Frozen Food Express Industries (Dallas based frozen food carrier with truckload and less than truckload freight services) released its financial results for the second quarter of 2010. Frozen Food Express is a top national leading temperature controlled truckload and less than truckload carrier in the domestic United States. The primary focus of the carrier is to haul temperature controlled and frozen perishables for the health care, confectionery, and food industries. The carrier also has a third party logistics (3pl) division in order to exceed requirements of shippers and other freight brokerage customers.
The Company’s CEO stated the carrier had put a higher emphasis on service excellence and asset utilization. Mr. Stubbs believes the focus on profitable customer retention will increase margins in truckload and increase tonnage and shipment count on the less than truckload (LTL) division as well. A combination of an exodus of competitors and decrease in available capacity has improved the freight transportation and logistics marketplace. These economic factors allowed Frozen Food Express decrease their pre-tax loss by more than 41%.
Despite revenue only ticking up 9%, the use of existing equipment, increase in pricing, and lack of competitors allowed for these improved results. For the last six months however, the operating revenue had decreased more than 3%. Truck productivity (measured by revenue per truck per week) was also up by more than 4% during the quarter as the market has appeared to turn in the favor of the freight carrier. In 2009 Frozen Food Express said they had decided to park a portion of their existing tractors until the market returned. Now the company appears to be putting them back into service as the market continues to strengthen.
Shippers have also been willing to respond to the freight marketplace also. Carrier executives say they have seen a willingness on part of the shippers and logistics firms to adjust pricing to reflect the tightening marketplace. Truck Drivers returning to work will certainly help the transportation industry return to profitability as freight prices escalate off of historically low levels. Many carriers have adopted cost-saving strategies as losses during the last number of years had been increasing. During second quarter of 2010, most carriers have seen improved results from a combination of a favorable freight pricing environment and results of these carrier cost saving strategies.
Frozen Food Express feels a large element of its success during these turbulent economic times have been the employees commitment to the company and wiliness to seek new efficiencies in all phases of the operation. The carrier continues to have a strong cash position without loans outside of its credit agreement. Frozen Food Express has almost seven million dollars in cash, 83 million in shareholder equity and no outstanding debt. While the carrier is in a strong position to weather out the economic climate, the management is dedicated to continuing to manage its assets utilization and seek further operational efficiencies.
It appears freight carriers have regained a foothold in the transpiration industry. Several Carriers and third party logistics firms have reported better than expected earnings and narrowed losses due to tightening capacity and reduced overhead. An economic recovery within the freight industry certainly appears to be underway. Let’s hope a momentum allows for a sustained economic recovery not only for freight and transportation, but also for the broader economy.
