Average LTL, Truckload Operating Ratios Rise

Average LTL, Truckload Operating Ratios Rise

Average truckload and less-than-truckload operating ratios climbed in the first quarter, hitting their highest points in at least a year, according to the JOC.

Average Operating Ratio by Trucking Segment - For Publicly Owned LTL and Truckload CarriersAverage Operating Ratio by Trucking Segment

The rise in the average operating ratios indicate truckload and LTL carriers are struggling with higher operating costs, especially labor and equipment-related expenses.

The JOC average LTL operating ratio — based on the ORs of an $18.5 billion group of trucking companies — climbed to 97 from 95.7 in the 2012 fourth quarter.

The LTL average, which had dipped into the mid-90s last year from 98 in the 2012 first quarter, has been below 100 since the second quarter of 2011.

The JOC average truckload operating ratio — based on the ORs of a $10.4 billion group of carriers — climbed to 91 in the last quarter from 89.1 in the fourth quarter.

That was the first time the JOC average truckload OR rose above 90 since the first quarter of 2012, when it was 90.8, and the second time since the 2011 first quarter.

Operating ratios measure expenses as a percentage of revenue, and are widely used in trucking as a measure of profitability and financial health and stability.

An operating ratio above 100 indicates a company is losing money before taxes, interest, depreciation and other charges not included in operating expenses.

The lower the operating ratio, the better. Truckload ORs tracked by the JOC have averaged 89 over the last eight quarters, while LTL ORs averaged 95.8.

The Journal of Commerce tracks operating ratios as part of its quarterly JOC Trucking Dashboard. The next dashboard will be published June 10.

Contact William B. Cassidy at wcassidy@joc.com and follow him at www.twitter.com/wbcassidy_joc.