Con-way Truckload is looking beyond its less-than-truckload sister company for more business from “external” customers. The former Contract Freighters is repositioning its business and its trucks to better serve outside shippers.
Its focus on Con-way Freight business meant its trucks weren’t always in the right place at the right time to gain freight in the second quarter. Empty miles increased in the quarter even though the company operated 5 percent fewer tractor-trailers than a year earlier.
Loaded miles decreased 10 percent year-over-year at a time when truckload competitors were reducing empty miles. Unpaid empty miles dropped 12.8 percent at Knight Transportation and 10.5 percent at Werner Enterprises.
The imbalance is temporary, President Herb Schmidt said, and already is improving as the carrier reduces its dependence on line-haul revenue from Con-way Freight.
“Any time you make that kind of material move, there’s going to be some pain with empty miles,” which already are “trending down. “We should be back to a normal run rate on empty miles by the end of the third quarter.”
Con-way purchased the Joplin, Mo.-based carrier in 2007 and quickly relied on its truckload services — perhaps too much. “We used it as a cushion during the downturn,” Con-way President and CEO Douglas W. Stotlar said.
In the last quarter, “What we did was try to get the total amount of affiliate business that Truckload had with Freight down to a little more reasonable level,” Stotlar said, reducing that business to about $40 million in the second quarter from $150 million a year earlier.
Con-way Truckload’s revenue increased 1.5 percent from a year earlier and 3.5 percent from the first quarter to $145.5 million, largely on higher fuel surcharges and a 2.1 percent gain in revenue per loaded mile. Its operating income dropped 25.4 percent from a year earlier to $5.1 million, but was up 70 percent from the first quarter.
The company’s length of haul is shrinking — down 9 percent year-over-year — as it shifts from team-driver units to more single-driver tractor-trailers.
“We saw the pricing environment improving and industry capacity tightening” in the second quarter, Schmidt said. “Rates are up year to date in the neighborhood of 6 cents a mile, and they’ll continue to trend up” through the peak shipping season, he said. “I expect they’ll continue to increase through October and then stabilize.”
Contact William B. Cassidy at email@example.com.