- Knight-Swift's freight volumes strengthened through May and June after April volumes and rates fell during the first full month of the COVID-19 pandemic-related shutdowns, as non-essential shippers sent less freight, according to the company's earnings report for Q2. Freight volume and revenue per truck improved last month — two trends that continued into July, the company reported.
- The trucking segment's operating ratio improved to 85.5% in Q2, from 85.8% in Q2 2019, with Knight-Swift officials citing cost controls and lower fuel prices. But the pandemic still took a big bite, dropping Q2 revenue by 14.6% compared to Q2 2019.
- The truckload company said it expects spot rates to continue to improve, leading to stronger contract rates in 2021.
The TL giant re-established its guidance for the year, a sign that large freight companies are feeling confident that businesses will remain open. The company suspended its guidance in reporting in Q1 results in April, citing the COVID-19 pandemic as clouding the outlook. Other transport companies that suspended their guidance included UPS, Schneider and Volvo.
Knight-Swift said it expected earnings per share (EPS) for 2020 to be between $2.15 and $2.30 — higher than the guidance it issued for the full year on Jan. 29, well before the COVID-19 pandemic took hold in the United States. The carrier initially thought EPS would be between $2 and $2.15. The new guidance is based on the assumption there will not be widespread business closures again and that business in Q4 will be "modest."
The COVID-19 impacts upon Knight-Swift's internal operations appear to have been modest. The company reported $10 million in expenses "that were directly attributable to the pandemic and were incremental to those incurred prior to the outbreak. These primarily pertained to payroll premiums paid to our drivers and shop mechanics, as well as additional disinfectants and cleaning supplies."
Knight-Swift said it does not expect the expenses to be regularly incurred, assuming, once again, that the pandemic subsides.
The earnings guidance mirrors sentiments expressed by Knight-Swift CEO David Jackson during a June 2 UBS Global webinar, when he said the worst of the truckload market turmoil was over. Knight-Swift's largest business segment is regular-route, one-way TL, he said, and that segment would benefit from stores reopening.
Produce season, and warmer temperatures, could stimulate what Jackson called "beverage season," giving business another boost. Jackson told the webinar that as the year ends, capacity could be "acute" in Q4 as more businesses demand carrier services.