Economy, Merger Mania Provided Tank Truck Carriers a Wild Ride
May 1, 2002 12:00 PM
(Search the archive of previous Gross Revenue reports dating back to May 2001.)
What a year. What a year, indeed.
Tank truck carriers weathered one of the most challenging years in recent history, and this is reflected in the 1998 Modern Bulk Transporter Gross Revenue Report. Carriers were buffeted by both external and internal economic factors.
On the one hand, the US domestic economy continued to show plenty of strength.
Domestic demand for chemicals and refined petroleum remained firm. Highway and road construction continued to expand-fueled by more federal money-and 1998 was a record year for new home sales. US auto makers had their best year since 1978.
In stark contrast, economic data shows that 1998 was the worst trade year on record for the United States. Total exports of goods were down $8.3 billion, with petroleum products, finished textiles, and organic chemicals leading the decline.
Many tank fleet managers reported wild swings in business activity. Some weeks, so many loads were tendered that fleets ran out of equipment and drivers. Often, that was followed by a week or two of extreme slowness.
While overall revenues for the tank truck industry grew by slightly better than 5.3%, only 53% of the carriers in the report achieved higher revenues and about 37% recorded improved operating ratios. In comparison, roughly 80% of the tank truck carriers participating in the 1997 Gross Revenue report had higher revenues and about half had improved ratios.
As if the economic fluctuations weren't enough, merger mania swept through the tank truck industry with a real vengeance last year. Mergers and acquisitions reached record levels in 1998, and a purely financial player entered the market.
Apollo Management LP, a New York City investment firm, bought MTL Inc, Plant City, Florida, and Chemical Leaman Tank Lines, Exton, Pennsylvania, creating a $620 million operation that is now called Quality Distribution Inc. Matlack Inc, Wilmington, Delaware, was another Apollo target, but the deal fell through.
In other notable deals last year, Liquid Transport Corp, Greenfield, Indiana, bought Kansas City, Missouri-based Kaw Transport Company, creating a combined fleet with more than 600 power units and 1,175 tank trailers. Tankstar USA Inc, Milwaukee, Wisconsin, acquired Rogers Cartage Co, Crestwood, Illinois. Rogers was ranked 36 in the 1997 Gross Revenue Report with $40.1 million in annual revenue.
Suttles Truck Leasing Inc, Demopolis, Alabama, purchased the assets of Panama City, Florida-based Pan American Transport and then agreed in late 1998 to merge with Dana Transport Inc, Avenel, New Jersey. The dry bulk trucking assets of DFC Transportation, Huntly, Illinois, were purchased by Bulkmatic Transport Co, Griffith, Indiana. Jackson, Mississippi-based Miller Transporters Inc acquired InTank Trucking Inc of Hammond, Indiana. Oklahoma Tank Lines/United Petroleum Transports, Oklahoma City, Oklahoma, purchased C&A Trucking Inc, an Oklahoma City tank truck carrier with annual sales of about $3.5 million.
Considering the size of some of the acquisitions, it's not surprising that changes occurred in the top ranks of the 1998 Gross Revenue Report. Quality Distribution Inc (the giant formed from MTL Inc and Chemical Leaman Tank Lines) now holds the top spot. Trimac Transportation Services Ltd is at number two, followed by Matlack Inc, Initial DSI Transports Inc, Kenan Transport Company, Groendyke Transport I nc, Bulkmatic Transport Inc, and Dewey Corporation. Tankstar USA Inc jumped from 15 to nine. Superior Carriers Inc rounds out the top 10.
With gross revenues of $2.1 billion, the 10 largest carriers accounted for 40.4% of the revenues in this report. A year earlier, the top 10 tank truck carriers had combined gross revenues of $2 billion and accounted for 39% of the total revenues.
The top 25 carriers had $3.2 billion in revenues, or almost 61% of the total represented in this report. This was almost 2% higher than in the 1997 report. The 50 largest carriers had revenues of $4.2 billion, or 78.9% of the total, which was only slightly greater than in 1997.
Of the 149 tank truck carriers in this report, just over half had higher revenues in 1998 than in 1997. A year earlier, 79.8% reported revenues that were higher than the previous year. Slightly over a third (34.5%) showed improved operating ratios in 1998, compared with 53.4% in 1997.
Total 1998 revenues for all carriers in this report were $5,376,491,150. In 1997, the same number of carriers reported a combined total of $5,093,554,468.
For the 149 carriers in the report, the average revenue for 1998 was $36,083,833, up from $34,184,929 in 1997. Removing the top 10 carriers from the total revenues produces an average revenue of $21,486,241. The median carrier on the list, the one with an equal number of carriers above and below it, had revenues of $16,994,600. In 1997, the median carrier revenue was $16,813,793.
Operating ratios for 1997 and 1998 are listed for 136 of the carriers in this report. Forty-seven showed improvement over the previous year, 22 less than in last year's Gross Revenue Report. The operating ratio represents operating expenses as a percentage of revenue.
The operating ratios clearly illustrate that carriers struggled to make a profit last year. Seventy-one carriers had ratios between 95.0% and 99.0%, two more than in 1997. On the brighter side, fewer carriers had ratios above 100%. Fifty fleets had ratios between 90.0% and 94.9%, four more than the previous year. Ten had operating ratios below 90%, three less than in 1997.
A majority of the tank truck carriers provided tractor revenues. The average for 1998 was $122,185 based on 140 carriers. That was a decrease from the 1997 tractor revenue average of $129,998. Nine of the top 10 carriers reported tractor revenues, and the average for this group was $150,084, down 5% from the 1997 Gross Revenue Report.
The highest revenue per tractor ($237,347) was reported by a small southeastern chemical hauler. The lowest amount ($32,184) came from a chemical transporter in the Midwest. Fifteen carriers that emphasize chemical hauling had an average revenue per tractor of $147,014. The average for chemical carriers in 1997 was $119,556.
Average revenue per tractor for 15 petroleum transporters was $121,226, down from the previous year, when 20 carriers had an average tractor revenue of $131,821. The high in 1998 was $179,387, while the low was $43,275.
Nine dry bulk haulers posted average revenues of $168,220, a substantial increase over the $112,128 average achieved in 1997. Tractor revenues ranged from $232,262 to $72,349. Nine liquid and dry bulk food carriers had an average tractor revenue of $122,807, a solid improvement over the $109,600 average reported in 1997. The high was $161,867, and the low was $93,174.
Many of the figures here are from preaudited reports, and some may include nonbulk revenues or revenues from subsidiary tank truck carriers. In most cases, the figures were supplied directly to Modern Bulk Transporter. The magazine greatly appreciates the cooperation of all who helped in the preparation of this report.
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