Despite a rocky road currently being driven by the trucking industry, which included the recent end of business for a Kansas City-area carrier that employed 30,000, the ride for some local companies is notably smoother.
Both Springfield-based Prime Inc. and Strafford-based TransLand are coming off a strong 2022.
It was a record-high revenue year for Prime, which was founded in 1970, as the trucking company exceeded $2.8 billion, up nearly 17% from its $2.4 billion in 2021, according to Springfield Business Journal list research.
Nicky Morrison, director of financial analysis and reporting, said Prime was a beneficiary of a booming year for trucking. According to the American Trucking Associations, trucks moved 11.46 billion tons of freight in 2022, up from 10.93 billion tons the previous year.
“There was more freight than anyone knew what to do with. In order to accommodate that growth, our fleet grew from the prior year to our peak by over 1,000 trucks. Since that peak in 2022, we’re down about 400 trucks,” she said, adding Prime’s current truck fleet is 7,150. “That’s by design to protect revenue and based on the saturation of freight that we have.”
Over at TransLand, year-over-year revenue was up 15% in 2022, said Mark Walker, CEO and chair, declining to disclose figures.
“Part of it was we had increased capacity with more drivers,” Walker said, adding he considered 2021 also to be a good year for the company. “It’s just that 2022 was that much better.”
Still, Walker said industry challenges abounded during the COVID-19 pandemic and continue to persist. Those include higher cost of capital, supply chain delays and workforce shortages.
“The cost of the equipment we’re buying has gone up, anywhere from 15%-30%,” he said of the year-over-year increase. “You put the increased cost of the equipment plus the cost of capital and all of a sudden, the cost of operations goes up quite a bit. To keep quality people, we’ve seen an increase in labor and what we’re paying drivers and other employees. That went up quite a bit during the pandemic.
“Those are some pretty tough headwinds.”
According to a June report from the American Transportation Research Institute, total marginal costs for motor carriers in 2022 increased by 21.3% over 2021 to $2.25 per mile. Fuel was the largest driver of the spike, coming in nearly 54% higher than the prior year. Additionally, driver wages increased by 15.5%, to 72 cents per mile, which reflects ongoing industry efforts to attract and retain talent.
In the ATRI survey, fuel prices were chosen as the top industry concern in 2022. According to ATRI data, year-over-year increases in fuel cost per mile were more than 35%. Diesel prices, currently at $3.97 per gallon, according to AAA, are in better shape than August 2022 when it cost $4.59. However, the current rate is up from $3.53 a month ago.
The ongoing challenges can even topple giant companies in the industry, as shown by Overland Park, Kansas-based Yellow Corp. (Nasdaq: YELL) filing Aug. 6 for bankruptcy. The 99-year-old trucking firm, which employed 22,000 Teamsters among its 30,000-person workforce, estimated in its Chapter 11 filing assets of $2.15 billion and liabilities of $2.59 billion. The bankruptcy marked the largest filing in U.S. trucking history, according to industry officials.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” said Yellow CEO Darren Hawkins in an Aug. 6 statement. “Today, it is not common for someone to work at one company for 20, 30, or even 40 years, yet many at Yellow did. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”
Unlike Yellow, drivers aren’t part of a union at Prime or TransLand, officials say. Walker said he is unaware of any former Yellow drivers seeking employment at TransLand since the company’s closure. Morrison said Prime has seen some interest from some of Yellow’s ex-employees but was uncertain how many have applied for jobs.
“We’re always interested in growth and hiring good quality drivers,” she said. “We have some mix of freight options that could be appealing to many different groups.”
Walker said TransLand has had a good year of growth in driver recruitment but noted retaining some of its workforce has been a challenge in the last couple of months.
“The market’s been a little soft. But we’re at about almost 190 drivers now, which is pretty helpful for us in our growth objectives,” he said, adding the company is up 10 drivers since early last year. “We’d like to have about 10 more in a perfect world. But we’re pleased with where we are.”
Driver average annual pay ranges $52,500-$85,000, as well as sign-on and recruitment bonuses, Walker said, adding the lower figure is about a 5% increase from last year. According to the U.S. Bureau of Labor Statistics, the median pay in 2021 for heavy and tractor-trailer truck drivers was $48,310, up from $47,130 in 2020. About 259,900 openings for truck drivers are projected each year, on average, over the decade.
Morrison said Prime employs roughly 2,300 drivers companywide as part of its workforce of 4,200. The company’s local employee count as of May 2023 was 1,556 when including drivers, up from roughly 1,200 in 2022. While she said the company typically increases drivers’ wages each year, she declined to give a range of average starting pay.
While not expecting revenue growth to hit another record this year, Morrison said the company still is increasingly optimistic about how 2023 will finish.
“We feel like we’re going to have single-digit growth year over year,” she said. “We’d like to see that in the double-digit realm, but realistically we’re just trying to protect our drivers and grow in as many ways as we can.”
Walker said TransLand started the year strong, but the higher equipment and operations costs are eating into profits.
“We’re up year over year in revenue, but the bottom line doesn’t look as promising as we saw in previous years,” he said. “I still want to be optimistic about the fourth quarter, so I think if we’re flat year over year in bottom line, we will be very happy.”
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