Gross Revenue data for 2000 shows a slight increase for 65 carriers responding to information requests from Refrigerated Transporter. On average, these carriers report higher revenue than they reported for 1999. However, the rate of growth is two full percentage points lower than that shown for 78 carriers who responded to this survey with 1999 data for the September 2000 issue.

Profit margins continued to narrow for the second straight year. The average operating ratio for carriers responding to this report with data from 2000 increased two full percentage points from 94.6 on data for 1999 to 96.6. Many of the larger carriers show higher operating ratios for 2000, and two of the larger public stock companies actually lost money in 2000.

With 65 entries, fewer carriers are listed in this Gross Revenue Report than the 78 that were named in the report last year. As the business climate becomes more difficult, privately held carriers are more protective of their financial data. A number of carriers that have provided data in the past declined to participate this time. In addition, data is not available on refrigerated carriers that are part of larger public stock companies. These companies do not release data from individual operating divisions.

With fewer carriers listed, determining results for the whole industry becomes slightly complicated. In raw terms, the 65 carriers responding for this report show less revenue for 2000 than the 78 carriers listed last year showed for 1999. The total for 1999 revenue from those 78 carriers was $4,831,601,739, up from $4,440,779,582 in 1998. The 65 carriers providing data on 2000 revenue report a total of $4,506,940,120, which is 6.4% more than the $4,236,084,982 they reported for 1999. Ostensibly, the shortfall from 1999 to 2000 revenue is roughly $300 million. More than half that can be accounted for by just a few carriers that did not report 2000 revenue. Nonetheless, freight demand in 2000 was soft, and many sources suggest that the results for 2001 will be lower still. Allowing for variations in the number of carriers responding to our request for financial data, we still see an increase of almost $1 billion in refrigerated carrier revenue since 1995.

$271 Million Increase

The revenue increase reported by these 65 carriers amount to almost $271 million. The growth rate is 6.4%, down from the 8% shown for 1999 revenue in September 2000. The rate of growth shown in the 1998 report was 9.8%. The recent peak was a 15.5% growth rate shown in the 1997 report. A look at growth since 1995 shows that 7% to 8% has been a fairly normal rate of increase, and that the economy slipped fairly badly in 2000 and is expected to show more slippage for 2001. The depth of the current freight recession will determine whether or not a growth rate as high as 15% will be repeated again soon. If freight demand slips far enough and capacity tightens as a result, a recovery could indicate a high rate of growth and still barely exceed revenue totals posted in recent years.

The percentage of carriers who respond to our Gross Revenue Report request and who report a revenue increase remains strong. As in the past year, 85% of the responding carriers report higher revenue. Although the total number of respondents is lower, the percentage of carriers showing an increase is higher for the second straight year than the 80% shown in the 1999 Gross Revenue Report on 1998 business. The number of carriers reporting an increase has been at 80% or higher since 1996.

Operating ratios are available for 57 of these 65 carriers. The average 2000 operating ratio for carriers in this report is 96.6, a full two points higher than the 94.6 average ratio reported for 1999. The average operating ratio began rising in 1997, moving slightly for 1998 and 1999 and taking a sharp jump for 2000. As operating ratios become higher, even small increases indicate potential trouble. The last time operating ratios were this high was 1996 when the average was 96.5. Profit margins have been narrowing steadily since 1995 when the average operating ratio was 90.7.

One sign of the profit difficulties facing refrigerated carriers is that nine companies reported an operating ratio of 100 or more on 2000 revenue. This represents 16% of carriers providing data. The number of carriers with an operating ratio of 100 or more on 1999 revenue was six, up from four carriers with similar results in 1998. Only three carriers reported an operating ratio below 90, down from six carriers with such a low ratio last year and significantly lower than the nine carriers reporting a low ratio on 1998 revenue.

Another indication of difficulty in the business climate is that only 13 carriers reported an operating ratio of 95 or lower for 2000. On 1999 revenue, 28 carriers reported an operating ratio of 95 or lower. This benchmark has been falling rapidly; 39 carriers posted a 95 ratio or better on 1998 revenue.

