Covenant Logistics Group optimistic about freight market to 2025
Covenant Logistics Group officials said they expect market conditions in the trucking industry to improve in the coming months.
“I think the environment is getting better. I think the optimism is getting better,” David R. Parker, chairman and chief executive officer of Covenant Logistics, discussed the fourth quarter with analysts on Friday. said on an earnings conference call.
Chattanooga, Tenn. (NASDAQ: CVLG) reported fourth-quarter results after the market ended Thursday.
The company's total revenue for the quarter was $277 million, a year-over-year increase of 1% compared to the fourth quarter of 2023.
“This is the best I've felt in two and a half years. Something is happening in the market that we've all been waiting for a long time,” Parker said. “I really believe that in March, we're going to say freight is very good. By June or July, somewhere in the middle of summer, we're going to say there's a lot of freight.”
In the fourth quarter, total freight revenue increased 5% year over year to $251 million, and truck operations increased 3% year over year to $190 million.
Weekly tractor-trailer freight revenue increased 2% year over year to $5,444. Covenant Logistics' dedicated segment revenue increased 17% to $91.7 million.
Parker said Covenant Logistics has won several bids for new shipments in the past three weeks.
“We haven't done this in two years on this type of volume. I see more concrete cargo coming in. That tells me that if this happens in January, as we all know, February is The worst two months of the year, that's going to get better. “I think the economy is going to get better. “
Covenant's expedited trucking revenue fell 6% year over year to $98.6 million, while its managed freight segment generated revenue of $62.2 million in the fourth quarter, down 5% from the year-ago period.
Warehousing segment revenue was $24.3 million in the quarter, down 1% year over year.
The outlook for Covenant Logistics in 2025 calls for a 2.5% rate increase on 55% of its business and forecasts consolidated earnings growth in 2025.
“We expect earnings from the combination to be improved in 2024 compared to 2024 based on the following assumptions,” said Tripp Grant, Covenant's chief financial officer. “The fundamentals of the general freight market have improved to now position us from higher than the last two years. Better positioned to negotiate pricing levels. Assuming trends continue, we expect to see improved pricing over the course of the year under certain expedited non-specialty and managed freight contracts as contracts are renewed. Annual growth levels will be established over the course of the year.”