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TANK truck carriers faced another mixed year for financial performance in 2006. A majority of fleets posted modest revenue gains, and many (especially petroleum carriers) showed productivity gains. However, profitability continued the slide that started in 2005.
Just about 63% of the carriers participating in this year's Bulk Transporter Annual Gross Revenue Report posted higher revenues. However, that was quite a drop from the 2005 report in which more than 80% of the participating fleets announced higher revenues. Further, operating ratios worsened for nearly 66% of the participants in this report.
Factors contributing to the erosion of profitability included rising driver wages, diesel prices that climbed above $3 a gallon in August 2006, and ever-higher insurance premiums. Prices were up for new tractors and tank trailers. Fleet productivity was hurt by traffic congestion and hours-of-service regulations that limit a driver's time behind the wheel.
Overall truck tonnage dropped during 2006, along with new home construction and US automotive production. Tank truck carriers serving the construction and automotive sectors certainly felt the impact. In contrast, petroleum shipments remained strong in spite of higher fuel prices, and biofuels growth brought new business for many tank haulers.
The profitability challenges may have prompted the first significant increase in tank truck carrier mergers and acquisition in several years. Among the deals announced during 2006: Transport Service Co bought the chemical fleet assets of Mission Petroleum Carriers Inc; Dana Transport acquired Liquid Transport Corp; Dupré Transport LLC sold off its van fleet in mid-2006; Kenan Advantage Group bought Bulk Express; F T Silfies purchased Price Trucking Inc; and Trimac Transportation acquired cement hauler Jeffbrett Group Partnership.
Top 10 tank truck carriers fared somewhat better in the profitability struggle when compared with the rest of the industry. Of the seven Top 10 carriers that provided numbers for 2005 and 2006, six posted higher revenues, and four showed improved operating ratios.
Several of the Top 10 carriers changed position. Quality Distribution Inc again headed the list, but Kenan Advantage Group and Trimac Transportation traded places at two and three. Rounding out the Top 10 were Superior Bulk Logistics, Groendyke Transport Inc, Ruan Corporation, Enterprise Transportation Co, A&R Transport Inc, Schneider National Bulk Carriers, and Tankstar USA.
Combined Top 10 revenues were $3.02 billion in 2006, a marginal improvement over 2005. Top 10 revenues in 2006 accounted for 51.3% of the total in the report.
The Top 25 carriers had $4.4 billion in revenues, or 74.7% of the total represented in this report. That was an increase over the $4.23 billion in revenues reported by the Top 25 in 2005.
Total 2006 revenues for all 80 carriers in this report were $5,894,691,407. In contrast, the 80 carriers in the 2005 report accounted for a combined total of $5,552,355,943.
Average revenue in 2006 was $73,683,642, up $4.2 million from the average of $69,404,449 in 2005. The median carrier on the list, the one with an equal number of carriers above and below it, had revenues of $31,180,000. In 2005, the median carrier revenue was $28,175,000.
Operating ratios for both 2006 and 2005 were supplied by 70 of the carriers in this report. Twenty-four — just about a third — showed improvement over the previous year. The operating ratio represents operating expenses as a percentage of revenue.
Forty had operating ratios between 95.0% and 99.9% (compared with 46 in 2005), and one had a ratio above 100%. Ratios between 90.0% and 94.9% were reported by 28 carriers, up five from the previous year. Just one fleet had a ratio below 90%.
Most of the fleets participating in the 2006 report submitted information used to calculate tractor revenues. These numbers give an indication of productivity levels. The average for 2006 was $180,723, a good increase over the $173,845 average in 2005.
Six of the Top 10 reported tractor revenues, averaging $195,781. This was a significant increase over the $174,305 average reported by the Top 10 in 2005, and it was one of the real bright spots in this year's Gross Revenue Report.
The best productivity (tractor revenue of $356,739) came from an East Coast petroleum hauler. The lowest tractor revenue ($72,057) was posted by an East Coast dry carrier that hauls construction materials.
More than one petroleum hauler topped the $300,000 mark for tractor revenue in 2006. On the other hand, the low for petroleum haulers was $98,320. Average revenue for tractor for a group of eight petroleum carriers was $238,158, up from the previous year's average of $215,252.
Six chemical haulers accounted for average revenue per tractor of $196,571, up from $180,486 in 2005. Tractor revenue ranged from a high of $252,941 down to $104,500.
Average tractor revenue for six dry bulk specialists was $155,311, down slightly from a $156,546 average in 2005. Dry bulk tractor revenue ranged from a high of $226,771 to a low of $72,057.
Among six carriers that focus on transporting bulk liquid and dry foods, tractor revenue averaged $156,820, a nice increase over the 2005 average of $130,642. The high for the category was $196,246, and the low was $98,437.
Many of the figures here are from preaudited reports, and some may include nonbulk revenues or revenues from subsidiary tank truck carriers. In all cases, the numbers were supplied directly to Bulk Transporter. The staff greatly appreciates the cooperation of all who helped in the preparation of this report.