2023 Q3 Carrier Earnings: Knight-Swift

KNX, or Knight-Swift Transportation, is the first carrier out the gates for Q3 Earnings results in 2023 (July-September). Their LTL unit combines regional carriers AAA Cooper and Midwest Motor Express.??

In our last edition, we broke down the Earnings reports in Q3 from FedEx Freight and analyzed the results. Similarly, this article will examine the findings at KNX and provide commentary to gain insight into what’s influencing the achievements or difficulties within their operations.

This series closely examines the factors contributing to eight prominent carriers’ successes or challenges within the logistics industry by dissecting their quarterly results for Q3 in 2023.?

To learn more about carrier performance reporting, click here to start a conversation with our team today.

Here are the results released by KNX in their press release, SEC filings, and earnings call with analysts, along with some of our thoughts:

?? Carrier 2: Knight-Swift

• KNX reported a slight deterioration in adjusted OR from 84.5 to 84.9; but when computing OR with no adjustment for fuel surcharge, their actual OR improved slightly from 88.9 to 88.6.??

Not sure why they make a point of using an adjusted OR that removes the fuel surcharge in the way they do…

• They noted that the benefits of diversifying into LTL become more glaring, as TL navigates an extremely challenging environment of excess capacity.

• Volumes and pricing improved throughout the quarter.

• KNX has opened up 14 new terminals in the last 2 years since acquiring AAA Cooper and Midwest Motor.

They’ve also purchased 11 more properties with plans to open them as new terminals and will continue pursuing the acquisition of more properties.

• It’s expected that the expanded use of dimensioning equipment will provide additional opportunities for revenue growth, as well as from their connected LTL network.

• Moving into 2024, KNX will continue to look for organic and inorganic opportunities to geographically expand its footprint.

?? Promising 4th Quarter Projections

They expect LTL revenue to increase mid-teens year over year in the 4th quarter; that's a healthy forecast!

They also predict that shipment count and rev/cwt will increase high single digits year over year in the 4th quarter.

Both are positive improvements that reflect pricing power and gains as the length of haul continues to expand.?

• Shipments were up 4.8%, which reflects an 8.7% increase in the 2nd quarter’s -3.9% drop in shipment count.

KNX definitely felt the impact of the Yellow Corp closure and gained business - it translates to a gain of just under 1,000 shipments per day.

• The TL market is still brutal, particularly for spots where rate expectations from shippers are at or below operating costs.?

?The TL market would seem to be at a bottom… but who knows… it could still get worse from here.

As the market does start to improve for Truckload, KNX will be a beneficiary while many brokers will be feeling the pain for at least another 12 months.

?? Key Objectives and Future Outlook

• One of the 3 key objectives at KNX is to grow their LTL network.??

The wish is to continue filling out their super-regional network short-term while they build out a long-term national network. This could provide them access to more freight, as well as the ability to provide further support to their existing TL customers.

• They feel that disruption from Yelllow’s closure is still several months away from being done, which is expected to yield positive results as new business gets re-priced.

?? Navigating Growth: KNX LTL’s Prospects and Challenges?

KNX LTL is definitely worth the watch going forward.??

It will be fascinating to see if they participate in the purchasing of Yellow terminals that are scheduled for auction later this year.?

These terminals represent a once-in-a-lifetime opportunity for KNX and other LTL carriers to get their hands on some very favorable property locations that can help build a bigger and stronger future; we expect KNX will be an aggressive player, particularly in the West and Northeast where they currently do not operate.

One concern for KNX is that as their network expands, it gets more complicated. Running a regional carrier is different from running a national carrier…?

Linehaul operations are different.??

Customer expectations are different.?

Expansion may challenge KNX as management adjusts to its larger footprint; but thus far, they have done a nice job merging AAA Cooper and Midwest Motor together…?

So they just might have the chops to fully convert from a regional to a national model with their existing team.

?? Coming Up Next: TForce (TFI Intl)

Keep an eye out for the next iteration of the series tomorrow as we continue with the Q3 Earnings results for TForce Freight. TFI purchased UPS Freight from UPS back in early 2021 that has since been re-branded as TForce Freight.??

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This article was collaboratively written by “LTL Observers” - a collective of industry veterans spanning the carrier, shipper, 3PL, and tech provider spaces who are willing to share their opinions.

Disagree with these opinions? We'd love to add you to the line-up to make sure we're including a diverse set of LTL observers. Contact us today.