The 3.2% first-quarter GDP figure released by the Commerce Department seems to portray a...

The 3.2% first-quarter GDP figure released by the Commerce Department seems to portray a stronger volume environment than was experienced by the trucking industry.

Source: Company Reports, Tahoe Ventures, LLC Estimates

The 3.2% first-quarter GDP figure released by the Commerce Department seems to portray a stronger volume environment than was experienced by the trucking industry, judging by first quarter fleet earnings at press time.

The accompanying table shows some of the key operating statistics and performance indicators in those earnings reports. The companies are ranked in order of the percentage point (basis point) improvement in operating margins.

Pure truckload

Truckload carriers saw the greatest average improvement in operating margins, 125 basis points, despite a surprisingly weak 1.4% revenue decline, compared to fourth-quarter revenues that grew by 8.8%. Fleet size shrank by an average of 1.5%, but 6.4% higher revenue per mile almost offset a 6.8% decline in miles driven. We attribute the decline in miles driven to changes in length of haul, and to carriers shuttling trucks out of the over-the-road divisions into dedicated truckload. USA Capacity Solutions and and PAM Transport took top honors in improving their bottom lines, but overall, operating margins retreated to a median of 7.9%, down from 12.5% in the previous quarter.

Dedicated truckload

More and more companies are breaking out dedicated truckload, and there are some interesting observations here. Median revenue growth was 16.9% (strong, but down from 21.1% in 4Q), with an average operating margin of 8.3%, a 60-basis-point improvement over the 7.7% margins reported a year ago. Fleet growth remained strong at 11.5% (versus fourth-quarter growth of 15.7%), so this is where all the new trucks are going. Despite the short-haul nature of dedicated operations, miles per truck actually rose 4.4%, on a 6.6% improvement in yield (down from 8% in the fourth quarter). Top honors here went to Marten’s dedicated division, improving margins by 450 basis points.


Winter weather affected a number of LTL carriers. We saw 10% fourth-quarter revenue growth drop to 2.6% in the first quarter, with a 4.4% median tonnage decline, on a 5.4% improvement in revenue per hundredweight. Top honors went to FedEx Freight, which reported a 2,500-basis-point improvement in operating margins, driven by an industry-leading 8.5% revenue growth rate. LTL labor costs only rose 3.9%, compared to the 9.7% increase among truckload companies. The median industry profit margin dropped from a record high 8.9% in the fourth quarter to 4.8% in the first quarter, which was 5 basis points lower than the prior year.


Intermodal profits fell by 102 basis points, from a very robust increase of 397 basis points in the fourth quarter. This likely was the result of high inventories because of goods pre-shipped in the fourth quarter ahead of proposed tariffs, and weather-related railroad system breakdowns in the first quarter. Top honors this quarter went to Hub Group’s intermodal division, which reported a 190-basis-point improvement in operating profits. Surprisingly, intermodal loads were down 6% on average.

The takeaway

The first quarter for freight companies was likely much worse than trend, as they were affected by severe winter weather; the pre-tariff shipping; a drop in rail industry fluidity, and a late Easter. However, pricing appears to be holding, despite anecdotal reports of rapid decline. We believe the inventory overhang on truckers will remain until the summer, with plans for capital expenditures likely to moderate as margins deteriorate.

Jeff has been a recognized trucking and transportation authority for almost 30 years, most notably heading freight transportation research for Merrill Lynch, and today runs transportation consulting firm Tahoe Ventures. He can be reached at

About the author
Jeff Kauffman

Jeff Kauffman

Contributing Economic Analyst

A recognized authority in trucking, logistics and transportation equipment, Jeff Kauffman has been a frequent contributor to national news outlets on economic and trucking industry trends. The longtime global head of freight transportation research for Merrill Lynch, he now heads up his own transportation consulting firm, Tahoe Ventures. He is also principal at Vertical Research Partners.

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