Q1 2024 Carrier Earnings: Knight-Swift
We had a 2-for-1 back on April 24th - on that Wednesday alone, both Old Dominion and Knight Swift released their 2024 figures for Q1.?
We covered Old Dominion’s Q1 results in our latest edition of #LetsTalkLogistics from last week…now, let’s get into what KNX has said.
As we do with each Quarterly Earnings series, we’re taking time to evaluate the financial performance of leading carriers in the industry by analyzing the results they release after each quarter.
In them, we offer our two cents on what these metrics mean in the grander scheme of the industry as both a resource to shippers and a guide for those in logistics who want to stay informed!
For more information about carrier performance as it relates to your LTL, click here to connect with someone on our team today.
Like several other LTL carriers, Knight-Swift is currently undergoing a major transformation;?
since the purchase of AAA Cooper and Midwest Motor Express in 2021 AND the merging of these two entities onto a single operating platform in 2023, Knight-Swift continues to grow out their LTL offering as they work to create a full national footprint.??
To catch up on the latest about KNX and their quarterly performance from 2023, our Q3 and Q4 Earnings analyses are below to bring you up to speed before you get started:
Otherwise, let’s see what they shared with us for Q1!
Carrier #3: Knight-Swift (KNX)
KNX continues to leverage a growing network, allowing them to take market share while they move more freight between their AAA Cooper and Midwest Motor service areas (+ add more terminals in the meantime).??
Volumes between these networks are up 90% year over year; and as KNX participates in more and more bids where they’re starting to be viewed as a longer-haul carrier, we can expect to see that inter-network traffic keep growing.
Sequentially, KNX reported a strong 2.3% increase in revenue.
On a sequential basis, shipment counts were up 2.2% BUT tonnage was down -0.4%...even here, shipment size is headed in the wrong direction.??
That’s a very strong figure… just know that a part of it is being driven by both their increasing length of haul and their decreasing shipment size.?
If both were flat, Rev/cwt likely would have grown around 7%.
(Typically, their adjusted ORs of 85.7 and? 90.0 when the impact of fuel is removed isn’t how other carriers report this metric).
They blamed the weather for the rise in their OR, as well as ‘growing maintenance and labor costs’ that are rising because of higher volumes and expanding networks.??
In other words: longer lengths of haul mean more touches, which requires more labor and more equipment per shipment…but this will be an issue to deal with as they build out their national footprint.
Opportunities for LTL GROWTH are on their radar!?
These terminals represent a 16% growth in door count…14 new terminals had been opened in 2023.?
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Also, compared to the TL market, LTL looks much more favorable.
This is a shift away from their goal of going fully national by the end of 2025;
they may be slowing down the growth due to some challenges in obtaining terminals and purchasing carriers to fill the holes they still in the Northeast and West.
KNX seems optimistic that as they grown out their national footprint, they’ll start to see margins improve. In terms of M&A, their priority is LTL.
The goal is for an 85 OR, but that seems pretty high compared to what their peers are targeting.??
The thought is that as they scale the business, economies will allow for margin expansion, which might be a big assumption -?
as the network gets bigger, it also gets more complex because more ‘handling of freight’ will take place.??
Can they handle this kind of shift?
Right now, KNX’s LTL network is being built by folks with regional LTL experience…they’re still learning. They have done a stellar job so far though!!!
But as we’ve mentioned before, especially in regard to KNX… a national network is a much different creature from a regional network.??
Right now, KNX is really more of a super-regional carrier - once they bridge the gaps in the Northeast and West, we could see the situation change rapidly for them.?
This will be a very interesting story to watch.
To see them get to a full national LTL carrier network, expect to see a carrier purchase out west. It’s really the only way for them to enter the California market.??
(Who they acquire will depend on several factors, including a potential partial purchase.)
And in the Northeast, there are limited options which have yet to turn into a purchase.
the cost to acquire those options has only gone up, so expect KNX to enter the Northeast with terminal purchases and, possibly, a very small carrier purchase.
Coming up next: TForce Freight, Saia…tune in and find out ??
KNX is definitely expanding, taking market share as they grow…but their costs are rising faster than their revenues.?
Let’s see if they can control and reverse this to improve their OR…It’s a big task as they continue to transform themselves!!
Up next in our Q1 Earnings lineup will be either TForce Freight or Saia Logistics, who both released their Earnings reports at the end of April.
Theirs are the next reports to break down, so stay tuned for those editions of #LetsTalkLogistcs in the upcoming weeks!
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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.
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10 个月Great companies! JV