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Focus: Transportation Management

Feature Article from Our Transportation Management Subject Area - See All
 

From SCDigest's On-Target E-Magazine

- May 21, 2014 -

 

Logistics News: Q1 2014 LTL Carrier Review

 

Old Dominion Continues to Shine, While Rates Seen Up Just 1-2% but Firming as Q1 Ended


SCDigest Editorial Staff

 

We're finishing up this week SCDigest's regularly quarterly review of the results and comments from leading transportation carriers by mode, this week for the less-than-truckload carriers, as the last of them finished up their Q1 2014 earnings reports in the last two weeks.

SCDigest Says:

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Saia was able to improve LTL pricing by 2.3% in the quarter, said CEO Rick O'Dell.
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Last week, we covered the US rail carriers (see Q1 2014 Rail Carrier Review) and the week before the truckload sector (see Q1 2014 Truckload Carrier Review).

Here we look at five major LTL carriers. The analysis, however, does not include either FedEx (the largest LTL provider) or UPS, because the way both report the numbers does not allow for a apples to apples comparison with the more dedicated LTL providers.

 

For three of the four quarters we provide results for both the just closed quarter as well as year-to-date numbers, but as nearly all carriers operate on a calendar year basis, after Q1 the quarter and year-to-date are obviously the same, so the latter is unneeded.

All told, it was a rather ho-hum quarter for the LTL sector, as YRC Worldwide continued to struggle, Old Dominion as usual blew away the field, and the carriers seemed to be able to raise rates, but modestly.

As with the truckload and rail carriers, extremely bad winter weather in much of the country in Q1 had a big impact on operations and profits, the LTL carriers said.

 

After briefly achieving a operating profit in 2013, YRC Worldwide had an operating loss of about $32 million in Q1, and a net loss of some $70 million. However, YRC said $20 million of the operating loss could be attributed to the bad winter weather in the quarter.

 

Operating ratios operating ratios (operating expanse divided by operating revenues, and key transport industry metric) were basically flat versus 2013, at 97.1%, but that number masks big differences amoung our five carrier group.

 

Old Dominion once again well outperformed its competitors, driving its OR down in Q1 to 87.1% from 87.8% in 2013. Conversely, YRC and ABF Freigth Systems both had operating ratios in the 102% range, meaning operating expenses were 2% more than operating revenues - not good. Conway Freight had an OR of 97.8%, while Saia managed a respectable 94.9%, but even that was more than seven percentage ppoints about the Old Dominion number.

 

There weren't a lot of specifics on rates, but the comments and revenue per hundredweight numbers implied rate gains of 1-2% in the quarter, on decent gains in volumes, although again here the group average is skewed by Old Dominion, which amazingly saw tonnage increase almost 14% in Q1, leading to a gain in net income of 13.2%.

 

The full table of results is below:

 

Q1 2014 LTL Carrier Results

 

For Quarter Ending March 31, 2013 Data in $Thousands
Carrier YRC Worldwide Arkansas Best/ABF* Old Dominion Conway** Saia Total Carriers
Total Operating Rev Including Fuel $1,210,900 $577,904 $620,276 $848,027 $299,730 $3,257,107
Change 2014 from 2013 4.2% 11.0% 15.2% 2.5% 9.5% 6.8%
LTL Tonnage 2.5% 5.4% 13.9% 0.3% 5.7% 5.5%
Net Income -$70,200 -$5,193 $45,887 $18,565 $8,576 -$2,365
Change 2014 from 2013 Had loss of $24.5 million in Q1 2013 Had loss of $13.3 million in Q1 2013  13.2% 15.9% -6.3% -108.5%
Net Income as % of Revenue 2014 (total is unweighted average) -5.8% -0.9% 7.4% 2.2% 2.9% 1.2%
Net Income as % of Revenue 2013 2.1% -2.6% 7.5% 1.9% 3.3% 2.5%
LTL Operating Ratio 2014 (total is unweighted average) 102.7% 102.8% 87.1% 97.8% 94.9% 97.1%
LTL Operating Ratio 2013 99.1% 105.5% 87.8% 98.1% 94.7% 97.0%
 
* Includes numbers from its Panther Express Unit, except for OR percents
** The Conway numbers refer only to its LTL group, not the business as a whole, which includes Menlo Logistics, a truckload business, and other units.
Conway Income refers to Operating Income only for LTL group, before other expensesthat would be included in full net income number as is posted for the other carriers.



(Transportation Management Article Continued Below)

 
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In the section below, we break out key points made in each carrier's earnings releases and analyst presentations, although the the releases tended to be rather terse this quarter.

 

YRC Worldwide


Carrier had a consolidated operating loss of $32.4 million.

"This was one of the worst winter seasons in my more than 30 years in trucking. We estimate that it negatively impacted our operating income by approximately $20 million. The main culprits were lower volumes, decreased productivities and higher use of purchased transportation," stated CEO James Welch.


Workers comp and cargo claims in Q1 were $13.2 million, much attributed to weather incidents.


Said that "The good news is that during the first quarter of 2014, we laid the foundation for our future operational improvements based on changes provided by the recently ratified MOU" - meaning the extension of various concessions from the Teamsters union in early Q1 through 2019.


YRCs regional busines continued to perform much better than its national unit. The national unit has an operating ratio of 104.3% in the quarter, versus 98.3% for regional group.

Arkansas Best/ABF Freight


Arkansas Best Corporation, parent of ABF Freight, changed its name to become ArcBest Corporation.

The estimated operating income impact of first quarter severe weather at ABF Freight was
approximately $10.5 million. ABF Freight's pre-tax first quarter pension settlement charges equaled $2.9 million. Tose two numbers together basically account for the $12.2 operating loss at ABF in Q1.

"The improving economy and tightened industry capacity have contributed to a positive pricing
Environment," the company said, although revenue per hundredweight was up just .7%.

ABF Freight implemented a general rate increase during the last full week of March.

The previously announced consolidation of smaller ABF Freight facilities began in the second half of 2013, with the initial closing of 8 terminals. During the first quarter of this year, 22 additional ABF Freight facilities were shuttered by mid-March.


Old Dominsion

"Old Dominion achieved strong financial results for the first quarter of 2014, which included a company record for quarterly revenue despite the negative impact of the severe winter weather," the company noted.

Said that revenue growth accelerated throughout the quarter, and that this momentum has continued thus far into April.

The 87.1% operating ratio was a Q1 record.

Old Dominion opened new service centers in Newburgh, NY and Bend, OR.

Capital expenditures for 2014 are expected to be approximately $367 million, including planned expenditures of $132 million for real estate and expansion projects at existing facilities, $188 million for tractors, trailers and other equipment and $47 million for technology and other assets.

LTL revenue per hundredweight, excluding fuel surcharges, increased 2.2% despite the negative effect on this metric from the increased weight per shipment and decreased average length of haul.


Conway Freight

Revenue per hundredweight, or yield, increased 1.0% from 2013.

"As the quarter progressed, demand strengthened which supported a firm pricing environment," the company said.

 

Saia

Company was able to improve LTL pricing by 2.3% in the quarter, said CEO Rick O'Dell.


Added that "With the operational challenges of the first quarter weather behind us, we are encouraged about our prospects for the remainder of 2014.
"


Any reaction to our Q1 2014 LTL segment review? Let us know your thoughts at the Feedback button (for email) or section (for web form) below.

 


   
 

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