Top US truckers lead industry revenue growth

Top US truckers lead industry revenue growth

The largest of the large US trucking companies toiled uphill last year through the second economic slump since the end of the recession eight years ago, adding revenue and raising the combined top line of The Journal of Commerce’s Top 50 US Trucking Companies.

Only half the truckload, less-than-truckload (LTL), and specialized carriers on the list increased sales in 2016, however, as lower rates, lower fuel surcharges, and especially lower demand in a depressed retail and industrial freight market drew down revenue for the other half.

This may be the year companies in the Top 50 rankings, prepared for JOC.com by SJ Consulting Group, return to the type of growth they enjoyed in 2014, or at least something closer to it, as the US economy is expected to expand faster and more steadily this year.

Whether they increased revenue or not in 2016, the Top 50 trucking companies are likely to press shippers for higher rates in 2017 as freight demand accelerates. The result may not be another 2014, when truck pricing rose quickly, but 2017 won’t be a repeat of last year, either.

Low fuel prices and lower fuel surcharges pulled down the top line at many companies in 2016. If revenue was down 1 or 2 percent, fuel surcharges were the likely reason. Fuel prices started climbing in late 2016, and surcharge revenue is already heading up this year.

Many of the companies made improving profitability their focus during the 2015 to 2016 slowdown, especially after the slip in freight demand and excess capacity created by a surge in truck orders forced them off the route they had mapped during the brighter days of 2014.

As in recent years, the biggest carriers enjoyed the biggest gains, including top-ranked parcel and logistics companies UPS and FedEx and, through acquisition, XPO Logistics. Carriers specializing in dedicated trucking also experienced stronger-than-normal growth.

Total Top 50 combined revenue increased 5.8 percent last year to $129.5 billion, compared with a revised 3.4 percent gain in 2015 and a much more robust 11.3 percent increase in 2014. It was the fifth-straight year the group achieved more than $100 billion in combined sales.

The annual Top 50 ranking is a yardstick to measure trucking’s growth and track its recovery from the recession. The combined revenue of the Top 50 carriers has increased 65.8 percent since the recovery began in 2009, when the group reported $78.1 billion in revenue.

In 2009, Top 50 revenue plunged 17.7 percent from a peak of $94.9 billion in 2008. Getting back above that peak took the Top 50 carriers another two years, but trucking’s recovery in this decade proved longer and stronger than its recovery from the 2002 to 2003 recession.

Although last year’s 5.8 percent growth rate was an improvement, it still fell short of the five-year compound annual growth rate of 6.32 percent for the Top 50 trucking companies. The Top 50 have hit double-digit growth twice since the end of the recession, in 2011 and 2014.

An analysis of Top 50 growth rates shows how soft the latest two-year economic soft patch has been for truckers. In 2016, only eight of the Top 50 had growth rates above 5 percent. In 2015, that number was 10. In 2014, 40 carriers increased sales more than 5 percent.

In 2014, revenue declined at only two carriers and grew by double-digits at 25 others. Top 50 combined revenue rose 11.3 percent. In 2011, Top 50 combined revenue increased 11.6 percent, cresting after rising 9.3 percent in 2010, coming out of the recession’s deep hole.

“The overall growth of 5.8 percent is much higher than would be expected, but much of that growth is driven by the top three companies (UPS, FedEx, and XPO), which made up 47 percent of Top 50 revenue in 2016,” said Mark D’Amico, senior analyst at SJ Consulting and the lead researcher on the rankings.

Most of last year’s growth, however, came from the top of the rankings. The 10 largest companies on the list increased revenue 9 percent from 2015 to a combined $89.3 billion. That sum represents 69 percent of the combined $129.5 billion in Top 50 carrier revenue.

Excluding the two largest companies — parcel giants UPS and FedEx — the next eight largest companies, from third-ranked XPO Logistics to 10th-ranked LTL carrier Old Dominion Freight Lines, raised their combined revenue 11.3 percent in 2016, bringing in $35.4 billion.

If XPO is excluded from the top 10 carriers, the combined revenue of the remaining seven was flat at $28.5 billion. That’s a sign of the importance of e-commerce, logistics, and last-mile delivery to the growth of overall trucking revenue in 2016, compared with general freight shipping.

