Fleets’ earnings reveal market keeps getting weaker

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Updated May 21, 2024

The bleak freight market continues to take its toll on carriers, with fleets noting soft rates, low volume and extreme weather in January creating incremental cost and operational challenges.

Other carriers like Knight-Swift, Heartland Express and Marten Transport attributed declines due to their refusal to lower freight rates.

A few, such as XPO, exceeded expectations and got a solid start to the year.

While the second quarter has offered little evidence of a 2024 recovery, some believe that freight market fundamentals are slowly improving, with most focusing on their growth strategies and investments on people and technology. 

Covenant directs investors to acquisitions “growth goals”

After taking a drop in revenue last quarter, Covenant (CCJ Top 250, No. 43) continues to have a difficult quarter. Chairman and CEO David R. Parker said that the quarter’s results were due to the soft freight rates and volumes, general market headwinds, declining used equipment prices, and adverse weather conditions.

The carrier’s net income tumbled to $3.97 million from $16.6 million a year earlier. Total revenue was $278.76 million, up 4.46% compared with $266.85 million a year earlier. Parker commented how the team “capitalized on opportunities where available, allocating equipment investments towards more profitable operations, and controlling costs.”

It reported an $8.1 million expense related to last year’s acquisition of poultry hauler Lew Thompson & Son Trucking, with Parker emphasizing that investors should factor in the expected earnings from the acquisitions’ “growth goals.” The carrier intends to triple the poultry carrier’s fleet and volumes as part of its strategy, discussed by Covenant President and COO Paul on an earnings call.

Revenue: 2024 Q1: $278.7 million vs. 2023 Q1: $266.8 million

Income: 2024 Q1: $3.97  million vs. 2023 Q1: $16.6 million


Forward Air contributed loss to acquisition and weak freight market

Though Forward Air (No. 34) reported a 52% year-over-year revenue growth, the carrier’s profits took a 239% year-over-year decline. CEO Shawn Stewart said that the results were negatively impacted by two tough headwinds, one of which was the weak freight environment, excess carrier capacity and pricing pressure. Another was the impact of its Omni Logistics acquisition and integration, completed in late January.

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Omni Logistics contributed around $225 million to the carrier’s $542 million operating revenue. Rebecca J. Garbrick, CFO, noted that Omni’s results were impacted because of its exposure to the international freight market.

Stewart, who took on the role of CEO after former CEO Tom Schmitt departed in the wake of the Omni deal, said that the distraction is behind the carrier, and assured investors to expect “steady improvement” and “enhanced communications.”

Revenue: 2024 Q1: $541 million vs. 2023 Q1: $357.7 million

Income: 2024 Q1: $(88.7) million vs. 2023 Q1: $33.9 million 


Heartland Express reports $15.1 million net loss

Heartland Express’ (No. 28) earnings reported a net loss of $15.1 million in the quarter, attributed to a mix of weak freight demand, excess capacity, unfavorable weather, and ongoing operating cost inflation.

After its two most recent acquisitions completed in 2022, the carrier struggled with its integration and focused on “internal efforts” to improve operating effectiveness.

The carrier worked to reduce unprofitable freight and declined to rely on broker freight and refused to lower its freight rates to “meet unsustainable requests” of some customers, which led to an undesirable impact on its revenues compared to the same period of the prior year.

Revenue: 2024 Q1: $270.3 million vs. 2023 Q1: $330 million

Income: 2024 Q1: $(15.1)  million vs. 2023 Q1: 12.6 million 


J.B. Hunt plummets further

After missing profit and sales estimates for the quarter, J.B. Hunt’s (No. 3) earnings reported revenue declined 9%, while operating income decreased 30%.

According to its release, the declines were driven by a combination of lower yields and freight volume, combined with increases in equipment, insurance and claims, and bad debt expense. The carrier’s intermodal, dedicated, integrated capacity and truckload divisions experienced a decline in operating income and revenue.

However, its Final Mile Services saw its operating income rise 128% to $15.1 million, and its revenue increased 2% to $860 million.

Amidst disappointing results, President Shelly Simpson is optimistic that the market will “eventually return to balance,” and said that the carrier is prioritizing expanding its intermodal business and making investments in people and technology. 

Revenue: 2024 Q1: $2.94 billion vs. 2023 Q1: $3.2 billion

Income: 2024 Q1: $194 million vs. 2023 Q1: $277 million


Knight-Swift Transportation’s LTL segment remains “healthy”

Knight-Swift Transportation (No.5) reported a $1.8 billion total revenue, an 11.3% increase from the first quarter of 2023 due to the acquisition of U.S. Xpress Enterprises. Operating income was at $20.6 million, reflecting a decrease of 85.8%, as compared to the same period last year.

