Swift boosts profits despite challenging market

Trucking and intermodal carrier Swift Transportation held onto profit gains in the fourth quarter and calendar year 2015 even though volumes were down slightly and fuel surcharges were virtually eliminated.    Truckload giant Swift Transportation posted higher fourth quarter and full-year earnings in 2015, helped significantly by the fall in diesel fuel prices. 
   The Phoenix-based motor carrier said operating income grew 16.5 percent to $194.6 million in the three-month period ended Dec. 31 and 9.3 percent to $625 million for the year, even as operating revenue fell from $4.3 billion in 2014 to $4.2 billion. Operating revenue actually grew slightly when factoring out fuel surcharges, which were increasingly canceled by the fall in fuel prices.
   Revenue growth (minus fuel) was the result of rate increases in Swift’s truckload, dedicated carriage and intermodal business segments. Earnings were also aided by lower insurance and claims expenses, which the company attributed to new safety technology in its fleet. A more modern fleet – 490 trucks new trucks entered service in the fourth quarter alone – has also helped the company reduce fuel use and retain drivers, it said.
   The operational results, plus lower tax payments and a pull back on capital expenditures enabled Swift to reduce its debt in the fourth quarter by $94 million, putting its debt ratio at a new low of 1.99.
   The truckload segment grew revenues in the fourth quarter by $4.8 million, or 1 percent, but rate increases were offset by a 2.2 percent reduction in weekly loaded miles per truck as demand continued to be weak. 
   Revenues for dedicated contract carriage grew 11.6 percent to $226 million in the fourth quarter, driven by new contracts and better pricing.
   Central Refrigerated Service, Swift’s reefer unit, saw revenues decrease slightly to $82.7 million, largely driven by the termination of a large specialty dedicated account in the first quarter.
   Swift’s adjusted earnings per share for 2015 was $1.49, up from $1.38 in 2014. The company forecast adjusted earnings of $1.50 to $1.60 in 2016 despite a challenging operating environment for motor carriers that includes a decline in industrial production and new safety regulations that could cut productivity.