The ‘ingenious strategy’ behind most truckers’ least favorite week of the year: International Roadcheck

International Roadcheck Week is hardly the sexiest topic in trucking, but it is a darn-tootin’ important one. Inspectors in the U.S. and Canada halt tens of thousands of trucks for vehicle inspections for a few days every summer or early fall. They remove thousands of trucks and drivers from the road; in 2021, 16.5% of inspected vehicles were put out of service along with 5.3% of drivers.

It’s uncommon for truck drivers to actually get their vehicles inspected at random during most of the year. To avoid International Roadcheck Week, many truckers simply don’t drive during that period of time — which, presumably, means more unsafe vehicles and drivers on the road outside of the inspection blitz. It’s a question that ate at Andrew Balthrop, a research associate at the University of Arkansas Sam M. Walton College of Business.

Around 5% fewer one-person trucking companies are active during International Roadcheck Week. But Balthrop and his fellow researcher, Alex Scott of the University of Tennessee, found a major upside to the inspection blitz — even with all the folks who avoid it. According to their working paper published in March 2021, vehicles are safer a month before and after the inspection period. There’s a 1.8% reduction of vehicle violations, according to Balthrop and Scott’s analysis. Surprise inspection blitzes don’t result in the same uptick of compliance.

I caught up with Balthrop about his research last week at FreightWaves’ Future of Supply Chain conference, and we chatted again on the phone this week about his findings on International Roadcheck Week.

Enjoy a bonus MODES and a lightly edited transcription of our phone interview:

FREIGHTWAVES: For our readers who are not aware of what Roadcheck Week actually is, can you explain a little bit about what it and why it is important to drivers and companies?

BALTHROP: “The International Roadcheck is part of an alliance between the inspectors in Canada and the ones in Mexico and the U.S. to have a unified framework for making sure trucks are safe to operate. That should make it easier to go across borders when you have this kind of unified structure.

“In the U.S., one of these CVSA inspection blitzes is the International Roadcheck that happens for three days in the summer. Usually it’s a Tuesday, Wednesday and Thursday. And usually it’s the first week in June.

“And in it, they focus on Level One inspections, the North American Standard Inspection where they inspect the driver records, the hours of service, the licensure and I believe medical records as well. Then they inspect the truck. It’s an in-depth inspection where the inspector will actually crawl under the truck to look at various things. And these inspections, from the data that I’ve seen, take about a half an hour on average.

“During the Roadcheck Week, they’ll do about 60,000 inspections, so 20,000 a day. They’re going to pull over a lot of trucks, and this can cause a little bit of congestion at the weigh stations and the roadside inspections localities as the inspectors are doing these inspections.”

Roadcheck Week doesn’t catch all truck drivers, but it has a long-lasting benefit to safety

FREIGHTWAVES: So, can most drivers kind of expect to be pulled over? How likely is that?

BALTHROP: “There’s 1 million or 3 million trucks on the road, somewhere around there on any given day. With 20,000 inspections, most drivers still will not get inspected, but there’s going to be a higher proportion of drivers inspected.

“You’re more likely to get inspected on these days. If you don’t have a recent inspection on your record, or if you have a bad recent inspection on your record, you’re more likely to be pulled over on these days.”

FREIGHTWAVES: Your research focused on that it’s just unusual that this inspection is announced, that it’s planned. We were talking before about how normally, if you’re trying to assure quality or compliance, you would not announce an inspection in advance. It would be more of a surprise-type situation.

Can you walk us through why that’s so unusual, or what’s the rationale that you see behind announcing it in advance?

BALTHROP: “It is unusual, and on the surface, it doesn’t make much sense, but it turns out to be kind of an ingenious strategy. So I’ll walk through it here.

“Over the course of a year, there’ll be 2 million inspections of 3 or 4 million trucks out there. The average rate of inspections is pretty low. It’s not uncommon for truckers to go years without having an inspection. With this low inspection intensity, the FMCSA has sort of a problem of, how does it get anybody to abide by the regulations?

“I’m a jaded economist, and I don’t worry or consider too much ethics and morality and all that kind of stuff. It comes down to incentives for drivers to follow these inspections. The incentives do guide behavior. So, how could the FMCSA incentivize drivers to follow these regulations more closely and adhere to the standards?

“They do this by announcing the blitz. This does two things. On one side, it allows everybody to prepare in advance. There’s a bunch of anecdotal evidence out there that people do prepare for these blitzes in advance. They will have their trucks inspected beforehand for any problems. They’ll time maintenance and upkeep in advance to make sure that their vehicles are in order. “They’ll be a little bit more cognizant of the driver-side regulations. One thing we notice in our study is that hours-of-service violations really drop during these extensions, because people see them coming. They don’t fudge the books in any way.”

Owner-operators can evade Roadcheck Week. Big carriers, not so much.

