Dive Brief:
- Heartland Express’ operating income dropped 29% sequentially to $16.2 million in Q2, and the carrier projected that hardships could persist for another quarter.
- Persistent, lackluster freight demand hurt traditional seasonal uptick that typically occurs in Q2, according to a July 31 earnings release.
- “We expect volatile freight demand for at least the next quarter of 2023 and look to the holiday season of the fourth quarter for potential improvements in the freight demand environment,” CEO and Chairman Mike Gerdin said in the release.
Dive Insight:
The Iowa-based TL provider’s operating ratio worsened sequentially in Q2, but a challenge to improvement rests with its Smith Transport and CFI assets acquisitions from last year.
Those new additions continued to struggle and represented an operating ratio of 99.8% during the quarter and 99.6% for H1 for those two business units.
“We are currently being challenged with driving needed operational improvements at both CFI and Smith Transport given the current freight environment,” Gerdin said, adding that they anticipate improvement in those areas despite the downturn.
Other carriers are also noting more sluggishness to operations, with companies such as P.A.M. Transportation Services, Schneider National and Werner Enterprises all posting operating ratios above 90%.
Meanwhile, Heartland’s other business units, Heartland Express and Millis Transfer, faced a steeper hit percentagewise compared to Q1. A combined operating ratio for the two had been in the low 80s until it jumped to 87.7% in Q2.
