Higher first quarter volume and revenue at Landstar System reflect rising freight demand and truck rates, despite and perhaps in part thanks to severe weather.
Load volume rose 2 percent in February, while revenue per load was up 7 percent, Henry Gerkens, chairman and CEO of Landstar, told financial analysts on March 6.
“We are clearly off to a good and fast start in 2014,” Gerkens said in a mid-quarter conference call. He expects first quarter revenue of $640 million to $690 million.
A 7 percent overall revenue increase last month followed a 4.1 percent revenue gain in January, “despite adverse weather conditions across the U.S.,” Gerkens said.
Revenue per load, which was down in October and November, began climbing in December at Landstar, the fifth-largest U.S. truckload carrier by revenue and No. 8 in JOC’s ranking of the Top 50 Trucking Companies.
Historically, the first quarter is the weakest for Landstar and the trucking industry in general, and the first two months are among the weakest in the year.
Although the weather has been a drag on the U.S. economy, Landstar may have benefited as shippers struggled to clear backlogs and get business back to normal.
The fact that revenue per load rose 7 percent at Landstar in February on a 2 percent gain in load volume indicates truckload rates are climbing higher as well.
Stronger demand from existing and new customers and tight truckload capacity have created “a very good pricing environment” heading into March, said Gerkens.
However, stronger rates do put more margin pressure on Landstar’s brokerage business, which accounts for about 40 percent of its trucking revenue.
Spot market truck rates were unusually high in January and February, as shippers turned to the spot market for truck capacity, according to DAT Solutions.