SEARCH searchBY TOPIC
right_division Green SCM Distribution
Bookmark us
sitemap
SCDigest Logo
 
 
 
distribution

Focus: Transportation Management

Feature Article from Our Transportation Management Subject Area - See All
 

From SCDigest's On-Target E-Magazine

- Nov. 18, 2014 -

 

Logistics News: Large US LTL Carriers Throw Big Profit Party in Q3

 

Four out of Five LTL Carriers Deliver Strong Double Digit Profit Growth on Rising Volumes, as Operating Ratios Almost Reach Respectability

 


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 Q3 2014 earnings reports in the last few weeks.

 

SCDigest Says:

start
The freight market was characterized by most as fairly strong in Q3, with several noting service issues with the rails and capacity issues in truckload helped to drive some additional freight to LTL carriers.
close
What Do You Say?
Click Here to Send Us Your Comments
feedback
Click Here to See Reader Feedback

Last week, we covered the US rail carriers (see Rail Carriers Enjoy Mostly Blow Out Q3 on Strong Volume Growth) and the week before the truckload sector (see Q3 2014 Truckload Carrier Review and Comment).

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 companies report their numbers does not allow for a apples to apples comparison with the more dedicated LTL providers.

 

While not exactly basking in the glow of rail sector profitability, the long financially challenged LTL sector had one of the better quarters it has seen in quite some time, although as usual YRC Worldwide wasn't exactly invited to the party.

 

Net income for the group as a whole was up 98% over Q3 2013, with gains of 40.3%,  29.5%, 39.4%, and 26.1%, respectively at ARCBest (ABF Freight,) Old Dominion, Conway Freight's LTL unit. and SAIA.

 

YRC Worldwide only eked out a profit of $1.2 million on $1.3 billion in revenue, but in a sense actually contributed strongly to overall sector profitability by erasing the $44.4 million lost it incurred in Q3 2013.

 

Operating ratios (operating expense divided by operating revenues, and key transport industry metric) for our group were down to 92.1%, from 93.1% last year. Net income as a percent of revenue rose to an almost respectable 5.2%, from just 3.7% in 2013.

 

While most of the carriers did well, Old Dominion once again blew away the field in almost every measure, seeing revenue growth of almost 19%, and driving its OR down in Q3 to 83.0%% from 84.1% in 2013. The next closest LTL carrier was Saia with an 91.8%, almost 9 percentage points higher than Old Dominion's number.

 

The freight market was characterized by most as strong in Q3, with several noting service issues with the rails and capacity issues in truckload helped to push some additional freight to LTL carriers.

 

The full table of Q3 LTL results is below:

 

Q3 2014 LTL Carrier Results

 

For Quarter Ending Oct. 31, 2014 Data in $Thousands
Carrier YRC Worldwide ARCBest/ABF* Old Dominion Conway** Saia Total Carriers
Total Operating Rev Including Fuel $1,322,600 $711,295 $743,586 $946,306 $332,544 $3,723,787
Change 2014 from 2013 5.6% 14.1% 20.6% 5.2% 13.5% 9.8%
LTL Tonnage 1.2% 7.2% 18.7% 0.2% 8.2% 7.1%
Net Income $1,200 $19,618 $77,909 $71,889 $16,278 $186,894
Change 2014 from 2013 Had loss of $44.4 million in Q3 2013 40.3% 29.5% 39.4% 26.1% 98.4%
Net Income as % of Revenue 2014 (total is unweighted average) 0.1% 2.8% 10.5% 7.6% 4.9% 5.2%
Net Income as % of Revenue 2013 -3.5% 2.2% 9.8% 5.7% 4.4% 3.7%
LTL Operating Ratio 2014 (total is unweighted average) 98.0% 95.0% 83.0% 92.5% 91.8% 92.1%
LTL Operating Ratio 2013 99.5% 95.3% 84.1% 94.3% 92.5% 93.1%
* Includes numbers from its Panther Express Unit, except for tonnage data 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 Expenses that would be included in full net income number as is posted for the other carriers



(Transportation Management Article Continued Below)

 
CATEGORY SPONSOR: SOFTEON

Learn More about Softeon's Innovative Supply Chain Solutions

 
 

For the full year to date, results in the sector were OK, but certainly not as strong as was seen in Q3..

