Dive Brief:
- Covenant Logistics Group increased prices three times in 45 days last quarter — and could increase rates further in the second half of the year, Founder and CEO David Parker said on an earnings call.
- The expedited and dedicated truckload carrier hadn’t raised prices in the previous two years with the freight market in a downcycle, but it has seen a sustained pickup in demand since mid-May, Parker said.
- “We don't have the momentum yet to go full-fledged and say, ‘Roll out rate increases all over to every customer,’ but we're looking at that,” he said. “And the ones that are not performing well are the ones that we're going to go have talks with.”
Dive Insight:
Boosting pricing has been a challenge across the trucking industry, particularly the truckload sector, with the spot market in the cellar.
Wolfe Research Senior Analyst Scott Group asked during the earnings call whether Covenant’s three price increases in Q2 might be out of a total of five — or more like 100 — this year.
Parker responded by wondering aloud whether the number could be closer to 23 by the next conference call. He was thrilled with the three rate increases so far, he said, adding “that is just the beginning.”
With the rate increases, Covenant’s overall operating income rose 15% to $18.7 million in Q2, the company reported.
Other truckload carriers also see opportunities for higher pricing as they desperately await a freight rebound.
The largest, Knight-Swift Transportation Holdings, is monitoring its volumes for a seasonal increase as it approaches the end of the year, CEO Adam Miller said on a Q2 earnings call.
“If we do, in fact, see the seasonal uptick as you get probably to the back half of August and really into September, then I think we would have more confidence that this is maybe a trend that we would expect to continue into fourth quarter and lead to a much more favorable bid season into next year,” he said.
