The trucking industry shrank rapidly last year, as the worst financial crisis in decades eliminated billions of dollars in freight revenue and erased years of growth at many carriers.
The nation’s largest trucking companies emerged from the recession much smaller than they’ve been in several years, and there were fewer of them by the end of 2009. However, some companies made gains at the expense of competitors, even as their own revenue dwindled. Market share shifted between carriers and industry segments, with more industrial freight apparently moving to the ground networks of UPS and FedEx.
|Combined revenue for the 50 largest U.S. motor carriers dropped 17.2 percent in 2009, according to The Journal of Commerce’s list of the Top 50 Trucking Companies, prepared by SJ Consulting Group. Revenue at the Top 50 carriers fell from $94.9 billion in 2008 to $78.5 billion last year, the group’s lowest level since 2005, breaking a five-year streak of growth that added more than $30 billion to trucking’s top line.
That was a hard shift into reverse gear for a carrier group that had grown 18.1 percent since 2005 and 33.7 percent since 2003, the first year the Top 50 list was published.
It was the first stumble for the carriers on the Top 50 list since the economic downturn early in the last decade. Their combined revenue shot up 11.9 percent in 2004, when tight less-than-truckload and truckload markets pushed rates up in the high single digits. Their revenue kept climbing, albeit at a slower pace, right through the year the recession began, even rising 6.1 and 4.3 percent in 2007 and 2008 as the downshift some called a “freight recession” took hold.
The sharp recession pulled the rug out from under trucking companies of all kinds last year, dragging down revenue at all but one of the Top 50 carriers as it hit package firms, LTL and truckload carriers, dedicated fleet operators and refrigerated, tank-trailer and flatbed haulers.
The Top 50 carriers represent only a fraction of the more than 227,000 companies in the for-hire trucking business. Nearly 88 percent of U.S. motor carriers operate six trucks or less, and 93 percent operate fewer than 20 trucks, according to the American Trucking Associations. But the Top 50 carriers represent a significant number of the larger companies, which makes the list a bellwether for the fortunes of the industry.
In 2008, the Top 50 carriers listed by The Journal of Commerce accounted for 14.4 percent of the $660.3 billion in trucking revenue reported by the ATA in its latest Trucking Trends report. If the decline among the Top 50 reflects results for the industry as a whole, trucking took a nearly $114 billion hit last year, with revenue down to $546.7 billion.
The list underscores the broad damage the recession inflicted on U.S. industries in 2009 — not just trucking but the manufacturing and retail businesses that ship freight. Almost all of the Top 50 carriers were hit hard, with revenue falling at year-over-year rates ranging from 42 percent at Vision Logistics Holdings, a flatbed carrier group and No. 44 on the list, to 3.5 percent at the Shevell Group, parent of LTL carrier New England Motor Freight and truckload carrier Eastern Freight Ways, which ranked No. 33 on the list.
The select group of trucking companies with more than $1 billion in annual revenue shrank last year, as four companies fell below the revenue threshold.
That left 13 motor carriers in trucking’s billion-dollar club. Those companies had combined revenue of $58.3 billion in 2009, 74.2 percent of the total revenue for the Top 50 carriers. Altogether, that was a 16 percent drop from the $69.4 billion in revenue the same group of carriers had the previous year, according to SJ Consulting.
In addition to FedEx and UPS, the billion-dollar club included five less-than-truckload carriers and six truckload carriers. The LTL carriers were YRC Worldwide, Con-way, ABF Freight System, Estes Express Lines and Old Dominion Freight Line.
The truckload carriers were J.B. Hunt Transport Services, Schneider National, Swift Transportation, Landstar System, Werner Enterprises and U.S. Xpress Enterprises.
Four trucking companies saw revenue drop below the $1 billion threshold in 2009, Crete Carrier, Greatwide Logistics, C.R. England and Saia.
The biggest shift came amid companies with $600 million to $799 million in revenue. In 2008, there were 12 in that range; last year, there were five. The number of companies with $400 million to $599 million in revenue rose from 17 to 19. There were seven companies on the list with less than $400 million in revenue last year. In 2008, there were none.
Revenue at the Top 50 ranged from $322 million at Central Refrigerated Service to $21.8 billion at UPS. (SJ Consulting figures may vary from those reported by the companies, as it excludes non-trucking revenue from its estimates when ranking the Top 50.)
