Truckload giant Swift Transportation expects to raise its contract rates 4 percent this year, the CEO of the $2.9 billion trucking operator said Friday.
“We’re on track” to a 4 percent price hike, Swift founder Jerry Moyes told The Street. “We think we can continue that this year and probably going into next year also.”
Swift, the nation’s second-largest truckload carrier, is experiencing what Moyes called “good steady growth” in freight demand, backed by consumer spending.
“The consumer is spending money out there,” he told The Street’s Debra Borchardt in an interview, though higher fuel prices have dampened that spending.
Excluding fuel surcharges, Swift’s revenue increased 9.7 percent year-over-year in the first quarter to $621.1 million. The carrier’s profit was $3.2 million.
A 5.9 percent increase in trucking volume and 4 percent increase in average rates helped push up revenue. Weekly revenue per tractor increased 5.6 percent.
“We’re seeing pretty good steady growth,” Moyes told The Street. “We saw it slow down when the price of oil went up, but it’s been pretty steady.”
Higher fuel costs are pinching the company, despite its ability to recover fuel costs through surcharges. The surcharge “lags a little bit,” Moyes said.
Fuel costs for Swift, which owns 12,100 tractors and has 4,000 owner-operators, climbed 42 percent in the first quarter from a year ago to $150.3 million.
Fuel surcharge revenue was up 55.2 percent to approximately $137.8 million, about 18 percent of Swift’s total first quarter revenue, according to company data.
Shippers don’t welcome rate hikes “with open arms,” Moyes said, “but they’re accepting it and they understand our situation. We’re having costs go up.”
He also said the 2011 rate increases represent “a little bit of a catch up” following widespread truck price chopping during the recession.
“We’re excited for the next two or three quarters and more importantly for the next four or five years,” Moyes told The Street.