* Werner, Hub, Covenant post strong Q2 profits
* Knight Transportation to add capacity
July 21 (Reuters) - U.S. freight companies reported higher second-quarter profits on Wednesday and said pricing was improving steadily, indicating strong growth for the rest of the year.
They also plan to add capacity in the second half of 2010 as the freight market thaws after a prolonged period of slowdown.
Truck brokerage Hub Group (HUBG.O) and truckload carrier Werner Enterprises (WERN.O) reported better-than-expected revenue after market close. Profit at Hub was in line with analysts’ expectations, while Werner topped estimates.
Covenant Transportation Group (CVTI.O) also reported strong results, sending its shares up 3 percent after the bell. [ID:nWNAB7904]
The freight market, which was in recession for about three years, is showing signs of recovery. Excess capacity had put pressure on pricing and dented margins at truckers as well as freight brokers.
A slew of truck-operator bankruptcies has sucked out excess capacity from the industry, easing margins.
“With the additional density, we have improved our drayage efficiencies and equipment utilization and look forward to meeting what we expect will be healthy demand in the second half of this year,” said Hub CEO David Yeager.
Hub posted earnings of 26 cents a share and revenue of $458.1 million. [ID:nWNAB7872]
In April, Hub said it would buy 2,000 intermodal containers from a subsidiary of Singamas Container Holdings (0716.HK) as the freight market was picking up.
Knight Transportation (KNX.N), which reported strong quarterly results earlier Wednesday, said it plans to add 100 to 150 tractors during the second half if contract rates and operating ratio continued to improve. [ID:nSGE65S0JW]
Werner said more of the improvement in the freight market over the last six months was due to a decreasing supply of truck capacity rather than rising demand.
“However, both factors are helping the freight market improve,” it said.
Werner’s quarterly profit of 29 cents a share beat Wall Street expectations of 25 cents a share. [ID:nASA00JKV] Its shares were trading up 10 cents at $23.73 after the bell.
However, earlier in the day, less-than-truckload operator Arkansas Best ABFS.O said it remained cautious on economic recovery in the second half of the year, although it posted a narrower-than-expected quarterly loss and said tonnage improved. (Reporting by A.Ananthalakshmi in Bangalore; Editing by Vinu Pilakkott)