Again excluding the parcel carriers, the remaining 24 companies with more than $1 billion in annual revenue increased sales 6.5 percent to a combined $59.2 billion. These figures underscore how revenue in a highly fragmented trucking industry is concentrated at the top.

Even so, combined sales at the five carriers with $3 billion to $5 billion in revenue actually dropped 2 percent from 2015, to $19 billion. The 17 companies in the $1 billion-to-$3 billion category barely pushed revenue up, at 0.1 percent, to $26.8 billion.

Revenue at the next 24 carriers, those with less than $1 billion in annual sales, declined 1 percent to $16.5 billion. Only three companies increased revenue by more than 10 percent; five companies from 5 to 10 percent; six companies from 2 to 5 percent; and 11 companies from 0 to 2 percent.

On the other side of the ledger, revenue at two companies fell more than 10 percent year-over-year; 5 to 10 percent at seven companies; 2 to 5 percent at 11 carriers; and 0.2 percent at five companies.

Looking past last year, the Top 50 rankings illustrate the strong growth of the largest US carriers since 2003, when the rankings were first published, and despite the interruption of the Great Recession in 2008 to 2009 and soft patches of growth in 2012 to 2013 and 2015 to 2016.

In 2015, the $122.4 billion in combined revenue of the Top 50 represented 16.8 percent of the $726.4 billion in total trucking revenue reported by the American Trucking Associations. Excluding all but for-hire revenue, the Top 50 carriers would be even more dominant.

Last year, 26 companies on the Top 50 list had more than $1 billion in revenue, one fewer than in 2015 but seven more than in 2012. The number of billion-dollar companies on the list has more than doubled since 2003, when there were only 12 trucking operators in that revenue class.

XPO, which entered the rankings in ninth place in 2015, shot up to No. 3 as it enjoyed a full year’s revenue from its 2015 acquisition of Con-way, as well as intermodal revenue from the former Pacer International business it acquired in 2014.

The latest rankings also illustrate how trucking, at the top, is evolving into a more logistics-oriented business. UPS and FedEx have long been recognized as so-called integrators, with international air package, ground package, and freight transportation operations.

XPO doesn’t own planes, but it certainly is integrating LTL trucking in North America and Europe with last-mile e-commerce deliveries and contract logistics. And fourth-ranked J.B. Hunt Transportation Services offers intermodal, dedicated, brokerage, and truckload services.

The first “pure” trucking outfit among the Top 50 is fifth-ranked YRC Worldwide, with four LTL subsidiaries focused squarely on long-haul and regional palletized industrial freight. YRC shed non-asset and international units early in the decade as it reorganized after steep losses.

This is the second year SJ Consulting listed intermodal marketing companies, or IMCs, among the Top 50 Trucking Companies, also reflecting increased integration among transportation modes within US domestic markets, fostered by acquisitions by XPO and others.

Driving these changes are the needs of shippers who want greater control over international and domestic freight movements (which are often interlinked), lower costs, and a maximum number of service offerings from a minimal number of transport suppliers. “Customers want to do more with less, which makes a lot of sense,” said Don Orr, president of LTL carrier Central Freight Lines. “They’re concerned with velocity in their supply chains. The supply chains of most customers are changing, and in almost all cases, accelerating.”

For Central Freight, ranked No. 20 this year on SJ Consulting’s list of the Top 25 LTL trucking companies, those shipper needs led to the acquisition of Wilson Trucking in Virginia, which gave the carrier coast-to-coast coverage.

Large shippers “really appreciate the option of having one single, seamless solution for movement of goods from the warehouse to the [distribution center] to home delivery,” Bradley S. Jacobs, CEO of XPO Logistics, told JOC.com recently.

XPO recently launched an e-commerce-driven service that, combining elements of its contract logistics, LTL, and last-mile delivery businesses, will give shippers end-to-end control over fulfillment. “Why not design one engineered solution?” Jacobs said.

Shipper demand for greater supply chain control, velocity, and visibility also drove growth in dedicated trucking in 2016, and that also accounted for the increase in Top 50 revenue. J.B. Hunt and other trucking operators have been shifting more assets into dedicated service.

