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From SCDigest's On-Target E-Magazine

- Feb. 18, 2015 -

Logistics News: Even Less-than-Truckload Carriers Join the Q4 Profit Party

Net Income up Almost 100% for the Group, as Old Dominion Keeps it Going

SCDigest Editorial Staff

When even the generally financially beleaguered less-than-truckload (LTL) sector throws a profit party in Q4, it's clear these were very good times for US freight transportation providers indeed.

SCDigest Says:

sual Old Dominion led the way, seeing revenue up 21.7%, tonnage up 19.8%, And net income up 48%, with its operating ratio falling to 84.4%, 9 percentage points better than its nearest competitor Saia.

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We're back as usual every quarter with our review of the results and trends across freight modes. Two weeks ago we started with US rail carriers, which also enjoyed a very positive Q4. (See US Rail Carriers Enjoy Generally Strong Q4, as Union Pacific Again Leads the Way.)

Last week, we covered the US truckload sector, which we characterized as having had a "blow out" quarter in Q4, with profits up sharply (see Truckload Carriers have Blow Out Q4 on Strong Rate Gains.)

This week, it's time for a look at the LTL sector and the five public carriers we follow. We'll note that does not include two of the largest LTL providers - UPS and FedEx - because neither UPS nor FedEx breaks out their numbers in a way that allows the LTL portion to be isolated out from other freight business such as truckload carriage (FedEx) and supply chain services (UPS).

In general, it was a great quarter for the LTL carriers, as most described a strong overall freight environment complemented with favorable pricing trends for the carriers.

YRC Freight, for example, achieved total revenue per hundredweight (including fuel surcharge) increases of 4.8% in October, 6.9% in November and 5.7% in December, with those numbers being a reasonable proxy for rate increases, especially with fuel costs falling for most of the fourth quarter.

Conway Freight saw its LTL unit operating profit up more than 200% in Q4. YRC had profits of only $6.2 million on $1.2 billion in revenue - but that was up more than 1000% from the $400,000 profit it eked out in Q4 2013. YRC also saw an operating profit of $32.8 million in the quarter, up from a loss in Q4 2013.

With everyone seeing a strong rise in net income, profits for the group in total were up 96% in Q4, on revenue gains of a solid 8.5%.

Operating ratios, or operating expense divided by operating revenue, a key metric in the transport sector, were down for all five of the carriers we follow, with the unweighted average falling to 93.6% from 95.3% in Q4 2013. It was not that long ago the average for the group was closer to break even, near 100%.

But of course as usual Old Dominion led the way, seeing revenue up 21.7%, tonnage up 19.8%, And net income up 48%, with its operating ratio falling to 84.4%, 9 percentage points better than its nearest competitor Saia, a striking advantage.

Full q4 results below:

LTL Sector Q4 2014 Operating Results

Source: SCDigest

(Transportation Management Article Continued Below)

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Results weren't quite as strong for the full year, though profitd for the group were up 54.8% over 2013.

LTL Sector Full Year 2014 Operating Results

Source: SCDigest

As usual, we end with some selected comments from each carrier's earnings reports, though once againl the LTL carriers did not have a lot to say compared with their rail and truckload brethren.

YRC Worldwide

Consolidated operating income increased $32.8 million, from an operating loss of $1.6 million, to operating income of $31.2 million.

"On a year-over-year basis during the quarter, YRC Freight achieved total revenue per hundredweight (including fuel surcharge) increases of 4.8% in October, 6.9% in November and 5.7% in December.

"The year-over-year increase in yield continued the trend that began in the third quarter and continued to pick up momentum, especially when compared to the results excluding fuel surcharge and is a testament of improving base rates and fundamental pricing," the company said.

Interestingly, the gap in performance between YRC's Freight business and its regional business closed. In Q4, the operating ratio for YRC regional was 97.5%, versus 96.9% for YRC Freight. In 2013, it was 102% for YRC Freight and 94.7% for regional. No real explanation was offered for this change.

ARCBest/ABF Freight

Solid fourth quarter business growth at ABF Freight resulted in an 11% increase in revenue and improved operating margins.

Full year 2014 revenue increased 14% to $2.6 billion, with 27% of the total revenue generated by the emerging businesses (Panther Logistics, its moving and storage business) nearly four times the percentage of total corporate revenue versus just five years ago.

Old Dominion

Q4 revenue increased 21.7% to $721.0 million from $592.5 million for the fourth quarter of 2013. Net income rose 48.2% to $69.9 million for the fourth quarter of 2014 from $47.2 million for the comparable quarter in 2013.

Revenue for full year 2014 increased 19.3% to $2.79 billion from $2.34 billion for 2013. Net income grew 29.8% for 2014 to $267.5 million from $206.1 million for 2013.

Excluding fuel surcharges, revenue per hundredweight increased 3.0%, as "the pricing environment has remained favorable."

"For 2015, we expect our capital expenditures to total $463.3 million, including planned expenditures of $164.7 million for real estate and service center expansion projects, $271.8 million for tractors, trailers and other equipment and $26.8 million for technology and other assets," the company said.

Conway Freight

LTL unit has operating income of $36.8 million, a 55.1% increase over the $23.8 million earned in the year-ago period.

"The higher operating income was attributable to increased pricing and ongoing revenue management initiatives," the company said.

Saia

Q4 Revenues were $310 million , an increase of 10.7%. Operating income increased 40% to $20.6 million compared to $14.7 million.

LTL revenue per hundredweight increased by 6.0%.

"Our significant year-over-year increase in earnings per share was achieved through our balanced approach towards adding tonnage at a reasonable price," said Saia CEO Rick O'Dell.

Any reaction to our Q4 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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