LTL industry need big volume boost for carriers to profit, CEO says
The trucking industry will have to see a significant freight volume increase before beleaguered carriers return to profitability, a leading trucking executive says.
“It’s going to take about a 10 to 15 percent increase in volume to turn the industry profitable,” Arkansas Best President and CEO Robert A. Davidson said May 19 at the Wolfe Reasearch Global Transportation Conference in New York.
The company’s main subsidiary, $1.8 billion LTL carrier ABF Freight System, reported a net loss of $18.2 million in the first quarter, when tonnage per day decreased 15.7 percent.
ABF is throttling back in the recession. It eliminated 625 positions in the first quarter, a 23 percent employee reduction since the fourth quarter of 2006, when its business began to decline. The cutbacks mean the trucker will be about 20 percent smaller than it was only three years ago.
Davidson said cutbacks in personnel and equipment wouldn’t affect the carrier’s ability to handle freight. “We can absorb more business like rain on a desert floor,” he said.