Increased inventory restocking and improving industrial output helped the U.S. trucking industry halt and then reverse a steep decline in revenue last year as carriers eased away from a financial crisis that erased several years of expansion from their books.
The nation’s largest trucking companies still have a long way to go, however, as they struggle to recover from the recession. Last year’s progress is a benchmark those carriers will use as they try to rebuild revenue, pricing and profit in 2011, as increasingly tight domestic transportation capacity boosts their pricing power.
Combined revenue for the 50 largest U.S. motor carriers rose 9.4 percent to $85.4 billion in 2010, after shrinking 17.7 percent in 2009, according to The Journal of Commerce’s list of the Top 50 Trucking Companies, prepared by SJ Consulting Group. Truckload carriers outpaced other companies among the Top 50, growing 11.1 percent on average last year. Parcel and same-day carriers increased revenue an average of 9.3 percent, while less-than-truckload carriers grew 6.5 percent.
Commentary: Shifting Lanes.
It was the best performance by the companies on the list since 2004, when the carrier group increased its revenue 11.9 percent after the 2001-03 downturn. The Top 50 carriers reversed four years of slower growth or declining revenue in 2010. But that $85.4 billion in revenue was still 10 percent lower than the Top 50 list’s 2008 peak revenue of $94.9 billion, a sign trucking’s recovery is far from complete. The carriers recovered only 44 percent of a $16.8 billion shortfall in 2009.
In terms of total revenue, last year was the best year for the Top 50 carriers since 2006, when they posted a combined $85.3 billion in revenue. But the recession wiped out 30 percent of the group’s 51 percent expansion between 2003 and 2008.
The 9.4 percent gain in revenue for the Top 50 list closely tracks a 9.8 percent increase at the 25 largest LTL carriers reported last month by SJ Consulting Group, another indication a broad if still moderate economic recovery is under way, powered by stronger industrial production and consumer purchasing.
U.S. consumers increased spending for the eighth straight month in February, despite widespread winter storms in January and February. Manufacturing output increased almost 7 percent in 2010, according to the Federal Reserve Bank.
Trucking companies are eager for a more complete recovery in 2011, although they face obstacles such as higher fuel prices and a stubbornly high unemployment rate. The most recent Cass Freight Index showed shipments up 6.9 percent in March from February and 13.8 percent year-over-year, while freight spending by shippers rose 6.3 percent in March, on the heels of a 12.5 percent increase in February. Year-over-year, freight payments were up 33.6 percent in March, according to the index.
The Top 50 trucking companies are only a fraction of the more than 227,000 for-hire carriers registered with the Department of Transportation. Only 7 percent of U.S. motor carriers operate more than 20 trucks, according to the American Trucking Associations, and 88 percent operate six trucks or less.
But the Top 50 list represents a significant number of the largest U.S. motor carriers and the capacity accessed by the country’s largest shippers, making the list a bellwether for the fortunes of the trucking industry.
Those fortunes improved dramatically in 2010. Revenue at 42 carriers on the Top 50 list increased between 1.2 percent and 28.9 percent last year, and the average rate of revenue growth for those 42 carriers was 12.1 percent. Only eight carriers saw their revenue drop, falling 0.9 percent to 11 percent, or 4.3 percent on average.
That’s an impressive turnaround from 2009, when revenue fell at all but one of the Top 50 trucking companies between 3.5 percent and 42 percent.
In 2010, the Top 50 carriers ranged in revenue from UPS, with about $21.8 billion in freight and ground package revenue, to Central Transport, a 45-state LTL carrier with approximately $354 million in revenue, according to the SJ Consulting study.
The biggest trucking companies got bigger in 2010, with three additional companies crossing the billion-dollar revenue threshold for a total of 16 billion-dollar-plus carriers. Those carriers had combined revenue of $66.5 billion, 77.9 percent of the total revenue for the Top 50 list and a 14.1 percent increase from 2009.
