Dive Brief:
- A difficult peak season led to lower profit at Knight-Swift Transportation Holdings in Q4 as volume lagged, the company's latest earnings report revealed.
- The company's operating income fell to roughly $203 million in Q4 2022, a 41% drop from the $342 million reported in Q4 2021, according to an earnings presentation.
- “Freight demand in the fourth quarter was well below typical seasonal patterns,” Chief Financial Officer and Treasurer Adam Miller said on an earnings call Thursday. “While spot opportunities were very subdued and projects were infrequent as anticipated, general freight demand was softer than expected.”
Dive Insight:
President and CEO David Jackson pinned the slowdown to the carrier’s customers receiving peak season freight before the fourth quarter arrived.
“Some of it has already arrived 10 or 11 months before,” Jackson said on the earnings call. “It kind of sat around.”
That softness left a quarter that was anything but a peak season, one analyst remarked. And operating income for its segments was scattered: In Q4, LTL increased 87% YoY to $25.6 million, but all other segments dropped, with its truckload segment leading the way with a 37% YoY drop of nearly $92 million.
Knight-Swift profits falter
Knight-Swift and other large trucking companies had predicted a muted peak season last quarter. Other companies saw declines in various segments’ operating incomes, too: TL and intermodal fell at Marten Transport, and Covenant Logistics also saw its dedicated and combined TL segments decline in Q4.
Looking ahead, Knight-Swift executives shared a gloomy forecast, suggesting that ordering patterns could remain challenged in Q1 and Q2 before they pick up later in the year.
"Last year, we expected the first half to be strong and then cool off in the second half, which is largely what happened," Miller said. "In 2023, we expect the opposite: more challenging environments in the first half before we start to see a recovery to a more typical freight demand, leading up to an improving Q4 peak season.”
