Arkansas Best Corp. on Monday, April 25, announced a first-quarter 2011 net loss of $12.8 million compared to a net loss of $21.4 million in the first quarter of 2010; and revenue of $434.9 million, a per-day increase of 19.0 percent from $359.9 million. The company said its results reflect continued improvements in broader economic and less-than-truckload market conditions that provided the opportunity for growth in its daily tonnage levels, but that additional business was not enough to return ABF to profitability.
ABF said its results were impacted by the lingering effects of a weaker, recessionary pricing environment, as well as severe weather effects in January and early February and a significant increase in fuel costs that occurred predominantly during the last six weeks of the quarter. ABF said fuel surcharge caps and nonstandard fuel surcharge programs played a greater role in its quarterly results than in past periods of significant fuel price increases. During March, and into the month of April, ABF said it took additional actions to increase pricing on underperforming accounts and to correct inadequate fuel surcharge programs.
“With the upturn in the economy and significantly less capacity serving the industry, the opportunities for ABF to grow profitably this year are favorable,” said Judy McReynolds, president and chief executive officer of Arkansas Best, based in Fort Smith, Ark. “Shippers are becoming more concerned about having transportation capacity to deliver their products.”
ABF Freight System posted revenue of $402.4 million compared to $333.0 million, a per-day increase of 18.9 percent; and a 17.4 percent increase in tonnage per day. “ABF continues to retain the general rate increase that was implemented in October,” McReynolds said. “The level of recently negotiated price increases on contracts and deferred pricing agreements has also improved. Though some progress in returning to adequate pricing has resulted from these actions, more work is needed to align our pricing levels with the value we provide.”
McReynolds said ABF is taking “aggressive actions” to improve pricing and profitability. “There are currently several internal initiatives directed at highlighting underperforming segments of business, including revisiting substandard and capped fuel surcharge programs,” she said. “I am pleased to report that the positive effects of these efforts can be seen in April yield improvements.”
McReynolds said that as the economic environment has improved, ABF’s tonnage levels have continued to grow. “During each month of the first quarter, our rate of positive year-over-year tonnage increased,” she said. “As in the past, there is an opportunity for ABF to benefit from operating leverage in its business.”