LTL yields are increasing but profits remain slim   

Stifel Nicolaus (www.stifel.com) reported strong year-over-year yield growth but continued financial struggles for publicly traded less than truckload (LTL) carriers in Q4. The Stifel industry sector Snapshot for the LTL sector showed revenue per hundredweight (yield) including fuel surcharge increasing by more than 5%. That makes 3 straight quarters of rising year-over-year yields for the LTL carriers following 6 straight quarters of declining yields. Operating ratios deteriorated slightly in Q4 from Q2 and Q3 and remain just below 100%. 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 historical yield compression is not related to price reduction but to larger average shipment size. Composite net income, excluding YRCW, remains well below pre-recession levels.

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