Werner Revenue, Profit Drop 30 Percent

A weak freight market slashed revenue and profit in the second quarter for truckload carrier Werner Enterprises.

Revenue decreased 30 percent to $403.1 million compared to $578.2 million a year earlier. Trucking revenue, excluding fuel surcharges, declined 16 percent to $310.1 million. Brokerage revenue declined 25 percent to $50.5 million. Net profit fell 30 percent to $12.7 million.

Average revenue per shipment declined 20 percent due to lower fuel prices and lower customer rates, Werner said. Shifting significantly more shipments from third-party capacity providers to the company’s own truckload segment helped cushion the impact of a soft freight market but slashed brokerage income. The weak freight economy lowered the number of industry freight shipments, Werner said. But freight volumes improved from the extremely weak shipping levels during the first quarter.

Werner said freight improved seasonally as the quarter progressed from April to May to June 2009. However, since June 2008 was the strongest freight month of the year, comparisons were difficult.

Werner adapted to the softer freight market by reducing its fleet size by 10 percent year-over-year. Fewer trucks and a 16 percent shorter length of haul reduced the company’s total miles by 14 percent over this same period. Lower capacity also took some pressure off of rates and the need to book unprofitable freight.

The company does not expect a meaningful improvement of its operating ratio in the near term, unless there is an improvement in the freight market or a reduction in capacity due to an increase in carrier failures. Based on current market conditions, the company does not plan to make further significant reductions to its fleet, unless there is a significant decline in the freight market or a loss of customer business.

Contact Thomas L. Gallagher at tgallagher@joc.com.