Tank Truck Carriers Thrive With Booming US Economy
May 1, 2002 12:00 PM
(Search the archive of previous Gross Revenue reports dating back to May 2001.)
OVERALL, tank truck carriers had a busy year in 1997, and a majority enjoyed higher revenues, if not higher profits. Contributing factors included a thriving economy and an operational meltdown at the Union Pacific Railroad that diverted large cargo volumes to the trucking industry in general.
Roughly 80% of the tank truck carriers participating in the 1997 Modern Bulk Transporter Gross Revenue Report were able to show higher revenues. In contrast, two-thirds of the participants in the 1996 Gross Revenue Report had higher revenues. Improved operating ratios were posted by half of the carriers in the 1997 report, roughly the same as the previous year.
The good economic climate may have contributed to the escalating merger and acquisition activity over the past year. Predicting this trend during a presentation at the National Tank Truck Carriers Inc 1997 annual meeting, consultant Martin Labbe said that the strong economy had made smaller carriers more salable. In addition, acquisitions are the best growth option for many larger tank fleet operators.
Significant deals announced during the year include the following: Kenan Transport Co, Chapel Hill, North Carolina, doubled in size with the purchases of Transport South Inc and Petro-Chemical Transport Inc. Like Kenan, both of the acquired companies were petroleum haulers.
Martin Transport Inc, Kilgore, Texas, acquired MCX Transport Inc, a Houston, Texas-based chemical carrier with revenues in the $25-million range. United Petroleum Transports Inc, Oklahoma City, Oklahoma, bought Oil Transport Co, a $10.8-million petroleum carrier based in Abilene, Texas.
Matlack Systems Inc, Wilmington, Delaware, purchased certain assets of Arrow Transportation Co, Portland, Oregon. Arrow had been operating under Chapter 11 bankruptcy protection. Greensboro, North Carolina-based Merritt Trucking Co Inc sold its cement and fly ash division to Schwerman Trucking Co, Milwaukee, Wisconsin.
In Canada, Trimac Transportation Services Ltd bought the Provost Ltee operations in the eastern part of the country. The purchase included Coastal Bulk Transport, Brunswick Bulk Transport, Quinnsway Transport, and Brunswick Bulk USA. Unable to find a buyer for the rest of the company, Provost shut down all remaining operations.
The mergers and acquisitions contributed to changes in the top rankings in the 1997 Gross Revenue Report. Trimac Transportation Services Ltd, Calgary, Alberta, Canada, remained on top, followed by Chemical Leaman Tank Lines Inc, MTL Inc, Matlack Systems Inc, and DSI Transports Inc.
Kenan Transport Co vaulted into the number six spot with the revenue increase that came from the Transport South and Petro-Chemical Transport acquisitions. Rounding out the 10 largest tank truck carriers for 1997 are Groendyke Transport Inc, The Dewey Corp, Bulkmatic Transport Co, and Superior Carriers Inc.
With gross revenues of $2 billion, the 10 largest carriers accounted for 39% of the revenues in this report. A year earlier, the top 10 tank truck carriers had combined gross revenues of $1.78 billion and accounted for slightly over 38% of the total revenues.
The top 25 carriers had $3 billion in revenues, or 59% of the total represented in this report. This was one percent higher than in the 1996 report. The 50 largest carriers had revenues of $4 billion, or 78.6% of the total, which was 1.6% more than in 1996.
Of the 149 tank truck carriers in this report, 79.8% had higher revenues in 1997 than in 1996. A year earlier, 66.2% reported revenues that were higher than the previous year. Over half (53.4%) showed improved operating ratios in 1997, compared with 37% in 1996.
Revenues increased for 119 of the 149 carriers listed in this year's report. Total 1997 revenues for all carriers in this report were $5,093,554,468.95, almost nine percent above the $4,649,175,919.76 combined total reported by 154 carriers in 1996.
For the 149 carriers in the report, the average revenue for 1997 was $34,184,929, up from $30,189,454.02 in 1996. Removing the top eight carriers from the total revenues produces an average revenue of $22,713,981. The median carrier on the list, the one with an equal number of carriers above and below it, had revenues of $16,813,793. In 1996, the median carrier revenue was $15,195,441.
Operating ratios for 1997 and 1996 are listed for 129 of the carriers in this report. Sixty-nine showed improvement over the previous year, 20 more than in last year's Gross Revenue Report. The operating ratio represents operating expenses as a percentage of revenue.
A review of the operating ratios for 1997 shows that higher revenues didn't mean higher profits for some tank truck carriers. Sixty-seven carriers had ratios between 95.0% and 99.9%, two more than in 1996. However, the number of carriers with ratios at or above 100% dropped from nine in 1996 to five. Forty-six carriers had ratios between 90.0% and 94.9%, two less than the previous year. Thirteen had operating ratios below 90%, three less than in 1996.
Many of the tank truck carriers provided tractor revenues. The average for 1997 was $129,998.04 based on 138 carriers. That is a decrease from the 1996 tractor revenue average of $139,719.16. Eight of the top 10 carriers reported tractor revenues, and the average for this group was $157,982.53, up 3% from the 1996 Gross Revenue Report.
The highest revenue per tractor ($228,403.75) was reported by a large western petroleum hauler. The lowest amount ($23,862.76) came from a dry bulk fleet in the Northeast.
Twenty-five carriers that emphasize chemical hauling had an average revenue per tractor of $119,556.36. The average last year for chemical haulers was $136,468.29, based on a sampling of 14 carriers. Tractor revenues ranged from a high of $195,449.94 to a low of $57,680.
Average revenue per tractor for 20 petroleum transporters was $131,821.38, a big increase over the previous year, when 10 carriers had an average tractor revenue of $118,401.99. The high in 1997 was $228,403.75, while the low was $69,130.31.
Seventeen dry bulk haulers posted average revenues per tractor of $112,128.92, a slight drop from the $115,297.20 average achieved in 1996. Tractor revenues ranged from $222,087.15 to $23,862.76 for dry bulk fleets.
Nine liquid and dry bulk food carriers had an average tractor revenue of $109,600.25, quite a drop compared with $131,603.26 in 1996. The high was $131,880.48 for a midwestern carrier, and the low was $79,485.53 for a western operator.
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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