Trailer Bridge says higher fuel costs hurt earnings
Trailer Bridge Inc. reported a second quarter net loss of $329,000 compared to a net loss of $1.9 million in the same 2007 period, which included a non-recurring tax charge of $4.6 million.
Revenue for the quarter was $33.9 million, 14.7 percent higher than the $29.6 million in the second quarter of 2007.
Operating income was $2.2 million, down from $5.3 million.
The company said sharply higher fuel costs mitigated the growth in revenue and said the overall reduction in operating income parallels the net detrimental effect of fuel costs, which are estimated at $2.9 million.
Trailer Bridge said it has taken steps it believes have remedied about one-half of the $2.9 million adverse fuel effect during the quarter, including adjusting vessel deployment at the beginning of June and implementing additional fuel surcharges, including an 11 percent increase that went into effect July 15. The deployment adjustment will result in increased vessel capacity utilization in both directions in the third quarter.
The company said the net effect of its service to the Dominican Republic, which began last August, was a loss $900,000 for the quarter, but the company said the business is now incrementally profitable.
Last November, Trailer Bridge announced the family of founder Malcom McLean wished to divest itself of their 47.8 percent interest in the company, and the company began a process to look at “strategic alternatives.” The McLean family suspended that process earlier this year when the federal government launched an antitrust investigation of the Puerto Rican container trade.
Trailer Bridge said that during the second quarter professional costs related to the strategic alternatives process and the antitrust investigation amounted to $496,000.
Southbound container volume was up 6.5 percent, car and other vehicle volume was up 12.9 percent and northbound container volume was up 41.6 percent. The only category showing weakness was movements of shipper-owned or leased equipment, primarily comprising flatbeds, which was down 19.4 percent.
The company said its revenue to and from the Dominican Republic exceeded $1.5 million, or almost three times the $566,000 in revenue during the first quarter. The company’s deployed vessel capacity utilization was 85.7 percent southbound and 26.8 percent northbound, compared to 87.7 percent and 23.2 percent, respectively, during 2007.