BALTHROP: “The issue with the announcement, on the flip side, is that it allows people to just dodge the inspection entirely. For a long time, people have talked about how owner-operators and smaller carriers time their vacations for this particular time. They could do this for a couple reasons. To avoid the hassle is a nice way to put it, but it also allows you to be noncompliant to avoid the high-intensity inspections.

“You have this balance here that on one side you get the behavior you want with people complying with regulations. That’s the behavior the FMCSA wants. But on the flip side, you get a bunch of people that are kind of outright dodging inspections.

“When you compare these two things on balance, the policy is actually pretty effective because you get a lot of people focused on maintaining their trucks and obeying the rules during that particular week. Especially with the vehicle maintenance stuff, that lasts a long time.

“In our research, we saw that vehicle violations, a month before and up to a month afterwards, is when you still notice your vehicle violations. That trucks are kind of better maintained around these blitzes.

“The ingenious aspect of it is that the FMCSA, by concentrating their inspection resources all at one time and announcing it, they’re making it clear that they’re serious about enforcing these regulations and everybody prepares for it. For the number of inspections that are happening, you get fewer tickets than you would have otherwise expected.

“The FMCSA, they’re putting people through a little bit of a hassle, but they’re not having to write a bunch of tickets to get people to comply. They’re not really punishing a whole bunch of people because, by making this apparent that this is going to happen, people comply and the FMCSA gets what they want essentially without having to come down on carriers too hard.”

A convenient time for a vacation, indeed

FREIGHTWAVES: OK, interesting. And how does this pattern of shutting down, how does that compare for an owner-operator versus a driver for a big fleet?

BALTHROP: “If you’re a motor carrier with thousands of power units, you can’t just pack up and not do business on a particular day. They just don’t have that option. So they get inspected at a higher intensity, and you see the larger carriers kind of more focused on making sure that they’re prepared for these inspections. With so many inspections, the larger carriers are going to be inspected at higher rates. You can really damage your reputation if your equipment isn’t in order on this particular day.

“Versus the smaller carriers, especially if you’re talking about a single-vehicle fleet, an owner-operator type, it is not that difficult to just not work for those three days. And so you see a lot about that.

“In terms of what the roadway composition looks like, if we look at inspection data and relative to a typical day with the usual inspections, on these Roadcheck days, you have about 5% fewer owner-operators on the road than you otherwise would expect.”

FREIGHTWAVES: Wow. And when you say owner-operators, you also mean just like fleets with just —

BALTHROP: “One-vehicle fleets.”

FREIGHTWAVES: OK, that’s interesting.

BALTHROP: “You know, you see a little bit of effect with the smaller fleets, below six vehicles, but it basically disappears by the time you get to a hundred vehicles.

“This effect is being driven by smaller carriers staying off the road in terms of avoidance. You see this goes also how you would expect; it’s also older vehicles that stay off the road. This is correlated with carrier size. The larger carriers use newer vehicles and owner-operators tend to use some of the older vehicles. But it’s particularly the older vehicles that are off the road.

“This makes intuitive sense. Older vehicles are more costly to keep compliant. Maintenance is more costly, and they’ve been around longer so there’s time for more stuff to have broken essentially.

How a truck driver gets stopped for inspection

FREIGHTWAVES: Can you explain a little bit more, the idea of having this inspection history and why it would benefit a larger or small carrier?

BALTHROP: “Getting flagged for inspection is sort of random, but not totally. If somebody notices something obviously wrong with your truck, that’s ground for a more in-depth inspection. Or if you get pulled over for some other reason, this can be grounds for inspection of some type.

“But there’s also the inspection selection service. The computer program that is random, that it randomly flags people in for inspection, but it’s based on your inspection history.

“So if your firm hasn’t been inspected recently, or if your carrier doesn’t have a very dense inspection history, you’ll be more likely to trigger that system to pull you in and have you inspected. If you have a dense inspection history, you’re less likely to get inspected.”

FREIGHTWAVES: So how do you get pulled over for inspection? As a person who only drives a passenger car, my main interaction with being pulled over is, I’m driving down the freeway or wherever, and I get stopped by the police. How does it work for a truck driver? How does getting pulled over or inspected work in that way?

BALTHROP: “The law is that you cannot pass a weigh station without pulling in and getting weighed. At that point they may flag you to be inspected. Now, in the past decade or two, there’s been a bunch of electronic devices that are installed in cabs. You may have heard of PrePass or Drivewise. This allows you to pass weigh stations.

“I don’t have data on how many trucks have the in-cab devices. But from a trucking perspective, they’re so convenient that you don’t have to stop every time you cross a state line. I think the vast, overwhelming majority of trucks have some sort of one of these electronic devices. The DOT inspectors at these roadside inspection points have a dial they can twist essentially about how many people they want to inspect.

“So during the roadcheck inspection week, they’ll crank that dial all the way up and pull everybody over. And if they get too backed up, they might crank it back down a little bit and so on.”

FREIGHTWAVES: OK, interesting. It reminds me of a highly sophisticated E‑ZPass.

