After hitting record gross revenue and net revenue in the second quarter, Echo Global Logistics sees more opportunity in helping shippers secure space in an increasingly tightening market.
In fact, it sees so much opportunity that the third-party logistic provider recently told investors that it expects to reach $2 billion in revenue in 2017. That’s more than twice the revenue it achieved in 2013, when it ended the year with $884.2 million in business, a 16.7 percent rise from the prior year.
“The bottom line is that capacity remains tight overall, and rates remain well above historical averages,” Dave Menzel, chief operating officer, said during an earning call in which the Echo reported a 2.4 percent year-over-year net income increase to $4.2 million in the second quarter. Revenue jumped 36 percent year-over-year to $305 million in the same period.
So far, Echo seems to be on track to hit its 2017 revenue goal, thanks largely to tightening truckload capacity. The majority of Echo’s second-quarter growth came from a 36 percent jump in truckload volume, driving revenue from the sector up 57 percent to nearly $160 million. The average revenue per shipment rose 16 percent year-over-year and 1 percent from the first three months of the year, reflecting stronger truckload pricing. The sequential gain in revenue per shipment was “notable,” considering the 15 percent sequential gain in the first quarter, thanks to severe winter weather exacerbating already tight truck capacity, Menzel said on July 25, according to a SeekingAlpha transcript. Menzel was promoted to president today.
The company’s truckload net revenue margin improved 93 basis points in the second quarter compared to the same period in 2013, and truckload net revenue margin increased 42 basis points. The year-over-year increase and the sequential increase — a reversal from what Echo has seen in past years — points to not just more freight, but also more profitable loads.
Echo’s less-than-truckload volume expanded 10 percent year-over-year, with the third-party logistics provider getting on average 8 percent more revenue per shipment. That lifted LTL revenue 19 percent to $111.1 million in the same period.
“Our increase in revenue per shipment was driven by increased rates from LTL carriers overall, and our acquisition of One Stop Logistics, which averaged higher weight per shipment across their customer base,” Menzel said.
Echo’s intermodal revenue expanded 24 percent year-over-year to $197.7 million, as it new intermodal technology platform helped offset a deterioration of rail service. As with J.B. Hunt and C.H. Robinson, poor rail service has cost Echo some intermodal business, although the company didn’t disclose how much.