Knight-Swift Transportation reported third-quarter operating income of nearly $179 million, more than triple the figure from a year earlier, with pricing gains across its segments driving the increase, according to the company's earnings release.
The truckload segment posted an adjusted operating ratio of 89.2% and $123 million in operating income. Chief Financial Officer Andrew Hess said the results reflected better pricing, network efficiency gains in the asset-based businesses and a recovery in gross margin within the logistics segment. One-way service outperformed dedicated service for the first time in years, helped by one-way margins on business under contract, Hess said on the earnings call.
Dedicated service posted an operating margin that was essentially flat from the prior year. Knight-Swift responded with driver pay increases, recruiting and training, and reported a stable truck count in that segment.
CEO Adam Miller described a market with constrained capacity and stable demand. He pointed to tougher regulations and enforcement, including English language proficiency requirements, non-domiciled commercial driver's licenses and scrutiny of CDL schools, as forces tightening supply. Miller said industry capacity remains under pressure and that sourcing quality drivers is as challenging as it has been in years.
Spot pricing at the carrier ran above public indicators during the quarter and stayed well above contract rates, which continued to accelerate through the period. Tender rejection rates at Knight-Swift ran two to three times the level of broader market measures, Miller said.
J.B. Hunt reported a different result for its dedicated contract services segment on Oct. 15. Operating income in that unit fell 22% from a year earlier to nearly $82 million, with driver and equipment costs, higher group medical claims and insurance premiums, and new business onboarding expenses cited as the main factors.
Source: Trucking Dive - https://www.truckingdive.com/news/knight-swift-reports-breakout-q3-profits/833685/