Dive Brief:
- Werner Enterprises expects to realize about $34 million in annualized savings, Chairman, President and CEO Derek Leathers said on an earnings call last week.
- Areas of improvement include “cost-saving opportunities for fuel efficiency,” reducing driver turnover and changes to “driver recruiting expense,” said John Steele, retiring CFO. Werner officials didn’t return messages seeking further details.
- “Many of those [initatives] are just being implemented as we speak, but we’re going to stay aggressive,” Leathers said. He suggested benefits of the efforts could accelerate in Q2.
Dive Insight:
Upticks in operating expenses are affecting Werner’s Truckload Transportation Services segment, where adjusted operating income decreased 31% last quarter, Steele said.
“The largest operating expense increases within TTS were in driver pay, supplies and maintenance and insurance and claims,” he said. Insurance and claims expense increased nearly $9 million or 33% in Q1 YoY amid higher cost per claim.
As demand has fallen across the industry, adjusted operating income for Werner’s TTS segment dropped from $78.3 million in Q1 2022 to $53.7 million in Q1 2023.
The carrier’s TTS segment includes its Dedicated unit and its One-Way Truckload unit, which covers a variety of dry van and reefer services over irregular routes, according to its annual report.
Other carriers are pursuing their own cuts amid an extended lull in demand. XPO reported earlier this month that it expects over $50 million in savings through headcount reductions, beginning in Q3.
For Werner, Leathers also suggested the company could identify more reductions beyond the $34 million target. “We think there's more that we can find,” he said.
