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Recent losses in Werner Enterprises’ exclusive business are not a distraction for the carrier.
New entrants to dedicated services, where a fleet handles a single customer, have taken some work away from Werner, but those fleet losses are isolated, executives said Wednesday in Q1 earnings call.
Customer retention in its specialty segment has declined 95% in the third quarter to 93% in Q4wherever it is remained in Q1. Its exclusive service usually includes retail distribution center or manufacturing facility.
“In the short term, there is no denying that there is pain, and we will continue to fight it,” said CEO and President Derek Leathers. “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.”
According to Leathers, knowing when to avoid certain businesses is a key part of company leadership. The industry has seen a wave of specialist entrants, but those players may not realize what they’re signing up for, even when they bid on a request for proposal, he said.
To address this pricing pressure, Werner Enterprises is focusing on price and long-term positioning, said EVP, Treasurer and CFO Chris Wikoff.
Because of its dedicated segment’s capabilities in scale, service and reliability, Werner focuses on enterprise customers who value their supply chain as “mission critical and not left to less sophisticated or inexperienced carriers,” Leathers said.
While operating income fell 71% in the first quarter year-over-year to $15.6 million, the carrier increased average revenue per truck in its special category, excluding fuel surcharges, by 1.3% year-over-year, according to earnings announcement.
“Despite the highly competitive environment and isolated fleet losses, pipeline opportunities remain healthy and customer retention remains strong,” the company said.