Dive Brief:
- Knight-Swift Transportation Holdings turned away some contractual volumes as shippers sought to bring down rates further, the carrier said in a securities filing Wednesday.
- That meant the carrier shifted more of its capacity to the spot market, creating further pressure on revenue per mile and utilization, the filing said.
- “We were not willing to commit to further concessions on what we view as unsustainable contractual rates,” the carrier said.
Dive Insight:
A soft market is slated to bring a major earnings hit for Knight-Swift. Its adjusted earnings per share is slated to range from 11 cents to 12 cents now, down from a previous projection of 37 cents to 41 cents.
Trucking firms are reeling with sluggish demand that has continued to stall. Linehaul rates for dry van and reefer dropped from February to March, decreasing 3 cents for both equipment types, per DAT Freight & Analytics data. In contrast, flatbed increased by 4 cents.
In early February, Werner CEO Derek Leathers said on an earnings call how downward pricing pressure was continuing as some customers sought to “take one last bite of the apple.”
Knight-Swift also noted issues with overcapacity and turbulent winter storms. January weather hit the carrier more significantly than expected, and its LTL business unit was particularly affected, the company said.
While volumes normalized into March and April, the recovery wasn’t enough to offset the hit to volumes and operating costs in Q1, Knight-Swift said.
“The less-than-truckload (LTL) segment continues to show positive volume and yield trends year-over-year, though the impact of the weather disruption was greater on this business relative to our Truckload segment,” the carrier said.