A $10 million-plus expense to trucking companies every year … but it’s worth it if just one fatal crash is avoided

FREIGHTWAVES: Zooming out, when we hear about large truck crashes, something like a vehicle maintenance issue is not really the most sexy explanation. But just looking at the FMCSA data, in 29% of all truck crashes, a major factor is brake problems. So it seems like a lot of the truck crashes on the road are caused by vehicle maintenance, versus something like the driver using illegal drugs or some other sort of more dramatic explanation. Can you speak a little bit to why this sort of vehicle maintenance is important for safety in preventing large crashes?

BALTHROP: “We did a little bit of a back-of-the-envelope cost benefit analysis of this. Let me try and make sure I remember it clearly, but we have it in the paper that the cost of this on one side is that you have the compliance costs the firms are undertaking, and then you have to add to that the delay costs from doing this, and then the cost of the inspection itself, having to pay federal inspectors to do this.

“On the benefit side, it reduces crashes. So when we add up, just looking at the cost of what an inspection is, we don’t have a good idea of how to measure the compliance cost. It’d be fun to measure the delay cost, but I don’t have good enough price data on that to get at that cost.

“But if you look at what the cost of an inspection is, it is something like $100 or $120 is what you would pay to have one of these inspections done privately. A lot of people do this in the run-up to inspections, and have it done privately so that you can fix whatever the problems are and be sure that you would pass the FMCSA inspection.

“With that $120 figure, if you aggregate that up to 60,000 inspections or whatever, and you take that in comparison, I’m going to give you a bad figure here, it’s on the order of $10 million. That is about the value of a statistical human life. Looking at this economically, it’s worthwhile if it saves one human life. If you identify just one faulty brake system that would’ve resulted in an accident, you’re getting some value out of the program.

“When you add those other costs in there, we’re going to need to save a couple of lives, but in terms of cost benefit analysis with this kind of stuff, we’re usually looking at orders of magnitude differences in cost and benefits to say something for sure.

“If you can save just a couple lives, this program will pay for itself.”

Time to start inspecting in the winter

FREIGHTWAVES: Then one last question: Is there any rationale for this program happening in the summer?

BALTHROP: “I think part of it is that for the inspectors this gets much harder and much more miserable to do in winter conditions.”

FREIGHTWAVES: That makes sense.

BALTHROP: “Inspectors are less productive. One of the things that we talk about in the paper, that they have in addition to the International Roadcheck, is that they have Brake Week where they focus a little bit more on brake inspections. You have Operation Safe Driver a little bit later on in the summer, usually in September, where it’s a little bit more focused on passenger vehicles and how they drive around these trucks.

“But there’s not one in the winter time. There’s an unannounced brake check that usually happens in May, a surprise inspection that’s just one day. But you’re right in pointing out that it might be worthwhile having one of these in the wintertime. You have this periodic high-intensity inspection that kind of incentivizes everybody to be compliant through the summer.

“But there’s nothing in the winter, so that’s an area. But if I was managing the FMCSA, that would be one of the first questions I ask, ‘Why don’t we have one of these in the wintertime?’”

FREIGHTWAVES: That makes sense. Maybe they can do it in the South or something. Maybe a Miami January inspection …

That’s it for this special bonus MODES. Subscribe here if you’re not already receiving MODES in your inbox every Thursday. Email the reporter at rpremack@www.freightwaves.com with your own tales on International Roadcheck Week or any other trucking topics.

Why the Northeast is quietly running out of diesel

The nozzle of a diesel fuel pump is inserted into the tank of a commercial truck as its driver looks on the bankground.

The East Coast of the U.S. is reporting its lowest seasonal diesel inventory on record. And some trucking companies appear spooked.

The East Coast typically stores around 62 million barrels of diesel during the month of May, according to Department of Energy data. But as of last Friday, that region of the U.S. is reporting under 52 million barrels.

The sharp increase of diesel prices has been a major stressor in America’s $800 billion trucking industry since the beginning of 2022. According to DOE figures, the price per gallon of diesel has reached record highs — a whopping $5.62 per gallon. It’s even higher on the East Coast at $5.90, up 63% from the beginning of this year.

When relief is coming isn’t yet clear, and experts say higher prices are the only way to attract more diesel into the Northeast.

“I wish I had some good news for the Northeast, but it’s bedlam,” Tom Kloza, global head of energy analysis at OPIS, told FreightWaves.

2022 has seen record-setting diesel prices. (SONAR)

Everyday Americans don’t fill up their cars with diesel, but the fuel powers our nation’s agriculture, industrial and transportation networks. More expensive diesel means the price of everything is liable to increase. Trucks, trains, barges and the like consumed about 122 million gallons of diesel per day in 2020.

Patrick DeHaan, a vice president of communications at fuel price site GasBuddy, reported that retail truck stops are hauling fuel from the Great Lakes to the Northeast, calling it “extraordinary.” We’ve also seen anecdotal reports from truck drivers posting company memos:

pic.twitter.com/yFYyjzYMWE
— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) May 11, 2022

#FuelShortage #DieselShortage #SupplyChainCrisis pic.twitter.com/zVmXlshXN0
— Don Ricardo 👑 🇺🇸 🇩🇴 (@NjPier) May 5, 2022

Pilot Flying J and Love’s, two of America’s largest truck stops, told the Wall Street Journal yesterday that they were not planning to restrict diesel purchases, but were monitoring low diesel inventory.

