The relationship between measures of operations efficiency and financial success of truckload motor carriers: An empirical analysis

Abstract

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.

Performance outcomes of environmental collaboration

“…Operational performance refers here to the operational efficiency of LSPs, i.e., to internal-facing measures of how efficiently an LSP uses its resources to perform its day-to-day service activities (Lai et al , 2002). The measures developed by Johnston (2010) were used in this research. In order to measure asset utilisation, the empty-mile percentage and the average load factor ( per cent) in both domestic and international shipments were included in the analysis.…”

“…However, in the study of Perotti et al (2012), Italian LSPs reported only a minor effect on operational performance. This study examines five operational performance measures by Johnston (2010): empty-mile percentage, average transport performance, average length of haul and average load factor in domestic and international shipments. Johnston (2010) argues that motor carriers use these measures to manage day-to-day operations, and improvements in them can increase asset utilisation and ultimately financial performance.…”

“…This study examines five operational performance measures by Johnston (2010): empty-mile percentage, average transport performance, average length of haul and average load factor in domestic and international shipments. Johnston (2010) argues that motor carriers use these measures to manage day-to-day operations, and improvements in them can increase asset utilisation and ultimately financial performance. It is anticipated that LSPs increase the total number kilometres per trip to spread the fixed costs over the widest possible base (Baker, 1989).…”

Does capacity utilisation influence financial performance? A study of Indian public bus transport companies

“…It indicates better operating performance and a high-profit margin (Coyle et al, 2011). Previous studies have also shown that several performance indicators might explain the operating ratio (Johnston, 2010). Therefore, we regressed the operating ratio on capacity utilisation scores obtained from Equation ( 16).…”