Operating Ratio Change

The biggest positive shift in operating ratio was five points, but the move was from 105 to 100, not a great performance, especially when compared to a five-point shift on 1998 revenue from 96 to 91. The worst showing was a shift of 5.8 points from 96.2 to 102. Although bad, this was a better result than the big shift of 8.8 points from 95.2 to 104 on 1999 revenue or the huge shift of 14.2 points from a spectacular 79.9 to a reasonable 94.1 on 1998 revenue.

The large carriers represented in this report are still becoming larger. The first three carriers in the report account for more than $1 billion, and the first four total almost $1.5 billion in revenue. This is so, notwithstanding the fact that the fourth ranked carrier shed almost $71 million in revenue between 1999 and 2000. The total climbs past $2 billion by the seventh carrier on the list. The clumping of revenue groups seen in the past has stopped. Revenue for 2000 shows an almost even incline from top to bottom with very few big drops. However, two gaps of almost $50 million separate two of the top ten carriers, but in each case total revenue for each is nearly $200 million.

The report is still extremely top-heavy. The first eight carriers account for more than half the report total, and the first 17 make up more than three-quarters of the total. This all pales in comparison to dry van carriers, however. It takes the total of the top 15 refrigerated carriers to equal the revenue of Schneider National, the largest dry van truckload carrier, and seven of the largest refrigerated carriers to reach the revenue of J B Hunt, the second largest dry van carrier that trails Schneider's annual revenue by almost $1 billion.

Combined Fleet Data

We have fleet data for all but one carrier in this report. These carriers operate a combined fleet of 29,178 tractors and 40,884 trailers. A small unknown portion of the trailer fleet is dry vans, and a few of the power units are straight trucks. The trailer-to-tractor ratio is 1.4:1, roughly the same as it has been for the past six years. The number of trailers compared to tractors has edged up slightly through the 1990s, perhaps as larger carriers institute more drop-and-hook operations in an effort to reduce unloading delays. Actual trailer fleet size ranges from 4,061 at C R England Inc to 13 trailers at R J Express. Notably, the R J Express trailer fleet doubled between 1999 and 2000. The trailer fleet at C R England has varied slightly for the past few years. The company reported 3,900 trailers with its 1998 revenue and shrunk the fleet to 3,622 trailers in its report for 1999 revenue.

This report shows average annual revenue per trailer of $126,270 in 2000, up from $117,846 in 1999. This benchmark could indicate a trend with revenue per trailer rising steadily from $94,222 in 1994, $96,202 in 1995, $100,154 in 1997, and $107,803 in 1998. In that span, revenue per trailer dropped only one year — 1996 in which average revenue per trailer was $93,969. Four years of averages above $100,000 per trailer per year seem to indicate a trend to higher productivity. This is reinforced by average annual revenue per tractor of $160,914 for 2000, up from $153,914 in 1999, $146,843 in 1998, and $147,835 in 1997. A trend to higher averages per tractor certainly seems likely considering that carriers reported only $132,276 per tractor per year on 1996 revenue and $132,284 per tractor on 1995 revenue.

Larger Average Carrier

A composite of the carriers covered by this report would show an average 2000 annual revenue of $69,337,540, up from $66,198,861 reported by these same 65 carriers for 1999. These averages are significantly higher than those resulting from the report of 78 carriers for 1999 revenue in September 2000 when the 1999 average was $61,943,612 and the 1998 average was $56,933,071. Average revenue has been rising steadily since 1995. A carrier posting the current average would rank Number 20 on the list, up four positions from the average position for the past five years.

Curiously, the soft freight market explains the rise of average annual revenue. As previously noted, this report is somewhat top-heavy. Large carriers have the resources to weather tough times and seem relatively comfortable reporting their financial data. As the total number of carriers reporting data falls, the number of small carriers falls in relationship to the large carriers. This weights the average toward the top of the list.

The median carrier in this report (Number 33) had $27,277,218 in gross revenue for 2000, up from $24,200,000 on 1999 revenue for the median carrier. Based on 1998 revenue, the median carrier had revenue of $17,025,466, which was down from the $21.4 million revenue posted by the median carrier for 1997 revenue. This median is the highest on record for this Gross Revenue Report and marks the second straight year for the record to rise. For most of the 1990s, the median carrier was in the $14 to $16 million range.

