Trucking Turnaround? Companies Report Rising Revenue

by Jan Cottingham  on Monday, May. 9, 2011 12:00 am  

The Bureau of Transportation Statistics reported last month that shipments measured by the Freight Transportation Services Index had risen 12.9 percent during the last 22 months, beginning in May 2009. That increase, however, comes after a 15.7 percent decline in the previous 16 months beginning in January 2008. And that means there's room for improvement.

Freight shipments have increased in 16 of the last 22 months, said the bureau, a division of the U.S. Department of Transportation. "In February 2011, freight shipments were at about the same level as in September 2008 when the amount of freight was early in the decline," the bureau reported.

As Jim Crowell noted, the revenue rise "is a very good thing, but you have to remember that it came from a very, very low base." Crowell is director of the Supply Chain Management Research Center at the University of Arkansas at Fayetteville.

A look backward to pre-recession days illustrates the depth of the downturn. For example, P.A.M. Transportation Services Inc. reported revenue of $400 million in 2006. However, even though the Tontitown company's revenue rose 31 percent in this latest survey, from $253 million in 2009 to $332 million in 2010, it still fell $68 million short of those more prosperous times.

And profitability is another matter altogether.

"Most analysts who track trucking predict that the fourth quarter of this year will be kind of a breakout quarter for the industry, and we'll begin to see actual net income flowing to the bottom [line]," Kidd said. "So many of the companies have been trying to simply apply what income they do have against debt service that they had to incur during the recession."


Potential Hazards

Rising fuel prices could threaten the trucking industry's recovery, or, at the very least, dampen it.

"Fuel prices will probably take some of that money that could have been net income away," Kidd said. That "and the rising cost of labor."

Crowell and Costello echoed Kidd's worries.

"Low-cost energy is what has built the U.S. economy, and, certainly, trucking is what I'd call an enabler," Crowell said.



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