Freight operators gain profits in tense supply chain markets

The supply chain crisis that has plagued retailers and manufacturers provides a wealth of profits to shipping companies.

US carriers are posting record profits in the narrow domestic transport market while shipping lines are reaping similar gains from higher prices to move containers from Asia to the US and Europe.

Schneider National a company ,

A large trucking company based in Green Bay, Wisconsin, boosted its net income 147% to $110 million in the third quarter over the same period last year and surpassed the quarterly earnings-per-share record the company had set just one quarter earlier. .

ArcBest Corp.’s ArcBest Corp. trucking and logistics company in Fort Smith doubled its quarterly profit compared to the same period last year.

“This quarter we generated the highest quarterly revenue and operating income in ArcBest’s history,” CEO Judy McReynolds said in an earnings call on Tuesday.

Profit growth in domestic US carriers comes as earnings in container lines rise, as ship operators are at the center of global supply chain congestion.

based in Denmark

AP Moller-Maersk

A/S, the world’s largest fund shipment operator in the world, capped a series of rich earnings reports by submitting a file $5.44 billion quarterly profit This week, Patrick Janney, Maersk’s chief financial officer, said on Monday’s earnings call, nearly double the “full-year 2020 net result in one quarter.”

Customers of transportation operators are feeling tight in freight markets, where rising transportation costs and other supply chain problems are affecting corporate profits from Online retail giant a company

For food companies and distributors of auto parts.

“Every link in the supply chain, from shipping lines, port bottlenecks, truck and rail shortages, to increased rework and disruption to production schedules, has created an environment in which input costs have increased dramatically,” said Michael Spitzen, CEO of Polaris Inc. . , in an earnings call on Oct.

Minnesota-based Polaris said its logistics, transportation, goods, and other costs increased more than $100 million in the third quarter compared to the same period in 2020. In total, the company reported more than $300 million in additional expenses due to sourcing. Series disturbances since the beginning of the year.

Companies point to limited capacity across international and domestic freight networks, including the trucking crisis that has driven prices in the sector’s spot market to record levels.

“You literally can’t have a truck,” Peter Bradley, CEO of specialty component maker RiceBran Technologies, said in an October 27 earnings call. Mr. Bradley said the Texas-based Tomball company is trying to alleviate trucking and labor shortages and rising material costs, “but a company of our size cannot fix a nationwide logistics crisis, globally.”

The average spot market price for a large rig rental was $2.86, including fuel surcharges, during October, up 19% from the same level last year, according to online freight marketplace DAT Solutions LLC.

David Jackson, CEO of Knight-Swift Transportation Holdings Inc. Headquartered in Phoenix, North America’s largest truckload carrier, supply and demand dynamics dictate market rates in this business.

“In most years, it results in a single-digit return that is often less than the cost of capital,” said Mr. Jackson.

The trucking industry has long been dealing with a shortage of drivers and a large turnover of jobs, but supply chain bottlenecks have highlighted the need for new employees. Here’s how some companies are trying to get them behind the wheel. Photo: Robin Beck/AFP via Getty Images

Knight-Swift reported a 68.9% increase in net income for the third quarter to $206.2 million, a result attributable in part to the company’s investment in trucks and trailers during its younger years. That bet is paying off now, he said, as supply chains realize the benefit of the company’s additional equipment to deal with logistical bottlenecks.

Paying for the transportation of goods by air, road and ship provides windfall for companies that match loads to capacity even as transportation prices rise.

CH Robinson International a company ,

North America’s largest shipping broker, said its third-quarter net income rose 81% from a year ago, to $247 million, buoyed in part by strong gains in the international shipping business.

Conversations about “Transport budgets are pretty much out the window at this point and are related to supply chain reliability, and how are we actually going to get the product on our shelves?” CH Robinson CEO Bob Basterfield said.

write to Jennifer Smith in

Copyright © 2021 Dow Jones & Company, Inc. all rights are save. 87990cbe856818d5eddac44c7b1cdeb8


Leave a Reply

Your email address will not be published.