Knight-Swift sees ‘rapid progression’ in TL fundamentals during Q2

“The second quarter saw a continued and rapid progression in truckload market conditions, with supply-driven tightening pushing spot rates, tender rejection rates, and contractual negotiations higher over the course of the quarter,” said Knight-Swift CEO Adam Miller in a news release.

Truckload revenue increased 3% y/y to $1.1 billion as a 6% increase in revenue per tractor was only partially offset by a 3% decline in average trucks in service. The unit posted a 91% adjusted operating ratio (a 9% adjusted operating margin), which was 360 basis points better y/y.

Less-than-truckload revenue was down 1% y/y to $333 million as a 4% tonnage increase was offset by a 4% decline in yield. Shipments per day were down 4% in the quarter, but weight per shipment was up 8%. Higher shipment weights were a drag on the yield metric, but a 5% increase in length of haul partially offset this. The unit recorded a 92.1% adjusted OR, 100 bps better y/y.

Revenue was up 9% y/y in the logistics segment, with brokerage revenue per load 30% higher. Elevated purchased transportation costs (gross margin eroded 350 bps y/y) resulted in a 96.4% adjusted OR, 160 bps worse y/y.

Intermodal returned to profitability at a 99.4% adjusted OR. Revenue was up 35% y/y as volumes were up 20% and revenue per load was up 13%.

The adjusted second-quarter EPS result excluded several deal-related, restructuring, severance and non-cash impairment costs. The period also benefitted from lower interest expense and higher gains on equipment sales (a 5-cent y/y tailwind).

The company will host a call at 5:30 p.m. EDT on Wednesday to discuss second-quarter results.

Why it matters? Knight-Swift is the nation’s largest asset-based TL carrier. Its quarterly results provide insight into current market conditions.

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