Not unlike every other supply chain crunch we’ve seen in the past few years, the cause of the Northeast’s diesel shortage is multifaceted. A yearslong degradation of refineries is rubbing against the Gulf Coast preferring to ship its oil to Europe and Latin America.

Here’s a breakdown:

1. The East Coast has lost half of its refineries.

As Bloomberg’s Javier Blas wrote on May 4 (emphasis ours):

In the past 15 years, the number of refineries on the U.S. East Coast has halved to just seven. The closures have reduced the region’s oil processing capacity to just 818,000 barrels per day, down from 1.64 million barrels per day in 2009. Regional oil demand, however, is stronger.

Rory Johnston, a managing director at Toronto-based research firm Price Street and writer of the newsletter Commodity Context, told FreightWaves that refining is a “thankless industry,” with intense regulations that have limited the opening of new refineries. The Great Recession of 2008 led to several East Coast refineries shuttering, but there have been more recent shutdowns too. One major Philadelphia refinery shuttered in 2019 after a giant fire (and it already had declared bankruptcy), and another refinery in Newfoundland shut down in 2020.

Billionaire John Catsimatidis owns a small oil refinery in the US East Coast and several hundred gas stations from Pennsylvania to New York:

“I wouldn’t be surprised to see diesel being rationed on the East Coast this summer.” #OOTT #DieselCrisis https://t.co/9g1e5UIf20
— Javier Blas (@JavierBlas) May 11, 2022

2. It’s a financial risk to bring diesel to the Northeast.

The Northeast has increasingly relied on diesel from the Gulf region. Much of that diesel travels to the Northeast through the famous and much-adored Colonial Pipeline. You may remember the 5,500-mile pipeline from last year, when a ransomware attack shuttered it for nearly a week!

It takes 18 days for oil to travel on the Colonial Pipeline from its source in Houston to New York City (or, more specifically, Linden, New Jersey), Kloza said.

That’s a long enough time to prioritize Colonial pipelines financially risky for traders — or, as Kloza said, “incredibly dangerous” — thanks to a concept called “backwardation.”

Backwardation refers to the market condition in which the spot price of a commodity like diesel is higher than its futures price. It’s only gotten stronger over time in the diesel market, Kloza said. So, a company could send off a shipment of diesel and find that it dropped by $1 per gallon in the time the diesel traveled from the Gulf Coast to New York — er, New Jersey. That could mean hundreds of thousands or more in lost profits, so traders often avoid such a fate.

“We’re not in an era where there are any U.S. refiners or big U.S. oil companies who would ‘take one for the team’ and bring cargo in where it’s needed,” Kloza said.

The desperation is showing in New England and the mid-Atlantic regions. New England diesel retail prices are up 75% from the beginning of 2022, per DOE data. In the mid-Atlantic, diesel is up 67%.

It’s not worth the risk, even amid ultra-high prices. As FreightWaves’ Kingston reported last week, the spread between a gallon of diesel in the Gulf Coast and its New York harbor price is usually a few cents. Last week, that swung up to 66 cents.

But that uptick still isn’t justifying moving oil to the Northeast — particularly when traders can make so much more money selling diesel abroad.

3. Of course, we can blame COVID and the crisis in Ukraine.

The catalyst for this diesel shortage, of course, is the ongoing conflict in Ukraine — particularly Europe’s desperation for diesel after weaning off Russian molecules.

As CNBC reported in March, Europe is a net importer of diesel. Europe consumed some 6.8 million barrels of diesel each day in 2019; Russia exported some 600,000 barrels per day of that. Today, Europe has only eliminated one-third of its Russian diesel, so prices are expected to continue to climb amid that transition. Latin America, too, has been clammoring for U.S. diesel.

The Gulf Coast has been happy to provide such diesel, amid “insane” prices for diesel abroad, said Johnston. Waterborne exports of diesel from the U.S. Gulf Coast hit record highs last month, according to oil analytics firm Vortexa. (The records only date back to 2016.)

Naturally, COVID is also to blame for the Northeast’s run on diesel. Those refineries still retained on the East Coast scaled back during the pandemic due to staffing issues. It takes six months to a year to reignite refineries that were previously shuttered, Kloza said.

The ‘everything shortage’ endures

It’s been a tale as old as, well, last year. An industry is quietly hampered by supply issues for years, or even decades, and COVID pulls back the curtains on its unsteady foundation. It’s particularly jarring for commodities we never thought about before, like shipping containers or pallets, but that quietly underpinned our livelihood all along.

