Two major U.S. truckload carriers reported January 25 significantly lower income for 2016 from 2015.
Covenant Transportation Group Inc. of Chattanooga, Tennessee. recorded net income of $16.8 million, a 60.1 percent drop from 2015’s $42.1 million. Total revenue dropped 7.4 percent from $724 million to $671 million.
Knight Transportation Inc. of Phoenix reported a 19.6 percent decrease in net income, at $93.9 million from last year’s $116.7 million. Revenue dropped 3.2 percent, to $1.028 billion from $1.062 billion.
Covenant Chairman and CEO David R. Parker attributed the lower profit to several factors, including continuing problems at refrigerated subsidiary SRT, a decline in operating income at logistics arm Covenant Transport Solutions and the decision by some e-commerce customers to reduce the number of tractors contracted under daily rates in favor of strictly mileage-based capacity.
“This allowed the available trucks to run additional miles, but had the effect of reducing our recognized freight revenue per mile,” Parker said. In addition, Parker noted, the period between Thanksgiving week and Christmas was shorter than in the past two years.
Knight President and CEO Dave Jackson said that adjusted earnings per diluted share of $0.29 in the fourth quarter dropped from $0.36 during the same period last year.
“During the quarter, revenue per loaded mile, excluding fuel surcharge, decreased 1.2 percent, which negatively impacted our results by approximately $0.02 per share when compared to the same period last year,” Jackson said. These and other negative items were partly offset, he said, by cost savings “of approximately $0.02 per share across several administrative departments.”
Jackson also noted that the company had a non-recurring expense in the form of $2.5 million for expected settlement costs for two class action lawsuits involving employment claims in California and Washington.
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