Riding out the Economy Storm

i wonder if anyone knows where jb hunt gets all their money.......

 

heh - I wonder... hrm


Actually, I find it interesting that they include BNSF, but not the UP.

 

If you ever wondered why you can't seem to compete in the cheap freight market, a careful read of Werner Enterprises First Quarter 2008 Revenues and Earnings Report will give you a lot of insight.

http://investor.werner.com/phoenix.zhtml?c=99642&p=irol-newsArticle&ID=1130903&highlight= for full text

"Werner made significant progress in a difficult truckload market by increasing miles per tractor by 3.7% and revenue per total mile by 0.6% in first quarter 2008 compared to first quarter 2007. Werner employees worked extremely hard to produce improved asset utilization and outstanding customer service, while at the same time tightly managing our controllable costs."

Guess who is a controllable cost??? Drivers are!

"During first quarter 2008, the Company intensified its focus on the controllable aspects of fuel expense by implementing numerous initiatives to improve fuel efficiency. The early signs of progress are very encouraging. These initiatives include reducing truck idle time, lowering non-billable miles, and continuing to increase the percentage of aerodynamic, more fuel efficient trucks in our fleet."

Remember what is controllable? Drivers can't idle even in cold or hot weather. Non-billable miles get lowered by making drivers wait days for loads closer to their currentl location. And non aerotrucks are being sold but do the new trucks have APUs???

"Werner has reduced its exposure to the longer haul market and increased its asset base in the more attractive, shorter haul Regional and Dedicated markets and the high-service Expedited market."

Drivers love long haul. They have more contol over their schedules. The less long haul the less control. Still wanna be a trucker?

"The driver market, while always challenging, remained less difficult than a year ago. Normally going into the spring season, the driver market is very difficult due to seasonal construction and housing jobs that become available with improving weather conditions. The current weakness in these industries and other factors are helping improve the Company's driver availability."

More drivers means you have even less value to a trucking company.

"The Company's financial position remains strong. The Company ended the quarter with no debt and $77.9 million of cash."

THIS IS HUGE! PAY ATTENTION HERE.

If you have debt financed operational assets you are at a tremendous operational disadvantage to Werner. Why. Because during a downturn in the economy, Werner can simply suspend dividends. If this isn't enough, they can spend some of their 78 million in cash to offset their already lower than your fuel cost until independent truckers go out of business. If this isn't enough they can reduce driver pay until they resetablish equilibrium between revenue and expenses.

It is not a level playing field. I wish you good luck and even more good management during these trying times.

BRI