Dedicated trucking accounted for 23 percent of J.B. Hunt revenue in the fourth quarter, but 30 percent of the company’s operating profit, second only to intermodal, its largest business. J.B. Hunt’s Dedicated Contract Services division ended 2016 with 7,401 tractors and 22,628 trailers.

Penske Logistics vaulted onto the Top 50 rankings this year, at No. 42, thanks to a 26.7 percent increase in dedicated contract carriage revenue, SJ Consulting said. The research firm includes revenue from trucking, intermodal, and associated brokerage in its rankings.

Shippers can expect the largest truckload operators to increasingly shift drivers, trucks, and other resources toward integrated and specialized services that provide a pricing premium, compared with general dry-van, irregular route, out-and-back-again, over-the-road freight.

One area to watch is refrigerated or temperature-controlled trucking. The requirements of the Food Safety Modernization Act will drive growth in refrigerated trucking in coming years, Jeff Tucker, CEO of logistics company Tucker Company Worldwide, told JOC.com. “We’re heavy into that space, and we’re looking to lock down carriers,” he said. Tucker predicted rules requiring strict monitoring of temperatures within a chain of custody for foods and pharmaceuticals alike will lead to intermodal-like growth within refrigerated trucking.

“We think [pharmaceutical companies] with 30 to 40 percent of their freight in temp-controlled trucks will have to go to 100 percent, and there’s not enough capacity to match their need,” Tucker said. Large shippers need to comply with the 2016 sanitary food transport rule this month, while small shippers have another year to comply.

As regulations ranging from the FSMA rules to the electronic logging mandate take effect, there’s a good chance more freight will be driven to larger companies with the scale in terms of assets and financial resources to provide the capacity and data shippers increasingly need.

The largest trucking companies can expect a big year ahead.

