The revenue growth was attributable in roughly equal portions to carrying more freight and charging more to carry it:
ABF’s second quarter 2006 total weight per day increased by 6.4% compared to last year. “ABF experienced solid tonnage increases throughout the quarter as the year-over-year increase in total tonnage grew during each successive month of the second quarter,” said Mr. Davidson. “Second quarter tonnage comparisons were dampened slightly by the timing of the Easter holiday, just as they were helped in this year’s first quarter. When adjusted for the Easter effect, ABF’s second quarter total tonnage per day increased about 7%.”
“Our year-over-year tonnage trends in July are running at or slightly behind those of the second quarter, although comparisons for this short period are complicated by calendar differences,” said Mr. Davidson.
Total billed revenue per hundredweight was $25.22, an increase of 5.5% over last year’s second quarter figure of $23.91. Total billed revenue per hundredweight, excluding fuel surcharge, increased by 1.9%. “The industry pricing environment is competitive but firm, consistent with recent quarters. The retention of the April 3rd general rate increase is in line with our expectations, and price increases on contract renewals are acceptable,” said Mr. Davidson.
The higher tonnage suggests that the economy remains strong, but the 5.5% price increase is clearly more than the Federal Reserve will find acceptable. So while things are looking good right now, slowing consumer spending, and additional interest rate hikes are areas to watch out for.
ABFS 1-yr chart: