Trucking | Looking Good

At least companies are looking good. Read that first line a couple of times and let it sink in.

Looking good - From Fleetowner.com

Despite a tight labor market and higher fuel costs, most Truckload and LTL carriers showed remarkably higher profits for the first quarter.

Did you get that? Despite a “driver shortage” and higher fuel costs, (most) everyone’s making money!

How much money? Same article -

For example, SCS Transportation posted net income of $2.6 million, a 97% increase over the same period last year. CNF Inc. said profits rose 47% mainly because of its Con-Way Transportation division. J.B. Hunt, the nation’s largest publicly held truckload carrier, posted net income of $33 million, compared to $11.2 million a year ago.

A 97% increase over the same time last year? 47% and a $22 mil increase of net? Not too bad for a driver shortage and skyrocketing fuel costs.

How’d they do that?

Industry observers say that fleets that charged for detention fees, instituted fuel surcharges early on and continued to run lean operations did best.

The big surprise was that the bogeyman of productivity loss from new hours-of-service regulations either didn’t materialize as expected or was mitigated by detention fees or other factors.

Carriers would never cry wolf about anything,right?

Research estimated that fleets have seen declines of only 1%-5% due to HOS-related productivity — a far cry from the 10 to 19% many fleets had been predicting.

For some LTLs, the new rules even helped.

Can’t have an article about how well the industry is doing without keeping in mind the bad news. (That wasn’t meant to be sarcastic. Really.)

First, fuel costs are rising. According to Celadon Group chairman and CEO Steve Russell, fuel surcharges did the trick last year but may not do the job in 2004 if prices continue to rise. So far, diesel averages almost 25 cents more than it did a year ago and shows no signs of abating. “Fuel charges are covering 75-80% of incremental increases,” he says.

Then CHARGE MORE. How tough was that? In order to make a profit, they’ll have to. And I’m sure they will.

Of course the dreaded “Driver Shortage” monster raises it’s ugly head, again.

The other issue that could cause heartburn is finding qualified drivers. “Our number-one concern for ‘04 is driver turnover; our number two concern is driver turnover; our number three concern is drivers; our number four concern is drivers,” Marten Transport Chairman Randy Marten told the Bear Stearns audience. Added Covenant Chairman David Parker: “Everyone has a driver problem; it’s putting a lid on capacity.”

I’m tired of discussing it, but here it goes, again. RAISE WAGES. To keep and attract drivers, PAY MORE. Looks like you can afford it!
We have a happy ending -

However, as we move into the second quarter, most industry executives are optimistic for the rest of the year. “April had started off consistent with the first quarter and the second quarter will be just as strong,” concludes SCS’ Burton.