Supply chains are constantly changing — and there are few better indicators of this than the performance of those companies most embedded within the value chain.
In a special edition of Logistically Minded, Supply Chain Dive put together an overview of significant results from various transportation and logistics providers' financial earnings.
Shipping Lines
Maersk Line appears to be winning out despite shipping industry woes. Hanjin's receivership and the upcoming holiday season led to a sudden surge in demand last quarter, which led to Maersk's 11% volume growth. In addition, the company noted part of the boost came from a growth in market share due to competitors' ailing fates.
"There was a lot of business to go around suddenly [after Hanjin failed], and Maersk Line captured, I believe, more than its fair share in the process," Maersk Line CEO Soren Skou said during the earnings call.
However, the world's largest carrier was not left unscathed. A 16% decrease in freight rates spurred 11% lower revenues and an underlying loss of $122 million in Q3 compared to the previous year.
China COSCO Holdings, the post-merger brand for COSCO and China Shipping, completed the companies' IT system migration last quarter, setting it on path to finish restructuring by the end of 2016.
The merger will leave it with 301 operating and 35 ordered vessels for over 2 million TEUs of capacity, or a 47% growth in capacity from last year. As a result of the increased capacity, the company's container business revenue rose 20% from the previous year, while throughput rose 3.9%.
Yet, if the industry has learned anything this year it's that growth in capacity does not equate to greater profits. The company recorded a 232.8% decline in gross profit, for a quarter loss of $81.6 million. This was largely due to historically low freight rates and rising gap in the supply and demand for maritime shipping.
But Orient Overseas Container Lines' results reveal the carrier's dilemma; invest in capacity to increase market share and revenue potential at the risk of further decreasing freight rates, or do nothing and lose market share and revenue per TEU as others raise capacity.
Shipping alliances will help share costs associated with both options, but they do not take away from the fact the companies will continue to struggle independently. The company's container volumes only rose 5.2% from last year, but revenue per TEU still decreased by 18.1% in the same period, according to a press release.
The Mediterranean Shipping Company, CMA CGM and Hapag-Lloyd are expected to release an update on their financial performance within the next two months.
Ground transportation and logistics
UPS reported revenue increases all-around, recording a 4.9% total growth in revenue driven by e-commerce and a jump in air shipments. In its parcel sector, deferred air product shipments saw the highest growth (10%), followed by next day air (5.9%) and ground shipments (5.2%).
Although international air freight shipments and U.S. truckload remained down, the company's supply chain sector saw a revenue increase of $2.6 billion (8.1% growth), driven partially by growth in North American air freight and a successful acquisition of Coyote Logistics.
Perhaps for this reason, the company also announced a $5.3 billion order of 14 Boeing 747-8 planes as a long-term investment.
J.B. Hunt may have missed Wall Street expectations, but the carrier still posted moderate gains: an 8.4% revenue increase with all-around capacity growth, stifled by weak markets.
Three of the company's four segments marked a similar trend of revenue growth and operating loss, as volumes rose but revenues per truckload fell significantly.
Dedicated services bucked that trend, however, recording a 3% higher revenue per truck per week to bring a 6% total revenue growth and a 16% operating income growth, compared to the same period last year. The segment accounts for 23% of all company sales, and has shown significant year-over-year gains.
The challenges of a weak market remain strong, however, particularly in the truckload and less-than-truckload service areas.
YRC Worldwide recorded a 29.8% profit drop last quarter driven by low fuel prices, soft volumes, the company's retrofitting of 15,000 tractors with in-cab safety technology, driver shortages and increases in labor costs.
"Our plan is to manage through the near term headwinds while executing in the long-term strategy," said YRC Worldwide CEO during the earnings call.
Meanwhile, XPO Logistics continued its rapid growth during Q3 proving it deserves its rising-star status.
The company reported a 57.2% revenue growth from last year, sold Con-Way's truckload assets to TransForce to hone its coverage, refinanced debt for $63 million in annual cash savings, and increased market share in the brokerage and last-mile spheres.
