Covenant shifts 80% of its fleet on multiyear contracts
Covenant's expedited unit has moved to committed capacity agreements fast, and its CEO expects that share to reach 75% to 80...
Covenant Logistics (CCJ Top 250, No. 36) moved more of its fleet onto multiyear contracts as management anticipates another year of double-digit rate increases amid rising costs.
Chairman and CEO David R. Parker said approximately 80% of its fleets were under long-term contracts at quarter-end. Expedited had seen the most significant shift—about 58% of tractors now serve committed capacity agreements, and Parker expects 75% to 80% by year-end, up from about 25% in January.
Contracts typically run two to four years with minimums, and customers can exit only if service isn’t corrected within about 90 days, Parker said in a call with analysts.
Demand is increasingly driven by high-security loads and high-value freight, including technology and data center-related loads, Parker said, supporting its shift toward committed capacity agreements.
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