Sales declined between 10 and 30 percent at 42 of the carriers, evenly divided at 21 each for the 10 to 20 percent and 20 to 30 percent ranges. Only three companies saw revenue decline less than 10 percent: the Shevell Group, UPS and FedEx. Five companies saw revenue plunge more than 30 percent from 2008, including Vision Holdings, YRC Worldwide, Allied Holdings, Anderson Trucking Service and Universal Truckload Services. With the exception of YRC Worldwide, those companies are all truckload carriers, with Vision specializing in oil field hauling and Allied in car hauling.
Only one of the Top 50 defied the recession and raised its revenue in 2009 — Prime, a specialized truckload carrier based in Springfield, Mo. Prime, which ranked No. 14 on the list, boosted its sales 9.8 percent in 2009, according to SJ Consulting. The refrigerated, flatbed and tank trucker had $992 million in revenue last year, up from $895 million in 2008.
The company also defied conventional wisdom by adding trucks at a time when excess capacity permeated the truckload market, putting downward pressure on rates. Prime added about 20 percent in tractor capacity in 2009, SJ Consulting said.
Prime’s success illustrates how companies pursue opportunities even in a down market. Prime may have benefited from the troubles of smaller competitors. The flatbed industry, in particular, was hit hard by the decline of the construction business. Several flatbed carriers folded last year, culminating in Arrow Trucking’s collapse in December, which left hundreds of drivers stranded and freight scattered across the country.
Despite the enormous pressure on their top and bottom lines, none of the carriers listed in 2008 went out of business in 2009. Two were dropped from the list — P.A.M. Transportation Services and DHL. P.A.M. revenue fell 28.2 percent last year to $291.9 million, pushing it off the bottom of the list. DHL exited the domestic U.S. market.
Two companies were added to the list — Vision and Central Refrigerated.
UPS and FedEx topped the list, as they have done consistently since FedEx knocked LTL trucker YRC Worldwide from the No. 2 spot in 2006. At UPS, SJ Consulting included UPS Freight and ground-based package revenue in its estimates, but not supply chain or international revenue. At FedEx, it included revenue from FedEx Ground and FedEx Freight, FedEx National LTL and FedEx Custom Critical.
The combined trucking-related revenue of UPS and FedEx dropped 7.9 percent in 2009 to $32.8 billion, compared with $35.6 billion in 2008, SJ Consulting said. Trucking revenue fell 7.6 percent at UPS, while dropping 8.6 percent at FedEx.
|But even as revenue declined, UPS and FedEx increased their share of the revenue generated by the Top 50 carriers to 41.7 percent last year, a 10.1 percent rise. That’s a gain of 4.2 percentage points over 2008, when they had 37.5 percent of the list’s revenue.
Some of that gain apparently came at the expense of less-than-truckload competitors. The 14 LTL carriers on the list of Top 50 trucking companies saw their share of the group’s revenue drop 10.2 percent, or 2.5 percentage points, from 2008. Those LTL companies had $17.1 billion in trucking revenue, according to SJ Consulting.
That indicates UPS and FedEx were able to use the scale and flexibility of their sprawling integrated ground and air networks to draw freight from LTL competitors in 2009.
The list provides more evidence for FedEx’s fierce battle with YRC Worldwide for the top spot in the LTL market. Since 2003, FedEx has widened its lead in Top 50 revenue share over YRC Worldwide by 7.7 percentage points. The companies held almost equal share of the Top 50’s revenue in 2003. That supports trends noted in an LTL study completed by SJ Consulting for The Journal of Commerce in March. That study, published March 15, found FedEx Freight increased its share of the LTL market to 14.4 percent by the end of 2009, while YRC’s share slipped to 17.5 percent.
Excluding YRC Worldwide, UPS Freight and FedEx Freight, the 12 remaining LTL carriers on the Top 50 list had $11.9 billion in revenue last year, a 16.5 percent decrease over 2008 and their worst collective performance since 2004.
The Top 50 include 30 truckload carriers, from multibillion-dollar companies J.B. Hunt, Schneider National and Swift Transportation, to $382 million USA Truck and specialized carriers such as FFE Transportation Services and Central Refrigerated Service. The truckload group generated $26.4 billion in revenue in 2009, a 21 percent slide from $33.4 billion in 2008. The Top 50 list also includes three companies that primarily offer shippers dedicated fleet services — Greatwide Logistics, Ruan Transportation Management Services and Ryder System. Combined, their revenue decreased 19.5 percent last year to $1.9 billion, compared with $2.4 billion in 2008.
Contact William B. Cassidy at email@example.com.