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2019 Top 50 Trucking Companies: Execution Wins the Day – Supply Chain Management Review

In the trucking world it’s called “blocking and tackling,” or executing the basics of the business as well as possible at all times and in all conditions. While this sounds easy in theory, it’s extremely difficult in real-world conditions.

Truckers consistently face peaks and valleys in demand, equipment, driver availability, rules and regulations and thousands of other small details—the reason that hundreds of trucking companies have ceased operations since economic deregulation in 1980.

Logistics Management’s (LM) annual listing of the Top 25 less-than-truckload (LTL) and Top 25 truckload (TL) carriers are the exceptions. In fact, our Top 50 is an annual compilation of the carriers with the top management, best vision, continued operational excellence and, perhaps most importantly, the best blocking and tackling on the front lines of execution.

“I pay attention to the big guys, and if somebody comes out with a better mousetrap that we don’t have, we copy it,” says Jim Gattoni, Landstar’s president and CEO. Landstar’s truckload revenue for 2019 hit $2.057 billion, which would rank 5th among the top TL carriers. “But mostly everybody is building on the same tools, whether it’s management, strategy or operations. So, I don’t see them doing anything that we’re not doing or
planning on doing.”

2019 TOP 25 LESS-THAN-TRUCKLOAD CARRIERS: 2018 REVENUES
(Including fuel surcharges)

Rank Carrier name 2018 Revenue($ million) 2019 Revenue($ million) YoY % Change18-19
1 FedEx Freight $7,352 $7,454 1.4%
2 Old Dominion Freight Line $3,983 $4,055 1.8%
3 XPO Logistics $3,830 $3,841 0.3%
4 YRC Freight $3,153 $3,049 -3.3%
5 Estes Express Lines $2,761 $2,818 2.1%
6 UPS Freight $2,706 $2,679 -1.0%
7 ABF Freight System $2,124 $2,094 -1.4%
8 Saia Motor Freight Line $1,654 $1,787 8.0%
9 R+L Carriers $1,692 $1,718 1.5%
10 Southeastern Freight Lines $1,237 $1,242 0.4%
11 Holland $1,178 $1,084 -7.9%
12 Averitt Express $891 $873 -2.0%
13 Central Transport International $825 $856 3.9%
14 Forward Air $748 $808 8.0%
15 Dayton Freight Lines $659 $679 3.0%
16 Pitt Ohio Transportation Group $633 $670 5.9%
17 AAA Cooper Transportation $606 $612 0.9%
18 Roadrunner Transportation $452 $433 -4.3%
19 Reddaway $424 $421 -0.8%
20 A. Duie Pyle $351 $386 9.9%
21 New Penn Motor Express $293 $278 -5.3%
22 Daylight Transport $264 $262 -0.8%
23 Central Freight Lines $248 $232 -6.5%
24 Oak Harbor Freight Lines $226 $230 1.6%
25 Ward Trucking Corporation $189 $190 0.3%
Total Top 25 LTL Carriers $38,478 $38,750 .7%
All Other Carriers $4,158 $3,806 -8.5%
Total LTL Market $42,636 $42,556 -.2%

2019 TOP 25 TRUCKLOAD CARRIERS: 2018 REVENUES
(Including fuel surcharges)

Rank Carrier name 2018 Revenue($ million) 2019 Revenue($ million) YoY %Change
1 Knight-Swift Transportation $4,290 $3,953 -7.9%
2 J.B. Hunt Transport Services $2,581 $3,084 19.5%
3 Schneider National $2,675 $2,397 -10.4%
4 Prime $1,937 $2,107 8.8%
5 Landstar System $2,243 $2,057 -8.3%
6 Werner Enterprises $1,853 $1,887 1.8%
7 U.S. Xpress Enterprises $1,562 $1,521 -2.6%
8 CRST International $1,583 $1,469 -7.2%
9 Daseke $1,345 $1,421 5.6%
10 Ryder Systems $1,094 $1,163 6.3%
11 Crete Carrier Corp. $1,151 $1,151 0.1%
12 Penske Logistics $919 $1,110 20.8%
13 CR England $1,003 $995 -0.8%
14 Ruan Transportation Management Services $813 $885 8.9%
15 TFI International $811 $759 -6.4%
16 PS Logistics $654 $744 13.8%
17 Western Express $695 $684 -1.7%
18 Covenant Transportation Group $706 $677 -4.1%
19 Stevens Transport $667 $646 -3.1%
20 Marten Transport $599 $644 7.5%
21 Anderson Trucking Service $674 $636 -5.6%
22 Cardinal Logistics $645 $622 -3.6%
23 NFI Industries $572 $604 5.6%
24 Heartland Express $611 $597 -2.3%
25 Mercer Transportation $607 $541 -10.9%
Top 25 Truckload Carriers $32,289 $32,362 .2%

Analysts agree. They say that while trucking appears to be a simple business—pick it up, deliver, don’t break it, get paid—it’s amazing how few carriers actually perform those basics consistently well over time to earn ranking in the LM Top 50.