Recall the Great Lumber Shortage of 2020? Big Lumber had unusually low stockpiles of wood by the summer of 2020, thanks to a vicious 2019 in the lumber industry shuttering sawmills and the spring of 2020 sparking staffing issues. (There was also a nasty beetle infestation.) Those in lumber expected the pandemic to slow the economy, not ignite online shopping, construction and housing mania. It meant lumber went from around $350 per thousand board feet pre-pandemic to a crushing $1,515 by the spring of 2021. The lumber price roller coaster persists today.

In diesel, there’s no beetle infestation, but there are plenty of other headaches. It all means higher fuel prices on the East Coast, particularly the Northeast, to lure molecules from the Gulf Coast. And, down the line, probably more expensive stuff for you.

Do you work in the trucking industry? Do you want to say that you hate or love MODES? Are you simply wanting to chitchat? Email the author at rpremack@www.freightwaves.com, and don’t forget to subscribe to MODES.

Updated on May 13 with the latest comments from truck stops.

Exclusive: Central Freight Lines to shut down after 96 years

Nearly, 2,100 employees will be laid off right before Christmas. Central Freight Lines is the largest trucking company to close since Celadon ceased operations in 2019.

Waco, Texas-based Central Freight Lines has notified drivers, employees and customers that the less-than-truckload carrier plans to wind down operations on Monday after 96 years, the company’s president told FreightWaves on Saturday.

“It’s just horrible,” said CFL President Bruce Kalem.

A source close to CFL told FreightWaves that CFL had “too much debt and too many unpaid bills” to continue operating, despite exploring all available options to keep its doors open.

Kalem agreed.

“Years of operating losses and struggles for many years sapped our liquidity, and we had no other place to go at this point,” Kalem told FreightWaves. “Nobody is going to make money on this closing, nobody.”

Central Freight will cease picking up new shipments effective Monday and expects to deliver substantially all freight in its system by Dec. 20, according to a company statement.

A source familiar with the company said he is unsure whether CFL will file Chapter 7 or “liquidate outside of bankruptcy,” but that the LTL carrier has no plans to reorganize.

The company reshuffled its executive team nearly a year ago in an effort to stay afloat, including adding the company’s owner, Jerry Moyes, as CFL’s interim president and chief executive officer. Moyes remained CEO after Kalem was elevated to president in July.

“I think it was surprising that there wasn’t a buyer for the entire company, but buyers were interested in certain pieces but not in the whole thing,” the source, who didn’t want to be identified, told FreightWaves. “Part of it could have been that just the network was so expansive that there was too much overlap with some of the buyers that they didn’t need locations or employees in the places where they already had strong operations.”

Third-party logistics provider GlobalTranz notified its customers that it had removed CFL as “a blanket and CSP carrier option immediately, to prevent any new bookings,” multiple sources told FreightWaves on Saturday.

CFL, which has over 2,100 employees, including 1,325 drivers, and 1,600 power units, is in discussions with “key customers and vendors and expects sufficient liquidity to complete deliveries over the next week in an orderly manner,” a CFL spokesperson said. Approximately 820 employees are based at the company headquarters in Waco.

Despite diligent efforts, CFL “was unable to gain commitments to fund ongoing operations, find a buyer of the entire business or fund a Chapter 11 reorganization,” another source familiar with the company told FreightWaves.

Kalem said the company had 65 terminals prior to its decision to shutter operations.

FreightWaves received a tip from a source nearly two weeks ago that CFL wasn’t renewing its East Coast terminal leases but was unable to confirm the information with CFL executives.

Another source told FreightWaves that some of the LTL carrier’s West Coast terminals had been sold recently, but that no reason was given for the transactions.

At that time, Kalem said the company was “working to find alternatives” and couldn’t speak because of nondisclosure agreements. He said executives at CFL, including Moyes, were trying to do everything to “save the company.”

“Jerry [Moyes] pumped a lot of money into the company, but it just wasn’t enough,” Kalem said.

Kalem said he’s aware that a large carrier is interested in hiring many of CFL’s drivers but isn’t able to name names at this point.

“Central Freight is in negotiations to sell a substantial portion of its equipment,” the company said in a statement. “Additionally, Central Freight is coordinating with other regional LTL carriers to afford its employees opportunities to apply for other LTL jobs in their area.”

As of late Saturday night, Kalem said fuel cards are working and drivers will be paid for freight they’ve hauled for the LTL carrier until all freight is delivered by the Dec. 20 target date.

“I’m going to work feverishly with the time I have left to get these good people jobs — I owe it to them,” Kalem told FreightWaves. “We are going to pay our drivers — that’s why we had to close it like we’re doing now. We are going to deliver all of the freight that’s in our system by next week, and we believe we can do that.”

During the outset of the pandemic, Central Freight Lines was one of four trucking-related companies that received the maximum award of $10 million through the U.S. Small Business Administration’s Paycheck Protection Program (PPP). This occurred around the time that CFL drivers and employees were forced to take pay cuts, a move that didn’t go over well with drivers.

