Recent losses in Werner Enterprises’ dedicated business are not distracting the carrier.
New entrants into dedicated service, where a fleet handles a single customer, have taken away some work from Werner, but those fleet losses are isolated, executives said Wednesday on a Q1 earnings call.
Customer retention in its dedicated segment dropped from 95% in Q3 to 93% in Q4, where it remained in Q1. Its dedicated service typically involves a retail distribution center or manufacturing facility.
“In the short-term, there is no refuting the fact that there is pain afoot, and we're going to keep fighting through it,” CEO and Chairman Derek Leathers said. “While we cannot control the macro, we are focused on our long-term strategy and structural improvements to position Werner for success in an eventual tighter market.”
Knowing when to avoid certain business is a core part of company leadership, according to Leathers. The industry has experienced a wave of new entrants into dedicated, but those players may not realize what they’re signing up for, even as they bid on a request for proposal, he said.
To counter that pricing pressure, Werner Enterprises is focused on price and long-term positioning, EVP, Treasurer and CFO Chris Wikoff said.
Because of its dedicated segment’s strengths in scale, service and reliability, Werner focuses on enterprise customers that value their supply chain as “mission critical and not left to less sophisticated or inexperienced carriers,” Leathers said.
While operating income fell 71% in Q1 year over year to $15.6 million, the carrier grew average revenue per truck in its dedicated segment, net of fuel surcharge, by 1.3% year over year, according to an earnings announcement.
“Despite a highly competitive environment and isolated fleet losses, pipeline opportunities remain healthy and client retention remains strong,” the company said.
