Profit, Revenue Drop at Heartland Express

Overcapacity and depressed truckload rates put a dent in revenue and profit at Heartland Express during the third quarter, but the company continued an extensive overhaul of its tractor fleet as it positions itself for long-haul recovery.

The North Liberty, Iowa-based carrier’s third-quarter net income fell 22.5 percent year-over-year to $14.5 million while its revenue dropped 33.3 percent to $113.4 million.

"The current recession and extended economic downturn continues to impact our nation," the carrier said in a statement. "Excess capacity in our industry continues to exist, resulting in downward pressure on freight rates and reduced demand for freight services from our shippers."

Despite signs that some of the core industries served by truckload carriers are beginning to recover, Heartland didn't have high hopes for the fourth quarter. The company said it "still has not seen any strong indicators of improvements in the demand for freight services that would increase our levels of business in the near future."

Heartland added 690 new Class 8 tractors in the quarter as part of a fleet upgrade, taking an unspecified number of older trucks out of service. It has purchased 1,151 new International Pro Star tractors to date in 2009, and expects to buy 449 more by the end of the year.

The new tractors are compliant with 2010 Environmental Protection Agency emissions rules. As a result, they cost approximately 22 percent more than previous models, Heartland said. However, they do improve fuel efficiency through aerodynamics, speed management and idle control.

The company's fuel cost per mile decreased 42.7 percent in the quarter, while fuel prices were 39.8 percent lower than a year ago.

Heartland also improved its operating ratio -- operating expenses as a percentage of operating revenue -- a key measure of profitability and a company's ability to control costs. The third quarter OR was 80.2, down from 83.2 a year ago.

Contact William B. Cassidy at wcassidy@joc.com.