“It all went to payroll,” Kalem said about the PPP funds. “Yes, our employees and drivers did take a pay cut over the past few years, and we gave most of it back, even raised pay over the past several months, but it just wasn’t enough to attract drivers.”

FreightWaves staffers Todd Maiden, Timothy Dooner and JP Hampstead contributed to this report.

Watch: Central Freight Lines’ impact on the LTL market

FreightWaves CEO and founder Craig Fuller reacts to the Central Freight Lines news:

“With Central struggling for many years and unable to reach profitability, it makes sense that they would want to liquidate while equipment and real estate are fetching record prices.”

Central Freight Lines statement

Here is the statement given by Central Freight Lines to FreightWaves late Saturday after reports surfaced of its impending closure:

“We make this announcement with a heavy heart and extreme regret that the Company cannot continue after nearly 100 years in operation. We would like to thank our outstanding workforce for persevering and for professionally completing the wind-down while supporting each other. Additionally, we thank our customers, vendors, equipment providers, and other stakeholders for their loyalty and support.

“The Company explored all available options to keep operations going. However, operating losses sapped all remaining sources of liquidity, and the Company’s liabilities far exceed its assets, all of which are subject to liens in favor of multiple creditors. Despite diligent efforts, the Company was unable to gain commitments to fund ongoing operations, find a buyer of the entire business, or fund a Chapter 11 reorganization. Given its limited remaining resources, the Company concluded that the best alternative was a safe and orderly wind-down. As we complete the wind-down process, our primary goal will be to offer the smoothest possible transition for all stakeholders while maximizing the amount available to apply toward the Company’s obligations.

“Central Freight is in negotiations to sell a substantial portion of its equipment. Additionally, Central Freight is coordinating with other regional LTL carriers to afford its employees opportunities to apply for other LTL jobs in their area. Discussions are ongoing and no purchase of assets or offer of employment is guaranteed.”

Brief history of Central Freight Lines

1925	Founded in Waco, Texas, by Woody Callan Sr.
1927	Institutes regular routes in Texas between Dallas, Fort Worth and Austin.
1938	Dallas facility opens as world’s largest freight facility.
1991	Receives 48-state interstate operating authority, expands into Oklahoma.
1993	Joins Roadway Regional Group and begins service in Louisiana.
1994	Expands into Colorado, Kansas, Missouri, Illinois and Mississippi.
1995	Consolidation of Central, Coles, Spartan and Viking Freight Systems into Viking Freight Inc. is announced. Central’s Waco corporate HQ starts closure.
1996	Becomes the Southwestern Division of Viking Freight Inc.
1997	Investment group led by senior Central management purchases assets of former CFL from Viking Freight and reopens as a new Central Freight Lines.
1999	Expands into California and Nevada.
2009	CFL Network provides service to Idaho, Utah, Minnesota and Wisconsin.
2013	Acquires Circle Delivery of Tennessee.
2014	Acquires DTI, a Georgia LTL carrier.
2017	Acquires Wilson; new division created with an increase of 80 terminals.
2020	Wins Carrier of the Year from GlobalTranz. Acquires Volunteer Express Inc. of Dresden, Tennessee.

Source: Central Freight Lines

Warehouse cramming is about to begin — Freightonomics

nVision Global, is a leading Global Freight Audit, Supply Chain Management Services company offering enterprise-wide supply chain solutions. With over 4,000 global business “Partners”, nVision Global not only provides prompt, accurate Freight Audit Solutions, but also providing industry-leading Supply Chain Information Management solutions and services necessary to help its clients maximize efficiencies within their supply chain. To learn more, visit www.nvisionglobal.com

Warehouse space is at a premium right now and with peak season right around the corner, shippers are starting to scramble for space.

Zach Strickland and Anthony Smith look into what shippers are doing to prepare for the end-of-year crunch. They welcome Zac Rogers from Colorado State University to the show to talk through the industry tightness.

The three also talk about the latest Logistics Managers Index results and what they mean for the fourth quarter of 2021.

You can find more Freightonomics episodes and recaps for all our live podcasts here.

Seasonality pushing rejections and rates higher ahead of the Fourth

This week’s DHL Supply Chain Pricing Power Index: 75 (Carriers)

Last week’s DHL Supply Chain Pricing Power Index: 70 (Carriers)

Three-month DHL Supply Chain Pricing Power Index Outlook: 70 (Carriers)

The DHL Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.

The Pricing Power Index is based on the following indicators:

Load volumes: Absolute levels positive for carriers, momentum neutral

The Outbound Tender Volume Index at 15,980 is nominally higher now than basically at any point in the past 12 months with the exception of the week prior to Thanksgiving/Black Friday last year. OTVI captures all electronic tenders, including rejected ones, so when accounting for the rejection rate, we can get an even more accurate look at volumes.

OTVI rose through the back half of May into the national holiday and has risen even further since. Throughout the back half of May and into the middle of June, tender rejections declined substantially. Meaning, current volume throughput is actually understated when comparing OTVI now to OTVI in November 2020. After adjusting for rejected tenders, the accepted outbound tender volume index is just 2.2% below the 2020 peak in November. At that time, OTVI surged towards 17,000, but the rejection rate moved in-kind towards its natural ceiling of 28%. So, the total accepted freight tenders in mid-June is comparable to the peakiest of peak seasons in 2020. Incredible.