If the industry growth rate were the only factor to consider, the increases of 2000 would allow industry health to be characterized as stable. With 85% of carriers reporting increases for the second straight year, stability would seem an appropriate description if not for narrowing profit margins. The percentage of carriers reporting revenue growth has been 80% or better every year except 1997 when only 73% of carriers reported rising revenues. Another possible indication of stability is that only 11 carriers reported a drop in revenue for 2000, a result almost identical to 1999. Still this is fewer than the 14 carriers reporting a drop in revenue for 1998. The recent record for the most carriers reporting a drop in revenue was set for 1996 revenue when 22 carriers reported decreases. The number of large carriers reporting decreased revenue stands at four for 2000 after only one carrier with revenue above $100 million showed a decrease in revenue for 1999, but three of the large carriers reported decreased revenue in 1998.

Industry Health Shaky

Operating ratios, costs as a fraction of revenue, provide the main reason for concern about industry health and for suggesting that it could be shaky. The average operating ratio has been rising since 1997 when it stood at 93.9. In subsequent years, it rose to 94.25 for 1998 and 94.6 for 1999 before jumping a full two points to 96.6 for 2000. Almost uniformly, carriers express dissatisfaction with profitability, saying that operating ratios are too high to make the investments needed in driver wages and equipment technology for competitive performance. In addition, fuel prices and insurance rates have begun to drag down profits. Recent operating ratio averages are nowhere near the low 90s and high 80s reported on 1995 or 1994 revenue.

Only three carriers report an operating ratio of 90 or below for 2000 compared to six who met that standard in 1999 and nine carriers at 90 or below for 1998. Among these three carriers, the range is from 86.5 to 90, well above the 70 to 88.4 for six carriers in 1999 and above the 82 to 89.9 ratios posted by nine carriers in 1998. The number of carriers with an operating ratio below 95 continues to fall for the second straight year. On 2000 revenue, 13 carriers report a ratio below 95. For 1999, the number was 22 carriers, while 39 carriers had an operating ratio below 95 on 1998 revenue, and 37 were below 95 for 1997. Nine carriers report an operating ratio of 100 or higher for 2000, up from six at that level for 1999 and four above 100 for 1998. The troublesome factor in the current Gross Revenue report is that two of the highest operating ratios are among the top 10 carriers. Two other carriers in the top 10 declined to report their operating ratios; however, their double-digit revenue decreases suggest a potential profitability problem.

Average growth rate for all carriers stands at 6.4%, down from 8% for 1999 revenue and 7.5% on 1998 revenue. The number of carriers reporting rapid growth is down as well with only 13 carriers reporting increases above 20% compared to 15 carriers at that level for 1999. Except for four carriers, the higher growth rates were all at carriers with less than $50 million revenue in 2000, and only one of the four reached the $100 million plateau.

On revenue for 2000, no carrier exceeded a growth rate of 34%, while four carriers posted growth rates higher than 40% on 1999 revenue. Only 14 carriers grew faster than 15% for 2000, down from 19 carriers reaching 15% growth in 1999. The number of carriers growing at better than 10% is down as well with only 24 carriers reporting such growth compared to 31 carriers growing at 10% or better for 1999 revenue, 36 at 10% or higher for 1998, and 37 at that level for 1997.

Fewer Grew Rapidly

Ten carriers posted revenue increases exceeding $10 million for 2000, down from 12 carriers reaching that mark in 1999. However, this was the same number of carriers growing by $10 million or more in 1998 and up one from the nine growing that much in 1997. In all, six carriers reported growth exceeding $20 million. The number of carriers growing by more than $1 million was 36, down from 61 carriers reporting gains of $1 million or more in 1999.

Perhaps the biggest cause for concern should be the 14 carriers that lost revenue or only reached their 1999 revenue levels in 2000. Of those 14, three are among the largest in the country, and seven others all had revenue in the $25 million or higher range, including two at or near $90 million.

Obviously, more refrigerated carriers are in business than those shown in this report. The big ones are easy to find and are usually fairly forthcoming with information. Our circulation list gives us a good tool with which we can locate smaller carriers. However, owners of small carriers are not as likely to provide financial data on their operations as their colleagues at larger companies. As the business climate becomes more competitive, nearly all carriers, with the exception of the publicly-owned companies, become more protective of their revenue information. Most of our information comes directly from the carriers, but we have used other sources.