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Landstar BCOs Will Get $1k/Week If Hit By COVID-19

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Landstar BCOs Will Get $1k/Week If Hit By COVID-19

Landstar System, Inc. (NASDAQ: LSTR) business capacity owners who are diagnosed with the COVID-19 virus or need to quarantine will receive $1,000 per week for up to two weeks to help tie them over financially.

Landstar's BCOs are the independent contractors who haul loads for Landstar. In the fourth quarter of 2019, they carried 45% of the company's loads as measured by revenue, while what Landstar described as "brokerage carriers" carried 47%. The BCOs' share was up two percentage points from the fourth quarter of 2018. 

Landstar defines an active carrier as a driver who "moved at least one load in the 180 days immediately preceding the fiscal quarter end."

"During this crisis, Landstar has temporarily authorized monies for any Landstar business capacity owner (BCO) who is diagnosed with COVID-19 and/or is required to be quarantined by a public health authority," Landstar said in a prepared statement. 

The two-week time span approximates the amount of time a person needs to recover or spend in quarantine, according to Landstar. 

"We hope our BCOs stay healthy and never need to take advantage of this relief effort," the company said in both its statement and its announcement to the BCOs. "We all must also recognize though the possibility that a Landstar BCO may be diagnosed with COVID-19 or ordered to stay home because of a mandatory quarantine. The intent of this new program is to make it easier for a BCO to stay home and take care of his or her health with less worry about paying bills during this unpredictable time."

The policy was disclosed to the BCOs in a gathering called the Thursday Safety Conference Call. 

The BCOs in the fourth quarter carried loads with average revenue per load of $1,918 compared to a company-wide average of $1,773 for dry vans, $2,523 for what the company called "unsided/platform equipment" which would be mostly flatbed, and $632 for LTL. That company-wide total averaged out at $1,877, about $41 less than figure for BCO-only loads.

Some analysts have said they look at the BCO numbers as a strong indicator of capacity. In the fourth quarter of 2019, Landstar said it had 9,554 BCOs compared to 9,884 BCOs in the fourth quarter of 2018. At the end of 4Q 2019, there were 39,497 "approved and active" BCOs compared to 41,069 in the fourth quarter of 2018. The category of "other approved" brought the 4Q 2019 total to 65,871 compared to 68,938 a year earlier. 

 

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