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- May 28, 2014 -


Supply Chain Graphic of the Week: Q1 2014 US Carrier Operating Performance by Mode


Rail Carriers as Usual Simply Far more Profitable than Truckload and LTL, as Old Dominion and Union Pacific Continue to Impress


By SCDigest Editorial Staff



We just finished our Q1 2014 review of truckload, rail and LTL carriers results and trends for the first quarter of 2014 (see Q1 2014 Rail Carrier Review, Q1 2014 Truckload Carrier Review, and Q1 2014 LTL Carrier Review).

We'll take that occasion to once again present some interesting comparisons on operating metrics across each of these three modes in Q1, as shown in the graphic below.


Q1 2014 US Operating Metrics by Mode
  Truckload Sector Rail Sector LTL Sector
Average Net Income as a Percent of Sales 4.0% 16.30% 1.2%
Best Net Income as a Percent of Sales 7.7% 19.3% 7.4%
Knight Transportation Union Pacific Old Dominion
Average Operating Ratio 92.4% 71.5% 97.1%
Best Operating Ratio 82.0% 67.1% 87.1%
Knight Transportation Union Pacific Old Dominion
Source: SCDigest Analysis


As can be seen, rail carriers as a group are simply far more profitable than truckload or LTL carriers. The average operating ratio, or operating expenses divided by operating revenue, a key metric in the transportation sector, for the rail carriers is an astounding 21 percentage points better than for truckload carriers and almost 26 percentage points better than the profit challenged LTL sector.


Note: The "average" operating ratio per mode is unweighted, meaning for example that to calculate this number for the truckload sector, we simply add the operating ratios of the sevel TL carriers we follow and then divide by seven. Size of the carrier in revenues is not factored in.


In LTL, however, one has be impressed with on-going numbers posted by Old Dominion, which continues to far outperform the rest of the LTL market. It came in with an OR 10 percentage points points better than the LTL sector average, and was even more than 5 percentage points better than the truckload sector average.


Union Pacific, by the way, has promised reiterated to reach a full-year operating ratio of under 65% before 2017, and seems well on its way to doing so.


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