Werner record huge Q2 profit growth
Trucking company Werner Enterprises increased its second quarter net profit 32 percent, compared to the same period in 2010, according to a company financial filing last week.
Werner's operating profits rose $46.8 million in the quarter, on revenue of $515.9 million, an increase of 11 percent. Subtracting fuel surcharges, revenue grew 2 percent, to $333.7 million.
'Freight volumes strengthened in June 2011 from April and May,' the company said in a statement. 'We continue to believe that favorable truckload trends are caused to a greater degree by industry capacity constraints than economic recovery. Our average revenues per total mile increased 3.1 percent in second quarter 2011 compared to second quarter 2010. Contractual rate increases and a better freight mix were the principal reasons for the rate improvement.'
Werner said capacity remains constrained by economic and safety regulatory factors.
'From 2007 to 2010, the number of new trucks purchased was well below historical replacement levels for our industry,' the company said. 'This led to the oldest average industry truck age in 40 years by the end of 2010. Carriers were compelled to upgrade their aging truck fleets, which led to increased replacement purchases of new and later-model used trucks in 2011. However, we do not believe that industry fleet growth is occurring, as some carriers are already struggling to finance the replacement truck upgrade due to the large pricing gap between the significantly increased costs of EPA-complaint new trucks compared to the low value of record-old trucks.'
There are also concerns about the dwindling driver market.
'The driver market is increasingly more competitive compared to 2010 and to first quarter 2011,' Werner said. 'An improving freight market, changing industry safety regulations and reduced financing options for driving school candidates continue to tighten qualified and student driver supply. We expect driver market challenges to increase for the remainder of 2011. We continue to believe our position in the driver market is better than that of many competitors because over 70 percent of our driving jobs are in more attractive regional and dedicated fleet operations that enable us to return these drivers to their homes on a more frequent and consistent basis.'