“While it’s not rocket science, there are essential basics that some carriers often lose sight of,” says Satish Jindel, principal of trucking analyst firm SJ Consulting. Indeed, mastering those basics is essential because of trucking’s high fixed costs. Equipment and labor account for about 70% of a typical trucking company’s costs—and that’s even a higher percentage for LTL carriers because of their hub-and-spoke terminal networks.

“With such a high level of fixed costs, you must have a very well-oiled operational machine,” explains Jindel. “Old Dominion, Saia, XPO, for example, all get full productivity from their people. That’s the No. 1 element.”

The other key is correctly pricing for freight services—including accessorials such as inside deliveries to retail stores, specialized equipment and weekend or night services. The best carriers manage their freight volumes to their equipment and personnel and get paid for doing it.

That explains why a carrier such as Old Dominion Freight Line can routinely post operating ratios in the low 80s—and once in awhile even in the 70s—while enjoying double-digit revenue growth rates at the same time.

So what else makes the Top 50 stand out from the rest? Sometimes it’s merely performing the basics better than their competition. Other times, it’s precisely managing capacity to take advantage of the best lanes of freight in the marketplace. Or it can be that precisely blending operational excellence with a stable and visionary executive team. Let’s look at what’s keeping the top carriers on top.

How to stay on top?

According to Darren Hawkins, president and CEO of YRC Worldwide, parent of the 4th- and 7th-largest LTL carriers, says that the best carriers are the ones who “obsess” over customer service in delivering on-time nearly all the time.

Other top carrier executives say that rather than fighting headwinds in the industry, it’s better to go with the flow and simply deliver based on the ever-shifting customer needs. “Rather than push back against changes occurring in the modern supply chain, we choose to evolve,” says Phil Pierce, Averitt’s executive vice president of sales and marketing. Averitt ranks 12th in this year’s LTL rankings by revenue.

As examples, Pierce points to two of Averitt’s newest service offerings—Averitt Distribution and Fulfillment (ADF) and Averitt Final-Mile to residential customers seeking a last-mile freight solution. “Consider the growth of online sales and the increasing demand for quicker deliveries that have moved into business-to-business markets,” he says.

According to Pierce, the ADF infrastructure consists of numerous shared-space distribution centers, a network that has grown to more than 1.2 million square-feet of freight staging and inventory management space. Averitt positioned the service in key markets, such as Nashville, Atlanta and Austin where those facilities enabled it to increase the speed-to-market of customers’ products.

“Additionally, we can integrate a wide variety of our services, including LTL, intermodal and drayage to provide our shippers a complete supply chain solution,” adds Pierce.

But it’s still equipment utilization that drives profits. The best carriers live by the mantra of how to best utilize their two most expensive assets—drivers and equipment. YRC’s Hawkins calls it the “biggest opportunity we have” to drive better productivity and profits.

“Drivers and equipment are very expensive and we have to keep our most expensive assets freed up and productive,” Hawkins said. “That requires good, clear lines of communication. We prioritize freeing up our equipment and drivers. We need to keep both moving to cover their costs.”

The carrier with the drivers wins

In an era of historically low unemployment, the decades-old driver shortage has only worsened as qualified drivers have become scarcer and more expensive than ever. The American Trucking Associations (ATA) estimates the industry is short some 60,000 drivers right now—and that total could top 100,000 in the next few years.

For decades, the biggest churn was in the truckload sector where driver turnover can exceed 100% at even some large companies. The unionized sector—which mainly consists of UPS freight and parcel, YRC long-haul and regional and ABF Freight—was largely immune from the shortage.

However, now even unionized companies—even though their turnover rates are in the single digits—are being hit by driver shortages as the work force ages and retire. Industry leaders say demographics are working against the industry, even in the unionized sector. “The available pool is not as deep as it once was,” says YRC’s Hawkins. “We offer a good pay package and the LTL lifestyle is good and that keeps our turnover rates in the single digits.”

But even YRC and other companies have had to expand their recruiting base. YRC actively recruits military veterans who now comprise 14% of its work force while women drivers account for another 6%.