2016 top 50 trucking companies
In millions of US dollars.
Rankparent companyPrimary ServicePublic/
Private
2015 Revenue2016 Revenue2015 to 2016 Percent GrowthSubsidiary Portfolio / Services and Comments
1 United Parcel Service of America Parcel Public $29,829 $31,770 6.5% Ground, Freight, Brokerage. Acquired Coyote Logistics in July 2015
2 FedEx* Parcel Public $20,307 $22,127 9.0% FedEx Ground, FedEx Freight, FedEx Custom Critical
3 XPO Logistics IMC Public $3,273 $6,860 109.6% Acquired Con-way in October 2015
4 J.B. Hunt Transport Services IMC Public $6,188 $6,555 5.9% Truckload, Dedicated Contract Service, Intermodal, Integrated Capacity Solutions
5 YRC Worldwide LTL Public $4,832 $4,698 -2.8% YRC Freight, Holland, Reddaway, New Penn
6 Swift Transportation TL Public $4,229 $4,032 -4.7% Dry-Van, Refrigerated, Dedicated, Intermodal
7 Hub Group IMC Public $3,526 $3,573 1.3% Hub, Mode, Unyson
8 Schneider National TL Private $3,423 $3,506 2.4% Largest privately owned trucking company
9 Landstar System TL Public $3,364 $3,172 -5.7% Dry-Van, Flatbed, LTL, Intermodal
10 Old Dominion Freight Line LTL Public $2,972 $2,992 0.6% Most profitable asset-based publicly held trucking company
11 ArcBest LTL Public $2,422 $2,496 3.0% ABF Freight, ABF Logistics, Panther Premium Logistics
12 Estes Express Lines LTL Private $2,135 $2,155 0.9% Largest privately owned LTL carrier
13 Werner Enterprises TL Public $2,094 $2,009 -4.0% One-Way TL, Dedicated, Value-Added Services
14 Prime TL Private $1,736 $1,747 0.6% Prime Refrigerated, Prime Flatbed, Prime Tanker
15 Roadrunner Transportation
Services
TL Public $1,610 $1,709 6.2% Truckload revenue growth offset LTL revenue decline
16 R & L Carriers LTL Private $1,429 $1,452 1.6% LTL, Truckload
17 U.S. Xpress Enterprises TL Private $1,542 $1,451 -5.9% U.S. Xpress, Total Transportation, Xpress Global Systems
18 Kenan Advantage Group TL Private $1,455 $1,421 -2.4% Acquired by OMERS Private Equity in June 2015; acquired Agri-Carriers Group in September 2016
19 CRST International TL Private $1,317 $1,303 -1.1% Acquired Pegasus Transportation in April 2015 and Gardner Trucking in September 2016
20 Saia LTL Public $1,221 $1,218 -0.2% Saia LTL Freight, Saia TL Plus, LinkEx
21 C.R. England TL Private $1,296 $1,210 -6.7% Truckload, Intermodal, Brokerage
22 TFI International TL Public $1,173 $1,198 2.1% US revenue only. Includes Dynamex, Transport America and Hazen Final Mile
23 Knight Transportation TL Public $1,183 $1,118 -5.5% Dry-Van, Refrigerated, Dedicated, Intermodal, Drayage, Brokerage
24 Averitt Express LTL Private $1,095 $1,091 -0.3% LTL, Truckload, Dedicated
25 Celadon Group* TL Public $1,026 $1,055 2.7% Made five acquisitions since June 2014
26 Southeastern Freight Lines LTL Private $1,031 $1,043 1.1% LTL, Truckload
27 Crete Carrier Corp. TL Private $1,014 $984 -3.0% Crete Carrier, Hunt Transportation, Shaffer Trucking
28 Ryder System TL Public $734 $837 14.0% Dedicated Contract Carriage
29 Alliance Shippers IMC Private $812 $822 1.2% Intermodal, Brokerage
30 Cardinal Logistics TL Private $815 $803 -1.4% Cardinal Logistics, Greatwide Logistics
31 NFI Industries TL Private $794 $775 -2.4% Dedicated, Intermodal, Brokerage
32 Forward Air Deferred Air Public $759 $764 0.6% Acquired Towne Air in March 2015
33 Universal Truckload Services TL Public $833 $763 -8.5% Truckload, Drayage
34 Quality Distribution TL Private $798 $758 -5.0% Quality Carriers, Boasso America, QC Energy; acquired by Apax Partners in August 2015
35 Ruan Transportation
Management Services
TL Private $770 $750 -2.5% Dedicated, Bulk
36 Jack Cooper Transport TL Private $761 $733 -3.7% Largest motor vehicle trucking company
37 Central Transport LTL Private $675 $703 4.2% LTL
38 Marten Transport TL Public $665 $671 0.9% Truckload, Dedicated, Intermodal, Brokerage
39 Covenant Transportation Group TL Public $724 $671 -7.4% Covenant Transport, Southern Refrigerated Transport, Star Transportation, Covenant Transport Solutions
40 Daseke TL Private $675 $655 -3.0% Merged with Hennessy Capital in December 2016 and went public in February 2017
41 Pitt Ohio LTL Private $627 $649 3.6% LTL, Truckload, Ground. Acquired Palmetto Trucking in May 2016
42 Penske Logistics TL Private $506 $642 26.7% Dedicated
43 Heartland Express TL Public $736 $613 -16.8% Heartland Express, Gordon Trucking
44 AAA Cooper Transportation LTL Private $596 $603 1.1% LTL, Dedicated
45 Anderson Trucking Service TL Private $618 $593 -4.0% Dry-Van, Specialized, Heavy Haul
46 Stevens Transport TL Private $616 $589 -4.4% Truckload, Intermodal
47 KLLM TL Private $618 $556 -10.0% KLLM, FFE Transportation
48 United Road Services TL Private $556 $553 -0.7% Motor vehicle trucking
49 Western Express TL Private $520 $528 1.5% Dry-Van, Flatbed
50 Dayton Freight Lines LTL Private $462 $498 7.9% LTL, Truckload
Total Revenue for the Top 50 Trucking Companies $122,392 $129,474 5.8%  
*Results adjusted to closer resemble calendar year.
Note: Companies listed have primary operations in the United States. Includes brokerage revenue of listed trucking companies, but excludes pure brokers.
Includes intermodal revenue for companies with container ownership.
Source: Company reports; SJ Consulting estimates
Prepared by SJ Consulting Group

Contact William B. Cassidy at billcassidy@ihsmarkit.com and follow him on Twitter: @wbcassidy_joc.