Even with more competition and challenges, refrigerated carriers report sustained growth and operating ratios

Despite the many challenges that continue to confront the industry, and the complicated dynamics of the marketplace, refrigerated carriers, on whole, have seen a slight improvement in business. Refrigerated Transporter's Annual Gross Revenue Report — the only compilation of revenue figures focusing on refrigerated fleets — shows that for 2006, revenue was up somewhat, and on average, operating revenues — a company's operating expenses divided by its operating costs — went up to some extent as well.

As can be seen in the accompanying Rankings and Growth Rates table, there was an average 8.5 percent rate of growth from 2005 to 2006 for the 45 carriers that responded to information requests from Refrigerated Transporter. That amounted to an average of $905,607 in additional revenue.

Revenue for these carriers totaled $5,090,053,674 in 2006, compared to $4,691,546,665 the previous year.

To gain further insight into the industry's business conditions, for this year's Annual Gross Revenue Report, Refrigerated Transporter reviewed carrier revenue information it has collected over the past 10 years.

An analysis of this data for each year from 1997 through 2006 reveals that many of the fleets have grown by double and even triple-digit percentages. For example, the top dollar performer, C R England, increased by 102 percent, from about $314 million in revenues to more than $636 million.

Some of the smaller refrigerated transportation fleets also performed very well during the past 10 years. Diversified Transfer and Storage, by way of example, grew by 200 percent. Its revenues went from about $4 million to $13 million.

The largest percentage increase in revenue for fleets was achieved by John Christner Trucking. It grew by 363 percent, from annual revenues of about $40 million in 1997 to nearly $185 million in 2006.

Report participants

The fleets that participate in Refrigerated Transporter's Annual Gross Revenue Report vary from year-to-year. As a rule, about three or four dozen refrigerated carriers participate in the annual survey each year.

In total, about 120 carriers have reported revenues in the survey since 1997. Of these, about two dozen refrigerated motor carriers that reported for 1997 also provided their revenue figures for 2006.

Altogether, there are 538 reports of annual revenue and 466 reports regarding operating ratios over the 1997 to 2006 time frame. With regard to 2006, 44 refrigerated fleets reported annual revenues, and 36 provided operating ratios.

Reported revenues

For fleets that reported revenues for 1997 and for 2006, average growth is about 85 percent over that 10-year period. Revenues increased from an average of $86,808,808 in 1997 to an average of $160,325,029 for 2006. See the 10-Year Revenue Snapshot table.

Total 1997 revenue for these fleets was $1,996,602,583. In 2006, their total revenue was $3,687,475,657.

Among the dozen fleets that reported revenues for each of the past 10 years, growth from year-to-year varied from a low of about two percent during 2002, to a high of about 12 percent in 2001.

Average growth from year-to-year for the fleets that have reported each year, including 1997, is about 8 percent. See the Revenue Trends 1997 to 2006 graph.

As a result of this steady growth, the gross revenues for these fleets have about doubled in 10 years.

C R England again tops the list for 2006 in terms of gross revenue. In five of the past 10 years, the company has held the top spot more frequently than any other refrigerated carrier.

Ten years ago, C R England was number two, then moved up to number one for several years, then was in the second and third position for a few years, before regaining and holding the lead in 2005 and 2006.

Operating ratios

Operating ratios reported by fleets that have participated in each of the past 10 Annual Gross Revenue Reports indicate rising costs from 1997 until 2002. This was followed by improved ratios for 2003 and 2004, and then a slight up-tick in costs again in 2006. See the Operating Ratio Trends 1997 to 2006 graph.

In comparing annual report against annual report, between the years 1997 and 2006, there is only a slight change in the average operating ratio for these fleets, even though during the course of the 10 years there was an overall swing of four points.

Looking at the 466 individual operating ratio reports provided by fleets over the past 10 years, it appears that larger companies have more favorable operating ratios. One contributing factor is larger companies command more economies of scale in their purchasing efforts than do smaller businesses.

Focusing on just those fleets that have participated in all of the past 10 Annual Gross Revenue Reports, the trend is slightly more pronounced, with the higher revenue fleets having even more favorable or lower operating ratios.

The typical operating ratio based on all fleets surveyed over the past 10 years is about 95. There are relatively few reports of operating ratios below 93, or above 97, over the years 1997 to 2006.

