The carrier blamed weather, high fuel prices, and the tightening driver recruitment market. The carrier's response to hours of service rules may have more to do with the poor results.
Swift Transportation announced ahead of its first-quarter earnings release that it would post $0.05 to $0.10 per share earnings. This is well below industry expectations of $0.20 per share. Swift said a combination of macro events was responsible for the lower results. Severe weather conditions took part of the blame from the carrier for reduced efficiency and earnings. It also credited higher fuel costs and an ever-tightening driver recruitment market for increased costs.
North American equity research firm Morgan Stanley expressed concerns that Swift had not dealt with changes brought about by new hours of service rules. "We were particularly concerned by comments on Swift's earnings call suggesting that it is still learning how to best dispatch freight under the HOS regulations," said a report issued by Morgan Stanley's James Valentine. "We believe that most other large truckload carriers had their hands around this problem in January," he continued.
Another concern is Swift's position holding the line on driver base pay while other truckload carriers have been taking pay up. Coupled with poor equipment utilization, the result is that drivers are getting fewer miles making less money. A productivity bonus and per diem program should help, but the Morgan Stanley report says Swift could struggle to keep its roughly 14,000 company trucks fully manned during 2004.