As the US economy rebounded last year, LTL carriers had plenty to smile about as their revenue significantly increased. However, this good news was shared primarily by the largest carriers, as the revenue got more consolidated and concentrated at the top. In 2014, the 25 largest LTL carriers increased their combined revenue by 9.1 percent to $32.3 billion. In totality, the LTL industry revenue increased by 7.5 percent to $35.4 billion.
This revenue increase is a direct result of the improvement of the US economy as a whole. The economy collapse of 2009 saw many sectors greatly affected and it is only recently that recovery is being made. As the economy inches closer and closer to a full recovery, it is expected that the revenue realized in the trucking industry will keep growing, with the largest companies taking the lion’s share.
The 9.1 upward growth was the best for LTL carriers since 2011, when they reported a 12.4 percent growth in revenue. Between 2012 and 2013, the revenue growth was at 4.4 and 3.9 percent respectively. Currently, the revenue of the 25 largest LTL carriers stands higher than their pre-collapse record of $29.3 billion. It is not just the 25 largest LTL carriers that are smiling though. As a whole, the LTL industry has surpassed its highest revenue collections which were recorded in 2006.
Individually, the LTL carriers grew their revenue differently, ranging from 0.8 percent to 36.8 percent. Nine carriers boosted their revenue by double digits, which is an increase by 7 from 2 carriers last year. This is an indication that the LTL industry is not just doing well collectively, but the carriers are enjoying an improved economic environment individually as well.
The bad news is that smaller LTL shipping companies weren’t fairing so well. In fact, smaller carriers that were not listed on the top 25 saw their revenue dip by 6.6 percent. This was attributed, partly, to the sale of Vitran Express and the shutdown of New Century Transportation, both of which contributed majorly to the combined revenue of the smaller carriers.
The dipping revenues of the smaller carriers come against the backdrop of a near crisis occasioned by an acute driver shortage in the trucking industry. This shortage has affected all players in the industry, including the consumer. So on top of the decrease in revenue, some small carriers also have to deal with the fact that they need to increase hiring and staffing to compete.
It is expected that the largest LTL carriers will continue to dominate as far as revenue is concerned. However, consolidation and increased efficiency will help some of the most nimble small and midsize LTL carriers. Compete effectively