However, since the middle of June, tender rejections have begun increasing again heading into Independence Day, a time when many drivers spend time off the road with their families. The move higher in OTVI this week has been driven primarily by higher rejection rates, rather than higher freight demand.

Over the past month, the drivers of freight volumes have continued to be imports and from just about every port. The west coast continues to provide seemingly non-stop container ships, while Houston, New Orleans, Miami and Savannah are seeing very strong throughput as well.

It is van volumes that are driving freight markets higher right now. The Reefer Outbound Tender Volume index has tumbled 25% since its all-time high in the weeks after the polar vortex in February. Since Memorial Day, ROTVI has fallen another 10.5%. This is likely a factor of declining grocery demand, but I would expect the trend to reverse course in the near future as summer festivities accelerate.

Dry van volumes pushed higher in the back half of May and into June while reefer volumes have declined significantly.

SONAR: VOTVI.USA (Blue); ROTVI.USA (Green)

The congestion at our nation’s ports has spread from Los Angeles and Long Beach to Oakland, California. The California coastline is a parking lot of container ships, most of which are full to the brim with imports, awaiting berth. As detailed in the economic section, there are some signs that the reversion is underway with Americans paring back spending on pandemic superstar categories in favor of airlines, lodging and entertainment. But spending remains strong despite the moderation, and low inventory levels offset much of the decline that will occur from slowing demand. Real inventories are 3% higher now than pre-pandemic, but real sales growth is far outpacing inventory growth, leading to the lowest inventory-to-sales ratio in decades.

On the manufacturing side, the ISM Manufacturing PMI expanded in May after declining in April. We’ve been in expansionary territory for 12 consecutive months. New orders, production, imports/exports and employment are all growing. The major issues should come as no surprise: Deliveries are slowing, backlogs are growing and inventories are too low.

In all, there are many, many catalysts to keep freight demand strong for the foreseeable future. Americans are traveling and spending on services at a high clip, but the high savings rate is enabling it to occur without a massive detriment to goods spending.

SONAR: OTVI.USA (2021 – Blue; 2020 – Green; 2019 – Orange; 2018 – Purple)

Tender rejections: Absolute level and momentum positive for carriers

After declining steadily from mid-March to mid-May, the Outbound Tender Reject Index has reversed course heading into Independence Day. This is typical for a national holiday as carriers selectively choose loads to bring drivers closer to home. OTRI now sits above 25% for the first time in June.

One of our newest indices in SONAR gives us the ability to compare markets on as close to an apples-to-apples basis as possible. FreightWaves’ Carrier Trend Market Score indices are divided into two perspectives – shipper/broker and carrier. The scores are positioned on a scale from 1-100 and have values measuring van and refrigerated (reefer) capacity. The higher values represent more favorable trends for whichever perspective. For instance, a value near the high-end of the range would suggest very favorable conditions for carriers in our carrier capacity trend score index.

For the past several weeks, capacity disparities have been driven by import volumes. The markets with the tightest carrier capacity coincide with the nation’s busiest ports. Ontario, California, Savannah, Georgia, and Atlanta all have carrier capacity trend market scores of 100.

SONAR: Capacity Trend Market Score (Carriers – VAN)

By mode. Reefer rejection rates tumbled from it’s all-time high in March to under 35% in mid-June before popping higher over the past two weeks. Reefer rejections are still quite high from a historical standpoint at 38%, but are significantly lower than just three months ago when reefer carriers were rejecting half of all electronically tendered loads.

SONAR: VOTRI.USA (Blue); ROTRI.USA (Orange)

Dry van tenders make up the majority of all tenders, so the van rejection rate mirrors the aggregate index closely. Van rejections have surged from ~23% to ~26% over the past two weeks.

Yes, one-in-four loads being rejected is not ideal, but it’s better than 30%. I am unaware of any meaningful signals that capacity is being added at a rate that would change my outlook. With so many catalysts for demand, and many constraints on drivers including the Drug & Alcohol Clearinghouse, driver training school closures and continued government unemployment benefits, the outlook is tight throughout this year and into 2022. That’s not to say we won’t see improvement as consumers revert to pre-pandemic spending habits and drivers enter or reenter the market. But I’m not expecting any quick reversal of this environment; there are simply too many catalysts driving volume and suppressing capacity.

SONAR: OTRI.USA (2020/21 – Blue; 2020 – Green; 2019 – Orange)

Freight rates: Absolute level and momentum positive for carriers

Throughout June, spot rates have moderated while contract rates have pushed higher. The Truckstop.com dry van rate per mile (incl. fuel) has fallen from $3.21 to $3.11 since the beginning of June, while FreightWaves van contract rates have risen from $2.50 to $2.59/mile, exclusive of fuel.

