Even though the nation's economy has been in a down cycle, refrigerated fleets, for the most part, have weathered the anemic business conditions. Many have even grown. They have accomplished this despite record fuel prices, a decline in construction, a downturn in housing and automotive, a wave of foreclosures, an explosion of sub-prime lending, and a lack of consumer confidence, among other things. All of which directly impacts the refrigerated transportation market.
A chief reason for the stability of refrigerated carriers is that their business has remained fairly steady because of the constancy of food market. “People need to eat no matter how rapidly or slowly GDP is going,” remarked an industry economist recently.
Additionally, refrigerated carriers have been implementing fuel-saving initiatives and incorporating technology and processes to increase overall truck efficiency and fleet utilization to offset rising costs.
Findings from this year'sAnnual Gross Revenue Report show that total revenue for 2007 was $3,810,828,548, up nearly 6% from $3,600,677,256 in 2006. However, the average operating ratio for the reporting fleets also increased from 93.62% in 2006 to 95.33% in 2007.
Operating ratio is way to measure a company's operating efficiency and effectiveness by calculating operating expenses as a percentage of revenue.
It should be noted that typically, anywhere between 30 to 50 refrigerated carriers participate in this report, the only compilation of revenue figures focusing on refrigerated fleets.
In total, about 120 carriers have reported revenues since 1998. Of these, about two dozen that reported for 1998 also provided revenue figures for 2007. For this year's report, 40 refrigerated fleets reported annual revenues; 32 provided operating ratios.
For the fleets that reported revenues in 1998 and in 2007, the average growth is about 77% over the 10-year period, increasing from an average of $102,578,206 in 1998 to an average of $181,468,026 in 2007.
Among the 10 fleets who reported revenues for each of the past 10 years, growth from year-to-year varied from a low of about 2% during 2002, to a high of about 32% in 2006.
These 10 fleets are: Baldwin Distribution Services, C R England, Frozen Food Express, John Christner Trucking, KLLM, Marten Transport, Prime, Sorenson Transport, Stevens Transport, W N Morehouse Truck Line.
Average growth from year-to-year for these fleets is about 10%.
As a result of this steady growth, the gross revenues for these 10 fleets have more than doubled from 1998 and in 2007.
C R England once again tops the list for 2007 in terms of gross revenue. In six of the last 10 years, the carrier has held the top spot, more frequently than any other refrigerated carrier participating in Refrigerated Transporter's Annual Gross Revenue Report.
It ranked third in gross revenue in 2004. Transportation Industries Holding was number one, followed by Prime. In 2003, 2002, and 2001, C R England ranked second behind Prime in the number one position.
Operating ratios reported by fleets that have participated in each of the past 10 Annual Gross Revenue Reports indicate rising costs from 1998 until 2002, followed by improved ratios for 2003 and 2004, and then an increase in costs again in 2006 and 2007.
Comparing annual report against annual report between the years 1998 and 2007 shows an increase in the average operating ratio for these fleets, even though during the course of the 10-year period there was an overall swing of four points.
The larger refrigerated fleets have more favorable, or lower, operating ratios over the past 10 years.
Focusing on just those fleets that have participated in all of the past 10 annual reports, the trend is slightly more pronounced. The higher revenue fleets have even more favorable operating ratios.
The typical operating ratio based on all carriers that took part in each and every Annual Gross Revenue Report from 1998 to 2007 is about 95%. There are relatively few reports of operating ratios below 93%, or above 97%, during this 10-year time frame.
The best operating ratio for 2007, at 82.5%, was reported to by Sorenson Transport. The previous year, Stevens Transport had the lowest operating ratio at 84.5%.
Clearly, not all refrigerated carriers are included in Refrigerated Transporter's Annual Gross Revenue Reports.
Sadly, despite our best efforts in contacting fleets and requesting their participation, there are those that simply will not. Some just don't care to contribute, for a variety of reasons. Others don't want to share their financial information, especially as the industry grows ever more competitive.
Through greater involvement, the Annual Gross Revenue Report will become an even more useful and valuable reference and benchmarking guide. We invite your participation.