William B. Cassidy | Sep 13, 2011 11:56AM EDT
Swift Transportation recently won a dedicated carriage contract from Wal-Mart Stores that will generate between $60 million and $80 million in additional revenue.
The three-year deal expands Swift’s dedicated business with Wal-Mart in the Southeast, adding four Wal-Mart distribution centers to the dedicated operation.
Each of the Wal-Mart distribution centers represent between $15 million and $20 million in annual revenue, said Richard Stocking, Swift’s president and chief operating officer.
“We will be taking over service of these new four facilities within the next six weeks, which will help us in our goal to increase our loaded miles,” Stocking said.
Wal-Mart has been working to drive routing and load efficiencies throughout its logistics network, mitigating rising energy and transportation costs.
In a Sept. 12 conference call with investment analysts, Stocking said the new Wal-Mart business was under way in Alabama and Florida.
“It was probably our largest one-time win sale in our company’s history,” said Stocking, bringing the total number of Wal-Mart DCs managed by Swift to nine.
Wal-Mart accounts for about 10 to 11 percent of the $2.6 billion trucking company’s business, and that percentage will probably rise to 12 to 13 percent, Stocking told analysts earlier in the summer.
There are “at least five separate, whole separate departments that we deal with from Sam’s to the grocery facilities,” said Jerry Moyes, Swift CEO and founder.
Moyes said the company is on track to increase its load volume and raise pricing in the second half of 2011, as customers shift more freight to the truckload carrier.
For the first half of 2011, the nation’s largest truckload carrier had a $22.8 million net profit, compared with a $76.1 million loss in the first half of 2010.
The company expects to buy 200 day-cab tractors for its intermodal drayage business and to support its expanded dedicated contract with Wal-Mart.
Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter at @wbcassidy_joc