The best operating ratio in 2006 was 84.5, reported by Stevens Transport.

The best operating ratio for the past 10 years was reported in 1997 by Indiana Western Express at 79.9.

A breakdown of the data for the different annual gross revenue groups on average operating ratios for the past 10 years are shown in the Average Operating Ratios by Annual Revenue Group — 1997 to 2006 table.

Many fleets have appeared at the top of the list, in terms of revenues or operating ratios, during the past 10 years of Refrigerated Transporter's Annual Gross Revenue Reports. However, a few have been very high in the rankings, but appeared only a few times in the surveys for a variety of reasons, such as mergers, acquisitions, or failure to respond.

Relative changes

To reveal meaningful relative changes in the revenue ranking over the past 10 years, Refrigerated Transporter has developed two fleet indices. The Fleet Revenue Index takes into consideration how high a carrier was ranked relative to others, and how many times a carrier was ranked. The more often a carrier ranks highly, the better its Index score.

The 20 most highly ranked refrigerated fleets in terms of revenues from 1997 to 2006, according to the Refrigerated Transporter Fleet Revenue Index, are shown in the Top 20 Revenue Refrigerated Fleets — 1997 to 2006 table. Leading the list are C R England, Prime, Frozen Food Express, Marten Transport, and KLLM.

The Fleet Operating Ratio Index, which works in a manner similar to the Fleet Revenue Index, provides a comparison of fleet performance over the past 10 years regarding operating ratios.

As noted previously, there is a significant relationship between higher revenues and favorable operating ratios. Thus, it is not surprising to see several of the same top performers in terms of revenues appear in the table regarding the consistently best reported operating ratios.

Heading the ranking of the Top 20 Refrigerated Fleets with Best Operating Ratios — 1997 to 2006 are Sorenson Transport, Stevens Transport, Prime, Marten Transport, and John Christner Trucking.

Fleet Input

Obviously, not all refrigerated carriers are included in Refrigerated Transporter's Annual Gross Revenue Reports. Try as we might, we are never able to contact all of them. As you would expect, the larger carriers are easy to find. The smaller ones are not.

Even when carriers are contacted and asked to participate in the annual survey, some will not. One reason for this is that a number of companies do not care to share their financial information, especially as the industry grows ever more competitive.

Through your participation, you can help make the Annual Gross Revenue Report become an even more useful and valuable resource as a benchmark for carriers serving the refrigerated transportation industry.

To be included in next year's survey, please send an e-mail request to: rt.directories@penton.com. Thank you in advance.

For an archive of previous reports that go back to 2000/2001 revenue figures, or to download a PDF of this article that includes the charts printed in the original published report, visit:
www.refrigeratedtrans.com/gross-revenue-reports

Alphabetical Listing of Companies
Company Rank
3KB Transportation Inc 31
Arctic Express Inc 18
Atlantic Coastal Trucking Inc 42
Baldwin Distribution Services Ltd 29
C R England Inc 1
Cargill Meat Logistics 17
Central Refrigerated Service Inc 7
Classic Carriers Inc 25
D & D Sexton Inc 23
Denney Transport Ltd 35
Diversified Transfer & Storage 39
Earl Henderson Trucking Co 15
Escro Transport Ltd 41
Fortune Transportation Co, Inc 30
Frock Bros Trucking Inc 36
Frozen Food Express Industries 3
FST Logistics Inc 20
Grand Island Express 24
Greatwide Logistics Services 5
Howell's Motor Freight Inc 22
J & R Schugel Trucking Inc 13
John Christner Trucking LLC 9
Kelle's Transport Service Inc 40
Kennesaw Transportation Inc 19
KLLM Inc 8
L W Miller Transportation Inc 33
M Bruenger Co Inc 32
Marten Transport Ltd 2
Nagle Toledo Inc 34
National Carriers Inc 11
Pride Transport Inc 14
Prime Inc 6
Refrigerated Food Express Inc 26
Rocky Top Trucking 44
Seagate Transportation Services 43
Sorenson Transport Co Inc 27
Southern Refrigerated Transport Inc 12
Stevens Transport Inc 4
T W Transport 28
W N Morehouse Truck Line Inc 37
Walbon & Co Inc 38
WEL Companies IncI 16
Willis Shaw Express 10
Witte Bros Exchange Inc 21