LTL carrier yields remain under pressure but financial performance improves   

Stifel Nicolaus (www.stifel.com) reported continued yield pressure but financial gains for publicly traded less than truckload (LTL) carriers in Q2. The Stifel industry sector Snapshot for the LTL sector showed a further compression of 1.2% in revenue per hundredweight (yield) including fuel surcharge. That makes 7 straight quarters of declining year-over-year yields for the LTL carriers as the battle to win YRC's share and the weak economy continue to take a toll on the LTL segment. Operating ratios improved substantially from Q1 2010 and from Q2 of last year but have just now dropped below 100% for the first time since 2008. LTL carriers have a long way to go to achieve operating ratios in the low 90's as they had achieved before the recession. Weight per shipment continues to climb as parcel carriers win smaller shipments and TL carriers only reluctantly accept multi-stop TL shipments. All else being equal, LTL yields vary inversely with weight per shipment, so part of the yield compression is not related to price reduction but to larger average shipment size. After six straight negative quarters, the composite LTL group showed EPS growth over a very weak 2009, and positive EPS for the quarter.

Graph reproduced with permission from Stifel Nicolaus. For more information contact: JGLarkin@Stifel.com