In addition to UPS and FedEx — the only companies on the list with more than $10 billion in annual revenue — the billion-dollar club included six companies with $2 billion to $5 billion in sales: YRC Worldwide, J.B. Hunt Transport Services, Con-way, Swift Transportation and Landstar System. The eight carriers with $1 billion to $2 billion in trucking revenue were Werner Enterprises, U.S. Xpress Enterprises, Arkansas Best (owner of ABF Freight System), Estes Express Lines (the largest privately owned LTL carrier in the U.S.), Old Dominion Freight Line, R+L Carriers, Prime and Greatwide Logistics, an asset-light dedicated carrier.
The number of truckers in the $800 million to $999 million revenue category declined as R+L, Prime and Greatwide all topped $1 billion in revenue, but four companies moved up to the $600 million to $799 million revenue category: — truckload carriers CRST International, Covenant Transport Group and Universal Truckload Services and Canadian-based cross-border LTL operator Vitran.
The number of carriers on the list with less than $600 million in revenue dropped by five, to 23 last year, and only four carriers had less than $400 million in sales, compared with six in 2009. Two carriers fell from the list: Central Refrigerated Transport and Vision Logistics Holdings, owner of Ace Transportation.
A newcomer to the Top 50 list was also the fastest-growing carrier in the group in 2010: Mercer Transportation, a flatbed and dry van truckload carrier in Louisville, Ky. Mercer increased its revenue 28.9 percent to about $364 million in 2010, according to the SJ Consulting study. The second-fastest growing carrier was LTL and truckload operator Roadrunner Transportation, which increased trucking sales 26.2 percent to approximately $569 million, the study said.
Altogether, six companies increased trucking revenue more than 20 percent, including truckload and intermodal carriers Universal Truckload Services, USA Truck, CRST International and NFI Industries. Eight companies increased their revenue 15 to 20 percent: Landstar System, Old Dominion Freight Line, Con-way, J.B. Hunt Transport Services, Prime, Greatwide Logistics, FedEx and Estes.
Fourteen carriers increased revenue 10 to 15 percent, and another 14 companies increased sales less than 10 percent, according to SJ Consulting Group.
The 2010 Top 50 list included 33 truckload carriers — three more than in 2009 — from multibillion-dollar carriers J.B. Hunt Transport Services, Swift Transportation and Schneider National to Western Express, NFI Industries, Comcar Industries and Mercer, whose revenue ranged from $432 million to $364 million, the study said.
As a subgroup, the truckload carriers had $30.9 billion in combined revenue.
There were 14 LTL companies on the list, from YRC Worldwide to Central Transport, with combined revenue of $18.3 billion. Several of those LTL companies, including YRC Worldwide and Con-way, also have truckload operations or subsidiaries, and both FedEx and UPS have LTL freight subsidiaries.
The SJ Consulting study underscores the shift of freight toward the integrated carriers — UPS and FedEx — and truckload operators. Although parcel and same-day carriers represented only 6 percent of the Top 50 carriers in 2010, they accounted for 42.4 percent of the group’s revenue. Among the top 10 carriers on the list, UPS and FedEx account for 60 percent. Truckload carriers represented 66 percent of the companies and 36.1 percent of the revenue, while LTL trucking companies accounted for 28 percent of the carriers and 21.5 percent of the revenue.
The Top 50 list also is increasingly privately held. Over the past five years, the number of publicly owned trucking companies declined from 29 to 24 carriers. That’s despite several initial public offerings, including Swift Transportation’s $806 million IPO and Roadrunner’s $148 million stock launch last year.
The increasing importance of logistics and dedicated carriage is evident in the presence of Greatwide Logistics, Ruan Transportation Management, Ryder System and Penske Logistics among the Top 50. Those companies increased their combined revenue from dedicated fleets 6.8 percent last year, according to the study. In addition, many of the other carriers also offer dedicated carriage services.
The list includes five carriers specializing in refrigerated freight: Prime, C.R. England, Stevens Transport, Marten Transport and FFE Transportation Services. Two carriers on the list specialize in tank car operations, $772 million Kenan Advantage Group and Quality Distribution, which increased revenue 14.9 percent and 13.9 percent, respectively, according to the SJ Consulting study.
Contact William B. Cassidy at email@example.com.