 

2014 LTL Carrier Results First 9 Months

 

First 9 Months 2014 Data in $Thousands      
Carrier YRC Worldwide ARCBest/ABF* Old Dominion Conway** Saia Total Carriers
Total Operating Rev Including Fuel $3,851,100 $1,947,845 $2,066,849 $2,734,836 $962,673 $10,600,630
Change 2014 from 2013 5.3% 13.2% 18.4% 13.1% 12.0% 8.8%
LTL Tonnage 2.9% 5.9% 15.9% NA NA  
Net Income -$73,900 $31,633 $197,645 $173,475 $38,422 $367,275
Change 2014 from 2013 Had $84 million loss in 2013 478.8% 24.3% 41.9% 8.0% 54.1%
Net Income as % of Revenue 2014 (total is unweighted average)  -1.9% 1.6% 9.6% 6.3% 4.0% 3.9%
Net Income as % of Revenue 2013 -2.3% 0.3% 9.1% 4.7% 4.1% 3.2%
LTL Operating Ratio 2014 (total is unweighted average) 99.6% 95.0% 84.1% 93.7% 93.5% 93.2%
LTL Operating Ratio 2013 (total is unweighted average) 99.2% 97.5% 85.0% 94.9% 95.4% 94.4%
* Includes numbers from its Panther Express Unit, except for tonnage data and 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 Expenses that would be included in full net income number as is posted for the other carriers

 

 

In the section below, we break out key points made in each carrier's earnings releases and analyst presentations. The LTL carriers in general don't usually have a whole lot to say, we will note.

 

YRC Worldwide


Consolidated operating income increased from $5.8 million to $26.7 million, a $20.9 million increase from the third quarter of 2013.

The operating ratio at YRC Freight unit was just was 99%, versus a much better 94.9% its Regional Transportation unit, and pattern that continues on.

Said that during the quarter, the Regional operating companies focused on pricing improvements to manage capacity and reduce short-term revenue equipment rentals. This strategy decelerated tonnage growth throughout the third quarter, but increased profitability. Improving pricing while balancing capacity will continue to be the focus for the Regional segment moving forward.

The company burned through $26.3 billion in cash for operating activities in the quarter.


ArcBest/ABF Freight


At ABF Freight, third quarter revenue was $523.4 million, an 11% increase over $471.0 million in the same period last year. Operating income increased to $24.7 million from $17.2 million in third quarter 2013.

During the quarter, ABF Freight was said to have benefited from an LTL freight environment that was positively impacted by improving economic trends, tighter industry capacity amid driver shortages, and additional LTL shipments associated with service and demand constraints in other transportation modes

As experienced throughout the first half of the year, the pricing environment was positive, and ABF Freight was able to obtain price increases needed to improve operating margins. Third quarter total revenue per hundredweight increased by 3.0% over last year and improved 2.1% versus this year's second quarter.

Earlier this month, ABF Freight implemented a 5.4% increase in general rates and charges effective today. This increase, the second GRI implemented during the year, impacts approximately 35% of ABF Freight's business.


Old Dominion

For the quarter, revenue increased 20.6% to $743.6 million from $616.5 million for the third quarter of 2013. Net income was $77.9 million for the third quarter of 2014, up 29.5% from $60.1 million for the comparable quarter of 2013.

For the first nine months of 2014, revenue was $2.07 billion, an increase of 18.4% from $1.75 billion for the first nine months of 2013. Net income for the first nine months of 2014 rose 24.3% to $197.6 million from $159.0 million for the same prior-year period.

Company said its 20.6% growth in revenue was once again driven primarily by increasing its market share, as based on customer service.

Yield was up about 2.2%, a general proxy for rate changes.

To keep pace with our revenue growth, Old Dominion has increased the number of full-time employees by over 2,000 employees, or 14.6%, over the past twelve months, with 868 of those new employees hired during the third quarter of 2014.

Firm expects capital expenditures for 2014 to be approximately $385 million, including planned expenditures of $132 million for real estate and expansion projects at existing facilities, $206 million for tractors, trailers and other equipment and $47 million for technology and other assets.

 

The company once again expects to fund the remainder of its 2014 capital expenditures primarily with cash flow from operations.

Conway Freight

 

Had revenue of $946.3 million, a 5.2 percent increase from last year's third-quarter revenue of $899.3 million. Revenue in the quarter benefited from improved yield.


Delivered an pperating income of $71.9 million, a 39.4 percent increase from the $51.6 million earned in the year-ago period. The higher operating income was attributable to increased pricing and an improved composition of freight in the network.

 

Revenue per hundredweight, or yield, increased 5.3% from the previous-year third quarter. Yield excluding fuel surcharge also was up 5.3%.


Total tonnage was up 0.2%, while tonnage per day declined 0.6 percent compared to the 2013 third quarter.

 

The operating ratio of 92.4% in the 2014 third quarter improved from 94.3% in the previous-year period.

"Our LTL company benefited from a solid rate environment supported by firm demand in the quarter," said Douglas Stotlar, Con-way's president and CEO.

Saia

Revenues were $332.5 million, an increase of 13.5%.

LTL tonnage increased 8.2% as LTL shipments were up 7.6%.

Said that "Customers have responded favorably to our consistent and reliable service offering which was the catalyst for our 4.3% improvement in LTL yield for the quarter."

Added that "The investment in sales resources we made late last year has helped us build momentum on the top-line and our operations group has responded well to the increased volumes, providing 98% on time service in the third quarter."

Said that in July, it increase wages for the fourth year in a row.


Any reaction to our Q3 2014 LTL segment review? Let us know your thoughts at the Feedback button (for email) or section (for web form) below.

 


   
 

Recent Feedback

 

No Feedback on this article yet

 

 
   
.