Supply Chain Digest (scdigest.com) ) recently did a quarterly review of five LTL carriers: Conway, YRC Worldwide, Saia, Arkansas Best and Old Dominion.
The analysis of Q2, 2012 results for LTL carriers has unveiled a lot. Despite the previous year’s poor performance of companies in the sector, the Q2 results for this year indicate that there is still light at the end of the tunnel. The firms in the industry have been implementing cost reduction strategies and networking efficiencies. These measures have proved to deal with previous LTL issues, especially in the last few quarters as there have been increases in contractual rates of about 4-5% each period.
With the exception of YRC worldwide, all of the five publicly traded LTL carriers made a net profit in Q2 of this year. All five carriers also had operating ratios of less than 100%. Although the profitability of the sector is still below the truckload and rail sectors, this has not been the case in a long while.
Old Dominion has been an exception to the poor performance. With an operating ratio of 84.7%, a drop from last year’s figure of 86.5%, and upward gains in market share, the company is doing as well as the truckload carriers and continues to expand with a current total of 218 service centers. On the other hand, Saia had increases in tonnage by a small margin of only 1.1%. Nonetheless, both its profits and revenues rose rapidly in Q2. It also had significant improvements in operating ratio from 96.9% last year to 92.6% in Q2 this year.
After a series of losses in the previous quarters Arkansas Best/ABF also joined the rest in making profits. The company has expanded its non-asset base with the recent acquisition of Panther, a non- asset based expeditor. Its LTL problems regarding a lawsuit are no longer a hindrance.
Upon being asked to comment on the quarters relatively good results, Conway attributed their current performance to continued price improvement, operating efficiency and effective cost controls. YRC worldwide is currently expecting improvements in productivity as it is deploying 10,000 new handheld devices.
Overall, the sectors performance in Q2 has been generally better than the combined half-year results. The companies are quite optimistic that the streak of good performance and increased profitability has just begun and is yet to continue. Time will tell.
Follow the link to the original analysis – http://www.scdigest.com/ONTARGET/12-08-22-2.php?cid=6123&ctype=content