Operating income increased 21% over prior year. Benefits from steady demand, consistent load growth, improved box turns and lower office personnel compensation costs were partially offset by higher insurance and claims costs, higher costs to acquire and retain drivers, increased outsourced drayage costs, increased rail purchase transportation costs and higher fleet equipment costs. The current period ended with approximately 64,000 units of trailing capacity and 4,050 power units assigned to the dray fleet.
Dedicated Contract Services (DCS)
- Third Quarter 2013 Segment Revenue: $319 million; up 17%
- Third Quarter 2013 Operating Income: $29.3 million; up 14%
DCS revenue increased 17% during the current quarter. Productivity (revenue per truck per week) decreased by approximately 3% vs. 2012 due to the higher percentage of customer provided equipment and customer paid fuel primarily with respect to new large private fleet conversions. New accounts provided a net additional 972 revenue producing trucks by the end of the quarter compared to prior year.
Operating income increased by 14% from a year ago. The increase is primarily due to the increase in revenue from new accounts and partially offset by higher recruiting, relocation and personnel retention costs mostly within the new fleet conversions; higher purchased transportation costs and toll expenses, also mostly within the new fleet conversions; increased bad debt expense and increased equipment costs. While the implementation of the two new fleet conversions is complete, implementation costs incurred in the current quarter were approximately $2.5 million versus previous estimates of $1 million. A portion of this increased cost is expected to be ongoing until the fleets for these new accounts are operating in the manner in which they were designed with the customer.
Integrated Capacity Solutions (ICS)
- Third Quarter 2013 Segment Revenue: $137 million; up 13%
- Third Quarter 2013 Operating Income: $2.8 million; down 48%
ICS revenue increased 13% in the current quarter vs. the third quarter 2012, primarily due to a 4% increase in load volume and a higher revenue per load. Revenue grew faster than volumes primarily due to freight mix changes driven by customer demand. Truckload brokerage volume increased for the quarter but was partially offset by a decrease in less-than-truckload brokered loads compared to the third quarter 2012. Both transactional and contractual volumes continued to grow during the quarter. Contractual business was approximately 64% of total load volume in the current period and comparable to third quarter 2012.