New Jersey-based NFI says that it has grown its female driver population by more than 36% in one year by offering higher pay and benefits. NFI adds that it is “committed to diversity by building an industry-leading training program that gives female drivers the opportunity to train and mentor women who have just graduated from truck driving school.”

New truck, trailer sales down—bad news for shippers

Class 8 sales figures are always a double-edged economic sword. More trucks mean more capacity—and usually lower freight rates.

Even though carriers sharply reduced their buying of new trucks from near record rates—Class 8 truck sales totaled 180,951 last year compared to 490,100 in the record year of 2018—they say they’re for replacement, and not fleet expansion.

“But guess what? Those old trucks traded in are being bought by other trucking companies and owner-operators and they’re still in use,” says trucking analyst Satish Jindel.

There are signs that new Class 8 truck and trailer sales are moderating. January Class 8 sales fell 22.5% year over year to 15,645, and the coincided with a 43% year-over-year drop in trailer orders to 15,000, down from 26,169 in January 2019, according to figures compiled by the research firm ACT.

One lure of the newest Class 8 models for the top carriers is the wide range of newer safety technologies, such as collision-avoidance systems and forward-facing event recorders to help protect drivers and the general public.

“Our team is continuously researching and testing new technologies that will help us operate more efficiently and safely even when there is no regulatory pressure to do so,” says Phil Pierce, executive vice president of sales and marketing at Averitt Express. “People are our number one asset.”

Newer equipment helps in driver recruitment and retention. So, even though there’s a dip in Class 8 sales for now, shippers should look for an uptick in overall new truck sales to help in their hunt for capacity as the shipping season tightens.

John D. Schulz,

Averitt’s Pierce said the carrier is committed to getting drivers home “every week” both in its LTL and truckload divisions. Indeed, maintaining a fresh fleet with measures such as this has been a major factor that has allowed the top carriers to overcome the challenges of fuel, regulations and retaining drivers.

The technology and ergonomic designs found in modern tractors and trailers provide improved fuel efficiency, increased safety performance and comfort for drivers. That has allowed some large carriers to keep the average age of their fleet to less than three years old.

And like many carriers, Averitt is continuously seeking ways to improve the driver experience. It recently implemented a per diem program in addition to its layover, detention and minimum mile pay systems. According to Pierce, the carrier has also focused on enhancing many of their service centers to include “driver support centers.” Among other amenities, these facilities feature lounge areas, Internet access, showers, laundry machines and gym equipment.

“Our goal is to provide as much comfort to our drivers as we possibly can,” Pierce said.

Capacity and rates?

Until the coronavirus scare hit in the first quarter, Top 50 carrier executives were rather optimistic about the 2020 rate picture—but uncertainty is now in the air.

Susquehanna Financial Group recently issued a forecast that was mostly bad news for shippers. It says trucking rates would have a “melt-up”—in other words, an irrational increase. The epidemic tempered that a bit, but the report by analyst Bascome Majors was enough for the company to raise ratings on Landstar and Werner, two TL giants in the top 10 of LM rankings.

After falling for 16 straight months, spot TL rates have evened out and even started to rise in the first quarter, according to DAT, a research firm. “Spring could be coming early to truckload freight,” DAT reported in the first quarter. “Load counts are holding steady and load-to-truck ratios are showing signs of life, for vans, reefers and flatbeds. Rates are even starting to trend up, especially in the eastern half of the country.”

Overall TL capacity is forecast to shrink 1% this year compared to a 4% increase in both 2018 and 2019. “Seasonal-plus patterns are returning to volatile real-time rates,” Majors added.

In closing

With shippers’ supply chains and inventories slowly adjusting due to the coronavirus, trucking executives say 2020 should be a better year than 2019, but not as good as 2018 when nearly every trucking company was profitable.

However, nobody is saying that with any great deal of certainty due to the coronavirus disruptions to worldwide supply chains. “It’s not 2018 or 2019. But capacity was a little more balanced at the beginning of the year than it was at the end of last year,” adds Landstar CEO Gattoni.

That evenness in demand levels is somewhat offset by what some executives say are relentless increases in their internal costs. However, operational costs for truckers are rising, often by double-digit percentages. Insurance costs, stung by what trucking executives call “nuclear settlements” by juries in wrongful death accident cases, are doubling for some smaller carriers.

The ATA’s research arm says rising insurance rates are contributing to an overall 7% rise in trucking costs. “We have to offset that every year, and that factors in our rate increases,” adds YRC’s Hawkins.