US and UK trucking struggle to fight off sluggish economy

European and US road haulage sectors struggle to maintain momentum while trying to put the global financial crisis behind them

By Rob McKay | August 3, 2010

Road haulage sectors in Europe and the US are struggling to maintain momentum as they battle to put the global financial crisis behind them.

This was particularly so in the first quarter of calendar 2010.

The latest European haulage rate figures from Capgemini Consulting and Transporeon show the average price index 2010 fell 5.9 index points to 88.9 in the first three calendar months.

"This price drop is remarkable, based on the upward trend seen in 2009 and given limited changes in available capacity," the firms say in their Transport Market Monitor.

With available transport capacity at the same pre-crisis level but prices trending back down, Transporeon Managing Director Peter Förster was moved to ask: "to what extent the transport market has been structurally changed?"

The European trend appeared to be borne out to a point in the US.

Though US trucking companies painted a brighter picture for the rest of the year, its peak body, the American Trucking Association (ATA), was not sure it would last.

ATA Chief Economist Bob Costello pointed to two sequential decreases in its seasonally adjusted For-Hire Truck Tonnage Index as evidence of US economic deceleration.

Despite that, truck capacity has declined to the point that carriers will continue to make gains even with slower overall economic growth.

"Due to supply tightness in the market, any tonnage growth feels significantly better for fleets than one might expect," Costello says.

In the meantime, US trucking firms are enjoying the respite.

With first quarter and full year results emerging, Celadon Group reported revenue rises of 18.9 percent and 6.8 percent respectively, while freight revenues rose 12 percent.

"The freight environment has improved consistently over the past four months, as operating capacity has declined in the industry, and the average age of over-the-road trucks has continued to increase," Chairman and CEO Steve Russell says.

Universal Truckload Services has a better story. Reporting last quarter and last half-year results, it recorded a 28.7 percent revenue rise in the quarter and 24.9 percent in the half.

"Our second quarter has been a continuation of trends seen earlier in the year," Universal's President and CEO Don Cochran says.

"Load counts, rates and margins are showing signs of recovery in the truckload, brokerage and intermodal segments of the business.

"We are encouraged with the economic climate and our results in the second [calendar] quarter and we are cautiously optimistic that these trends will continue for the second half of [calendar] 2010."

Old Dominion Freight Line recorded its first quarterly double-digit tonnage increase in two years.

"The 16.5 percent increase in our second-quarter revenue was driven by a 13.4 percent increase in tonnage . . . was the result of a 6.9 percent increase in shipments and a 6.0 percent increase in weight per shipment," Old Dominion President and CEO David Congdon says.

Not so good but still positive was the performance of less than truckload specialist SAIA.

Revenues were $231 million, up 6 percent from the prior year quarter.
Operating income was $5.9 million compared with an operating loss of $0.4 million in the prior year quarter.

LTL tonnage increased by 1.6 percent from the same quarter last year as LTL shipments per workday were down 2.4 percent.

There was a 4.1 percent increase in weight per shipment.

"I am encouraged that improvements in the environment during 2010 have permitted us to implement prudent pricing actions allowing us to produce materially better results than the prior year quarter," President and CEO Rick O’Dell says.

"These pricing actions have resulted in deselecting a number of unprofitable accounts and obtaining increases on the majority of our contracts that were renewed during the quarter.

"This is a clear reversal from the pricing and challenging volume environment in which we have been operating."

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