The Relationship between Measures of Operations Efficiency and Financial Success of Truckload Motor Carriers: An Empirical Analysis
This research paper examines the statistical relationship between clay to day performance and effi ciency measures and financial performance in the motor carrier industry. Key findings are that carriers with more miles per tractor per year, a larger average length of haul, more revenue per mile, and more revenue per tractor per week tend to perform better financially as measured in three separate models by operating ratio, return on assets, or return on equity. Unexpectedly, for the eight publicly traded carriers included in the analysis, there was a negative relationship between empty mile percentage and financial performance, indicating that carriers with a higher empty mile percentage have better financial perfor mance. Possible explanations for these counterintuitive results could be due to a focus on better cus tomer service or driver satisfaction causing slight increases in empty miles. Therefore the increased costs resulting from empty miles could be offset by higher revenue or decreased costs in other aspects of the operation. These results suggest that managers should focus not on minimizing empty miles but rather on keeping them within an acceptable range.
Johnston, Ahren. "The relationship between measures of operations efficiency and financial success of truckload motor carriers: An empirical analysis." Journal of Transportation Management 21, no. 3 (2010): 3.
Journal of Transportation Management