Old Dominion and Con-Way Report Increased Freight Shipping
Freight carriers Old Dominion Freight Line and Con-Way Freight reported their second quarter results last week. While not better than expected, the earnings reports show that these companies, unlike some of their competitors, will remain solvent and strong throughout the current economic slowdown.
Old Dominion’s revenue increased over 15% during the first six months of 2008, from approximately $785.0 million from $670.0 million for the same period in 2007. Net income, however, decreased, with per share earnings of $0.92 per share versus $0.97 per share.
Key results include an increase in tonnage of over 10%, which was above company expectations. Revenue per hundredweight increased over 5%, mostly as a result of higher fuel surcharges. Importantly for freight shippers, Old Dominion’s cargo claims ratio decreased as a percentage of revenue, to the best level in company history.
Old Dominion executive’s comment that the freight carrier’s growth in tonnage shows that the company’s efforts to improve customer value are working. They feel the company is points to do better than the rest of the LTL freight carriers in terms of revenue and tonnage growth averages, and operating ratios.
Con-Way Freight also reported its second quarter results last week. Earnings per share decreased from $0.99 per share for 2007 to $0.98 per share for 2008. Con-Way’s less-than-truckload (LTL) unit posted good revenue gains and operating ratio improvements. The company gained market share as a result of its marketing activities, which included advertising in mainstream publications such as the USA Today newspaper. The company also began to see a stabilization in LTL pricing, which is expected to continue into the next quarter.
Con-Way Freight’s truckload sector reported a decline, attributable to the weak economy. Management sees opportunities down the road, however, as many truckload freight carriers have gone out of business and thus capacity has been reduced. When and if the economy turns around and demand returns, prices and margins should improve steadily.