April. However, Werner said January 2003 freight demand is comparable to the weaker freight demand in January 2002. Its largest freight market, retail and consumer products, is about 55% of Werner's total freight base. The holiday selling season was generally below expectations and most of Werner's largest customers reported lower positive same-store sales growth in recent months.
Werner said it will continue to be diligent with its plans to keep fleet growth at a slower rate until margins and returns are at least consistent with percentages achieved in the 1990s.
Concerns regarding the new engines prompted Werner to increase the purchase of trucks with pre-October engines, reducing the average age of company trucks from 1.5 years to 1.2 years, but it said truck buying during the first half of 2003 will be much lower than 2002. The number of trucks purchased in the second half will depend on the company's ongoing testing and evaluation of the new engines. Industry concern regarding EPA '02 engines did boost the value of Werner's used trucks, giving it a $1.7 million gain on the sale of equipment in fourth quarter compared to a $200,000 loss in fourth quarter 2001.
Average diesel fuel prices during fourth quarter 2002 tracked at the second highest fourth-quarter level in the last six years, averaging some 20 cents per gallon higher in fourth quarter 2002, Werner said. Fuel prices so far in January 2003 are tracking about 35 cents per gallon higher than the same period a year ago. Through automatic fuel surcharge programs, the carrier said it recouped much of the higher cost of fuel, except for miles not billable to customers, out-of-route miles and truck engine idling.