The carrier also reported a $19.5 million operating loss in third-party insurance business, which ceased operations at the end of the quarter.

Adam Miller, CEO of Knight-Swift, noted the market remains challenging for the carrier, citing oversupply of capacity, and reduced load volumes and continued rate pressures – all of which have negatively impacted the truckload, logistics and intermodal segments.

Its LTL segment remains healthy and growing, Miller said. Its revenue increase 12.6% to $241 million from $213.9 million during the same period last year. The carrier plans to open 25 new facilities to be opened in the remainder of the year. 

Revenue: 2024 Q1: $1.8 billion vs. 2023 Q1: $1.6 billion

Income: 2024 Q1: $20 million vs. 2023 Q1: $144 million

Despite declines, Landstar says results were 'better than expected'

Citing a soft freight environment, low manufacturing levels and loose truck capacity, Landstar (No.7) reported a decline in revenue and earnings in its first quarter. Despite of that, in an earnings call, President and CEO Frank Lonegro said that the performance were generally in line with expectations, particularly pointing out its heavy haul loadings, which grew 2% year-over-year.

Lonegro commended the team on performing admirably in a challenging freight market, as both the number of loads hauled via truck and revenue per load on loads hauled via truck exceeded the company’s guidance issue.

Lonegro also said that the company is focused on supporting its network of small business owners and executive its strategic growth initiatives and technology enhancements, along with its new leadership structure. Cross-border Mexico and heavy haul are two strategic initiatives that Lonegro said the carrier has been seeing “significant opportunities for growth.”

Revenue: 2024 Q1: $1.17 billion vs. 2023 Q1: $1.4 billion

Income: 2024 Q1: $59.9 million vs. 2023 Q1: $101 million


Marten Transport continues refusal to lower rates

Similar to other carriers, Marten Transport (No. 37) noted the weak freight environment, inflationary operating and impact of freight rates have negatively impacted its results. Overall revenue decreased 16.2% to $249.7 million from $298 million a year ago, while operating income took a 58% year-over-year decline from $29 million a year ago, to $12.3 million.

Executive Chairman Randolph L. Marten noted that the value of the carrier’s multifaceted business model as highlighted by the operating results for its dedicated and brokerage operations in the first quarter. “Our operating results improved throughout the quarter after earning 2 cents per share in January, which was also impacted by widespread harsh winter weather,” said Marten.

Marten also commented on the carrier’s focus on minimizing the freight market’s impact on its operations by investing and capitalizing on profitable organic growth opportunities. Since last August, the carrier has refused to lower rates.

Revenue: 2024 Q1: $249.7 million vs. 2023 Q1: $298 million

Income: 2024 Q1: $12.3 million vs. 2023 Q1: $29 million


Old Dominion Freight Line sees growth in revenue and income

Old Dominion Freight Line (No.9) reported a 1.2% increase in total revenue, and a 2.5% increase in net income. For the second straight quarter, both revenue and earnings increased on a year-on-year basis.

“Revenue for the first quarter included a 4.1% increase in LTL revenue per hundredweight that was partially offset by a 3.2% decrease in LTL tons per day,” said Marty Freeman, President and CEO. “The decrease in LTL tons per day reflects a 2.7% decrease in LTL weight per shipment and a 0.5% decrease in LTL shipments per day. Excluding fuel surcharges, LTL revenue per hundredweight increased 6.7% as compared to the first quarter of 2023.” 

Freeman said that the improvement reflects the carrier’s focus on revenue quality and consistent long-term approach to pricing, designed to offset cost inflation.

Revenue: 2024 Q1: $1.46 billion vs. 2023 Q1: $1.44 billion

Income: 2024 Q1: $292.3 million vs. 2023 Q1: $285 million


P.A.M. Transportation Services feels impact of shippers leveraging advantage on rates

P.A.M. Transportation Services (No. 59) reported that operating revenues decreased 17.6% to $182.6 million for the first quarter of 2024, compared to $221.7 in the same period last year.

Talking about the truckload market, President Joe Vitiritto commented how the carrier has been impacted by shippers’ “continued success in leveraging an overcapacity market to their advantage to attain rates at or below cost.”

“This market backdrop coupled with weather disruptions early in the quarter which drove cost increases and reductions in equipment utilization created a tough environment to get traction in efforts to improve earnings,” said Vitiritto.

