Between the lines: Q2 reports offer a look ahead
As second quarter financial statements continue to trickle in from publicly-traded trucking companies, I can’t help but scan them in search of a glimmer of hope that an industry rebound is just around the corner. Here in Canada, Vitrans filed its Q2 earnings report yesterday, showing a decrease in net income but remaining profitable and posting record revenue. In the US, the heavy hitters of the industry have been filing their reports as well, offering mixed messages in regards to what’s in store in the months ahead. Here are a few snippets that offer a bit of insight as to how the big players south of the border are faring and how they see things shaping up:
“For the second half of 2008, we expect freight demand to continue to improve somewhat but to remain less than robust. We also expect industry-wide equipment capacity to remain flat or decrease as poorly capitalized and poorly operated trucking companies shrink their fleets or fail in a difficult environment.”
– Marten Transport, Chairman and CEO Randolph L. Marten
“In 2007 and early 2008 we were dealing with a market that had excess capacity, which resulted in downward pressure on price. Due to increased fuel prices and low freight demand certain large carriers permanently reduced the size of their company iron fleets and many small carriers and single-owner operators have exited the market place, causing somewhat of a reversal in the capacity and pricing environment. Capacity tightened in the second quarter and created pricing power…I believe that tight-capacity trends will generally continue and result in a higher cost of purchased transportation for brokerage capacity. However, it will also result in generally a stronger pricing environment. I anticipate the weakness experienced in the automotive sector and in certain other accounts to continue into the back half of the year. However, that weakness should be offset, totally, by strength in other accounts.”
– Landstar Systems financial statement
“With respect to pricing and rates, the overall rate market has shifted from a rate decrease market to a rate stable market. If freight demand improves in the third quarter, the potential exists to begin obtaining necessary rate increases in the second half of 2008.
– Werner Enterprises financial statement
“The Company anticipates beginning a tractor fleet upgrade in the third quarter. The upgrade is expected to include the purchase of approximately 1,600 International ProStar tractors. Delivery of tractors is scheduled to begin during the third quarter of 2008 and will continue through 2009. The Company will also take delivery of 400 2009 Wabash trailers during the second half of 2008.”
– Heartland Express financial statement
“Conditions in the truckload industry have been challenging, characterized by suppressed freight volumes due to the slowing U.S. economy and record diesel fuel costs. This difficult operating environment appears to have caused an escalating exodus of truckload capacity from the marketplace. Our internal efforts, coupled with diminishing industry capacity, have resulted in a stabilization of our pricing and tractor utilization.”
– Clifton R. Beckham, President and CEO of the USA Truck
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