Quarterly Reports Show Truckload, LTL Carriers Face Different Challenges
Truckload carriers continue to expand sales faster than less-than-truckload carriers, even though they are getting less than half of the freight rate increases realized by LTL carriers. But TL profits are lagging because their business model
Truckload carriers continue to expand sales faster than less-than-truckload carriers, even though they are getting less than half of the freight rate increases realized by LTL carriers. But TL profits are lagging because their business model gives them much more exposure to fuel prices and driver wages, which have both risen sharply recently.
Conversely, LTL carriers have been more successful raising prices than expanding volume. Over the past year, adjusted for rate increases, LTL carriers expanded volume 6.8%, well below the 11.8% expansion achieved by TL carriers.
Summary spring quarter financial results for 29 carriers show sales up 12.3% from a year ago. This closely matches Heavy Duty Trucking's estimated year-to-year change in freight volume (+8.6%) and freight rates (+4.0%). Sales gained 3.8% from the previous quarter, slightly better than HDT's 3% estimate for the sum of increased freight volume and higher freight rates.
Profits were 9.9% above the same quarter last year. Carriers attributed the year-to-year decline in the profit margin to unrecovered fuel costs, lower prices realized on equipment sales and higher driver costs.
Profits were 35.2% higher than the winter quarter. The doubled profits reported by Yellow and J B Hunt accounted for 40% of the industry profit gain for the quarter.
About 20 mostly smaller carriers have yet to report financial results.
TL carriers, impacted more heavily by higher fuel and driver costs, reported profits down 10.2% from the same quarter last year on a 14.2% sales gain. LTL carriers reported profits up 22.4% on a sales gain of only 12.4%.
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