Revenue: 2024 Q1: $182.6 million vs. 2023 Q1: $221.7 million

Income: 2024 Q1: $281 million vs. 2023 Q1: $5.2 million


Schneider National sees 'signs of progress'

Amid a weak freight market, Schneider National (No.8) reported net income of a 81% decline of $18.5 million from $98.0 million a year ago. Total operating revenue decreased by 8% to $1.32 billion from $1.43 billion.  

Though the carrier feels the pressure of the market, Mark Rourke, President and CEO, said, “However, we did recognize some signs of progress in market dynamics and in our commercial efforts, and performance of all segments improved through the quarter.”

The carrier is focusing on controlling costs and is optimistic on progress in the second half of the year as inventory levels exits. “We're encouraged by the earnings improvement we have seen across all segments as the first quarter progressed, with a return of more seasonality, and we believe this is a positive indicator as we continue to navigate the current freight cycle,” said Rourke.

Revenue: 2024 Q1: $1.3 million vs. 2023 Q1: $1.4 million

Income: 2024 Q1: $18.5 million vs. 2023 Q1: $98.0 million


Saia experiences increase in revenue

Saia (No. 19) reported a revenue of $754.8 million, a 14.3% increase from last year’s first quarter and a record for any first quarter in the company’s history.

Though winter weather impacted operations in the first quarter, Saia President and CEO Fritz Holzgrefe noted that March trends improved a bit from February, though they did not experience the expected seasonal step-up.

“Shipment growth of 15.7% for the full quarter included March shipments per workday increasing by 16.8% from the prior year. Despite volume being below our expectations late in the quarter, we continued to focus on our customer service metrics which saw continued improvement, reflecting our ongoing commitment to provide an excellent service product for customers,” said Holzgrefe.

Revenue: 2024 Q1: $754.7 million vs. 2023 Q1: $660 million

Income: 2024 Q1: $90.6 million vs. 2023 Q1: $76 million


UPS sees decline in profit and revenue

UPS (No.2) saw a 41.3% drop in earnings in the first quarter. The results were in line with expectations, said UPS CEO Carol Tomé.

“U.S. average daily volume, or ADV, declined year-over-year, but the rate of decline slowed as the quarter progressed, ending with March down less than 1%. On a sequential basis, the ADV decline rate in the first quarter showed marked improvement compared to the fourth quarter of 2023,” said Tomé. The CEO credited the performance to its sales team’s efforts to pull new volume into the network. Outside the U.S., ADV decline rates improved sequentially compared with Q4 of last year.

The CEO is optimistic and expects to return to volume and revenue growth. In its earnings call, TomĂ© discussed the company’s plans, including its announcement to become the primary air cargo provider for the U.S. Postal Service and its acquisition of Happy Returns from PayPal. 

Revenue: 2024 Q1: $14.2 million vs. 2023 Q1: $14.9 million

Income: 2024 Q1: $1.11 million vs. 2023 Q1: $1.89 million 

Werner focused on 'controlling the controllables'

Werner Enterprises (No.13) reported $769 million in total revenues, an 8% decrease from $832 million from the same period a year ago. Operating income was reported at $15.6 million, a 71% decrease from $53.5 million a year ago.

Like other carriers, Werner felt the impact of overcapacity and adverse weather. “Despite these market conditions, we focused on controlling the controllables,” said Derek J. Leathers, Chairman and CEO.

“We continued a favorable production trend in One-Way, grew revenue per truck in Dedicated and realized outsized volume growth in our Power Only offering within Logistics,” said Leathers. “We generated solid cash flow, executed on additional cost takeout, reduced our debt and repurchased shares during the quarter.” The carrier is focusing on its long-term strategy and structural improvements.

Revenue: 2024 Q1: $769 million vs. 2023 Q1: $832 million

Income: 2024 Q1: $15.5 million vs. 2023 Q1: $53.5 million


XPO exceeds expectations, solid start to 2024

Despite market conditions, XPO (No.8) reported a rise of 5.8% in total revenues, from $1.9 billion in the same quarter last year to $2 billion. Its net income increased 378.6% year-over-year from $14 million in the same period last year to $67 million. 

Mario Harik, CEO at XPO, said that the results exceeded expectations. “The year-over-year increase in revenue was due primarily to higher yield and tonnage per day in the North American LTL segment, partially offset by lower fuel surcharge revenue,” it report said.

Harik noted that carrier is determined to lead the LTL market, and is set to execute its LTL 2.0 plan.

Revenue: 2024 Q1: $2.0 billion vs. 2023 Q1: $1.9 billion

Income: 2024 Q1: $67 million vs. 2023 Q1: $14 million


Pamella De Leon is a senior editor of Commercial Carrier Journal. An avid reader and travel enthusiast, she likes hiking, running, and is always on the look out for a good cup of chai. Reach her at [email protected].