Werner Profits Rise as Truck Brokerage Thrives

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The Wall Street Journal / January 28, 2016

The carrier bucked an industry trend with a 12% increase in fourth-quarter net income, due in part to strong performance in brokerage business

Werner Enterprises Inc. closed out 2015 with a jump in profit despite weak market conditions, underscoring the benefits that trucking companies can gain from mixed business models.

Werner said Thursday that its fourth quarter income rise 12% from a year earlier to $36.6 million. The company added 400 vehicles to its fleet of over 7,000 trucks, lowering the average age of its trucks and allowing the company to “better manage maintenance and safety costs,” Werner said in its earnings report.

Company executives said the hefty investment in new trucks is part of an effort to recruit more drivers and help reduce turnover , which can raise costs.

The Omaha, Neb.-based company, one of the largest in the U.S. providing full truckload service for shippers, also has a division that includes freight management, truck brokerage and other services. Operating income from the division jumped 84% to $4.4 million, helping Werner’s bottom line amid weaker-than-expected freight demand, rising driver pay and reduced fuel surcharge revenue.

Diversification “is one of the advantages to having a non-asset based business in addition to your asset-based business,” said Donald Broughton, analyst at Avondale Partners LLC.

Werner’s profit increase is a good reflection of the company’s management through a challenging year for trucking companies, Mr. Broughton said. “Having a well-developed brokerage business allows you to better manage the market conditions.”

Still, the company warned of challenging market conditions ahead. “We are continuing to work with our customers to recoup the cost increases associated with more expensive equipment, a shrinking supply of qualified drivers and an increasingly challenging regulatory environment,” the company said.