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From SCDigest's On-Target E-Magazine

- March 4, 2014 -

Logistics News: LTL Carrier Profitability Continues to Improve in Q4, Full 2013

Profits as Usual Nicely Out Run Volume Growth; Union Pacific Continues to Lead the Pack

SCDigest Editorial Staff

It's still a struggle for all but Old Dominion, but LTL carriers as a whole continue to inch towards something close consistent if weak profitability.

SCDigest Says:

YRC was able to restructure much of its debt, so that "for the first time in the last five years, we do not have the overhang of any near term debt maturities."

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As always, SCDigest is here this week with a review of Q4 and full year 2013 results from our group of four publicly traded less-than-truckload carriers: YRC Worldwide, Arkansas Best/ABF Freight, Old Dominion, Conway Freight and SAIA.

That includes both summary tables of financial and operating results as well as any noteworthy commentary from the various Q4 earnings releases. Both should be of interest to shippers.

Last week, we did the same for major rail carriers (see Rail Carriers See Generally Strong Results for Q4, Full 2013), and before that we covered the results for the major truckload carriers (see Lackluster Q4 Ends Decent 2013 for US Truckload Carriers).

For the LTL group, SCDigest notes we do not include the results for major LTL providers FedEx and UP for reporting reasons: FedEx is on an off financial calendar that makes comparisons with thes others difficult, and UPS has that issue plus it does not break out its LTL and truckload segments.

All five LTL carriers were in the black in Q4 - a relative rarity - though troubled YRC eked out just $400,000 in net income on $1.2 billion in revenue. Still, that was a lot better than the $35 million loss it had in Q4 2012.

All told, revenue for the group was up a solid 5.8% for the quarter, though comments seemed to indicate the rate environment was weak, with prices up just 1% or so, well down from gains the sector had seen more recenty.

All the carriers except YRC managed to drive their operating ratios, or operating expenses divided by operating revenue, a key metric in the transportation sector, down below the 100% level. The unweighted average for the group fell to 95.3% from 96.4% in 2012.

Old Dominion's amazing money machine kept rolling on, with revenues up 11%, profits up more than 19%, and an OR of just 87%, far better than number 2 Saia's 94.7%. The full table is below.

US LTL Carrier Q4 2013 Results

(Transportation Management Article Continued Below)

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Largely similar results for the full year, except YRC had a big loss of $83 million, though again down from $136 million for 2012. That helped actually increase total profits for the group by 39% for the year.

And even YRC managed to get its full year operating ratio under 100% for the year, though just barely, at 99.4%. The group average was 94.7%, with Old Dominion at just 85.5%.

The table is below.

US LTL Carrier Q4 2013 Results

Comments from the LTL carriers in their earnings releases are generally quite pithy, but we share a few below.

YRC Worldwide

Consolidated operating income in Q4 increased $4.3 million to $28.4 million.

Noted that its "2013 operating performance was slightly improved compared to 2012, and though better, we were hampered by execution challenges of the YRC Freight network optimization in the second and third quarters of 2013, driver shortages during the summer months and tough winter weather late in the fourth quarter."

After a surprising call for the Teamsters union to extend previous concessions set to expire in 2015 through 2019, the union at last acquiesced, and YRC was able to restructure much of its debt, so that "for the first time in the last five years, we do not have the overhang of any near term debt maturities."

The company's regional unit continues to far outperform in national LTL business. The OR for national was 1015, versus 95.4% for the regional division.

ABF Freight

Noted that its new five year agreement with Teamsters has been key to improved results and more flexibility to operate in the market. Also cited" improve account pricing" as key to LTL results.

Its Panther Expedited unit, acquired a couple of years ago, brought in $247 million in 2013 revenue vs $1.7 billion for AB Freight.

Old Dominion

Said its continued growth came from "continuing to win market share by providing our customers with an unmatched value proposition of superior on time, claims-free service at a fair and equitable price."

Added that it "will continue to be disciplined with respect to our yield management process, as we believe yield improvement has been a key driver of our financial success and is critical for funding the ongoing investments necessary to provide best-in-class service."

Conway

Said that in 2013 it had completed the rollout of several transformative projects designed to improve revenue management and operating efficiencies, and that "We expect these foundational initiatives to contribute to improved results in 2014."

Revenue per hundredweight, or yield, increased 0.9% from the previous-year fourth quarter. Excluding the fuel surcharge, yield rose 1.5%.

Saia

Noted that "Investments in technology, equipment and continuous on-going employee training have allowed Saia to post its ninth consecutive quarter of 98% on-time service."

Truckload carriage continues to grow faster than LTL, up 19% in tonnage versus 2.9% for LTL in the quarter. TL represented 15% of total tonnage.

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