Things are still tough in the US trucking market although the full-truckload seems to be recovering slightly. Knight-Swift Transportation, which is one of the largest full-truckload carriers in the US as well as a substantial less-than-truckload carrier, saw its sales revenue fall 3.5% year-on-year in the fourth quarter, but its income broke-back into positive territory after last years fourth quarter loss, seeing a positive result of $69.5m net income and $77.9m operational income.
The good news in the truckload market was that freight-rates increased and revenue per truck was up by 1.7% year-on-year. In part this appears to be due to Knight-Swift running a more efficient operation, as the fleet size fell slightly and overall costs also fell even with an inflationary back-ground. Revenue also fell after stripping out fuel surcharges, with a 4.4% fall, but operating income was up 16%.
Things were quite different in the less-than-truckload business. Here sales were very strong, with revenue after fuel surcharge increasing by 20.2% but profits falling as operating income was down 68.1%. The issue here seems to be that Knight-Swift has been aggressively expanding its less-than-truckload services in the market. It seems to have gained market-share but profits have been hit as a consequence. The number of shipments per day jumped by 13.3% and the revenue per shipment after stripping out fuel surcharges increased by 6.6%. The company said that “system integration and network expansion” created “near-term cost headwinds”, which clearly points to why profits have fallen. It also suggests that competition in the previously buoyant ‘less-than truckload sector’ may be increasing as large truck operations such as Knight-Swift seek to increase their presence.
Performance in the other businesses of Knight-Swift were also mixed, with Logistics and Intermodal seeing slightly higher sales but continuing pressure on rates and profits.
Adam Miller, the CEO of Knight-Swift described the market environment as “choppy” however he was mildly optimistic for the forthcoming year, describing it as a “year of gradual recovery in market conditions that bridges to a more constructive 2026″.
Author: Thomas Cullen
Source: Ti Insight
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