Fleet revenues rise; ratios worsen

OVERALL, tank truck carriers turned in a mixed performance on the economic front in 2005. While most carriers reported hefty gains in revenue, profitability apparently took a big hit.

More than 80% of the carriers participating in this year's Bulk Transporter Annual Gross Revenue Report listed higher revenues. For some, the increases were dramatic, and there are now 15 carriers that have broken through the $100 million level. On the other hand, operating ratios worsened for more than 60% of the fleets in the report.

A vibrant US economy gets part of the credit for the revenue increase. Gross domestic product grew by 3.5% during 2005, and unemployment fell below 5% over the course of the year. More than 2 million jobs were created during a 12-month period, and many were truck-driving positions.

Tank fleets were busy on all fronts during 2005 trying to keep up with demand for transportation. Petroleum shipments were strong, and fleets scrambled to keep up with a construction industry that grew by approximately 3% in 2005. Chemical volumes were robust despite the hurricanes that devastated the Gulf Coast, where many chemical plants are located.

However, strong revenue growth did not automatically translate to big profits for many of the tank truck carriers in this Gross Revenue Report. There were several reasons for that. At the top of the list were higher operating costs, especially fuel.

Diesel prices climbed from an average of $1.93 per gallon in January 2005 to $2.56 in August before spiking to a whopping $2.89 a gallon in September following the Gulf Coast hurricanes. The American Trucking Associations estimated that the industry spent $87.7 billion on fuel in 2005, compared with $65.9 billion in 2004.

Surcharges helped fleets recoup some, but not all, of the higher fuel costs. Several fleet executives interviewed during the preparation of the Gross Revenue Report said that fuel surcharges probably accounted for 40% to 60% of the increased revenues in 2005.

Rising fuel prices and other operating cost increases impacted tank truck carriers of all sizes. However, the Top 10 fleets in this report seemed to fare somewhat better than the rest of the industry with regard to revenues and operating ratios.

Among the Top 10, Quality Distribution Inc again headed the list. Trimac Transportation System Inc and Kenan Advantage Group Inc were two and three respectively. Rounding out the Top 10 were Superior Bulk Logistics Inc, Groendyke Transport Inc, Ruan Corporation (new to the Top 10), Schneider National Bulk Carriers, Enterprise Transportation Co, A&R Transport Inc, and Tankstar USA Inc.

The combined Top 10 revenues of $2.91 billion were a strong improvement over 2003 results, which were also at record levels. Top 10 revenues in 2005 accounted for 52.4% of the total in the report.

The Top 25 carriers had $4.23 billion in revenues, or 76.2% of the total represented in this report. That is an increase over the previous year. The 50 largest carriers had revenues of $5.22 billion, accounting for 94.1% of the total, compared with 91.1% in 2004.

Total 2005 revenues for all 80 carriers in this report were $5,552,355,943. In contrast, the 2004 report consisted of 96 carriers reporting a combined total of $5,307,134,352.

Average revenue in 2005 for these 80 carriers was $69,404,449, up nearly $15 million from the average of $54,712,725 for 96 fleets in 2004. The median carrier on the list, the one with an equal number of carriers above and below it, had revenues of $28,175,000. In 2004, the median carrier revenue was $21,876,000.

Operating ratios for both 2005 and 2004 were supplied by 71 of the carriers in this report. Twenty-eight — less than half — showed improvement over the previous year. The operating ratio represents operating expenses as a percentage of revenue.

Forty-six fleets had operating ratios between 95.0% and 99.9% (compared with 40 in 2004), and one had a 100% ratio. None of the fleets in the 2004 Gross Revenue Report had a ratio above 99.9%. On the upside, though, two fleets reported ratios below 90%. Ratios between 90.0% and 94.9% were reported by 23 companies, down one from the 2004 report.

Most of the fleets participating in the 2005 report submitted information used to calculate tractor revenues. These figures give an indication of productivity levels. The average for 2005 was $173,845, significantly higher than the $159,109 average in 2004.

Eight of the Top 10 reported tractor revenues, averaging $174,305 for the group. This was a slight drop from the $174,748 average reported by the Top 10 in 2004.

The best productivity (tractor revenue of $339,466) came from an East Coast petroleum hauler. The lowest tractor revenue ($65,049) came from a midwestern petroleum hauler. Average revenue per tractor for a group of 10 petroleum haulers was $215,252, up from the previous year's average of $147,887.

Ten chemical carriers accounted for average revenue per tractor of $180,486, up from $152,633 in 2004. Tractor revenue ranged from a high of $230,875 down to $122,857.

Average tractor revenue for six dry bulk specialists was $156,546, down from a $159,048 average in 2004. Tractor revenue ranged from a high of $215,873 to a low of $101,659.

Among five carriers that focus operations on transporting bulk liquid and dry foods, tractor revenue averaged $130,642. That was down more than $25,000 from the 2004 food fleet average of $155,816 per tractor. The high for the category was $176,619, and the low was $86,328.

Many of the figures here are from preaudited reports, and some may include nonbulk revenues or revenues from subsidiary tank truck carriers. In all cases, the numbers were supplied directly to Bulk Transporter. The staff greatly appreciates the cooperation of all who helped in the preparation of this report.

Alphabetical cross index of listed carriers