I still believe the Truckstop.com dry van national average will not retest the post-vortex surge pricing that brought spot rates up to an all-time high of $3.30. But, there aren’t many catalysts to bring spot rates down anytime soon either. Demand is unwavering with continued strong consumer goods demand, humming industrial recovery and a potentially cooling, yet still sizzling, hot housing market. And carriers can’t fill enough trucks to keep up with demand.

Prior to the seasonal movements we’re seeing in tender rejections, routing guides generally had been improving through Q2. We should continue to see a convergence between spot and contract rates, but spot rates will remain historically very elevated throughout the summer as demand simply outstrips capacity.

SONAR: TSTOPVRPM.USA (Blue); VCRPM1.USA (Green)

Economic stats: Momentum and absolute level neutral

Several economic releases this week are worth noting.

Weekly jobless claims were released Thursday and give us one of the best close-to-real-time indicators of the overall economy. This week, the data was again very promising as the labor market continues on a bumpy but trajectorially stable recovery path.

First-time filings totaled 411,000 for the week ended June 19, a slight decrease from the previous total of 418,000 but worse than the 380,000 Dow Jones estimate, the Labor Department reported Thursday. Initial claims have held above 400,000 for consecutive weeks after falling to a pandemic low of 374,000 three weeks ago. As things stand, the current level of initial claims is about double where it was prior to the Covid-19 pandemic.

The good news on the jobs front is that continuing claims are on the decline, falling to 3.39 million, a drop of 144,000. That number runs a week behind the headline claims total.

Initial jobless claims (weekly in May 2020-May 2021)

At the time of writing, the newest weekly data for the week ending May 29 had not been updated in SONAR. This week, claims fell from 405,000 to 385,000.

SONAR: IJC.USA

Consumer. Turning to consumer spending, as measured by Bank of America weekly card (both debit and credit) spending data, total card spending (TCS) in the latest week accelerated to 22% over 2019. This is the first time in June that TCS has topped 20% over 2019, but spending has been running up 16-19% consistently on a two-year comp for months. For contect, the average pre-pandemic two-year growth rate was about 8% (from 2012 to 2019).

The Bank of America team highlighted service spending in the nation’s two largest state economies, California and New York, which are now fully reopened. Spending at restaurants is now well above 2019 in both states, and the team believes there is more capacity for spending to accelerate in the states that were slower to reopen given pent-up demand.

There was also a notable acceleration in spending on clothing this week, according to Bank of America. It could be a reversal from some softening in the early weeks of June, or an indication of people refreshing wardrobes ahead of a return to work, more travel and vacations. One tepid statement for freight markets from this week;s report: Leisure spending is on the rise and durable goods spending is flatlining.

FreightWaves’ Flatbed Outbound Tender Reject Index, both a measure of relative demand and capacity, moves directionally with the ISM PMI.

SONAR: ISM.PMI (Blue); FOTRI.USA (Green)

Manufacturing. Over the past two weeks, regional manufacturing surveys have reported generally positive readings amid logistical challenges. The New York Fed’s Empire State business conditions index declined 6.9 points to 17.4 in June, retreating from strong readings the past two months. The Empire State Index is a diffusion index with a baseline of zero; any reading above zero indicates improving or expansionary conditions.

Delivery times lengthened to a new record during the month, new orders and shipments fell, and inventories entered negative territory. The supply chain and transportation challenges are as visible upstream as downstream, but overall the manufacturing sector is handling. Growth continued throughout the second quarter in both the Empire State and Philly Fed indices.

The Philadelphia Federal Reserve’s business activity index edged lower to a still robust 30.7 in June from 31.5 in the prior month. Unlike NY, the pace of shipments growth accelerated in the Philly region during June. The employment subcomponent rose to a very healthy 30.7 from 19.3 last month, the regional bank said.

Record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy, but demand remains strong.

For more information on the FreightWaves Freight Intel Group, please contact Kevin Hill at khill@www.freightwaves.com or Andrew Cox at acox@www.freightwaves.com.

Check out the newest episodes of our podcast, Great Quarter, Guys, here.

Project44 acquires ClearMetal to strengthen predictive tools

Project44, a leader in real-time visibility of the global supply chain, announced on Thursday it has acquired ClearMetal, a San Francisco-based supply chain planning software company that focuses on international freight visibility, predictive planning and overall customer experience. The terms of the acquisition were not disclosed.

ClearMetal, founded by top software engineers and data scientists from Stanford, Google and other Silicon Valley elites, has created a “continuous delivery experience” that leverages proprietary machine learning algorithms that can forecast supply chain disruptions.

In an interview, Jason Duboe, chief growth officer at project44, explained that bringing in ClearMetal’s elite team is essential for the company’s future predictive solutions.

“Their team construct is fundamentally different. When you look at their data science, machine learning and computer science background, they are best in class,” he said. “Applying the team to solve really interesting challenges, starting with highly predictive ETA and deeper exception management to create more predictive analytics is really a key component here.”

Project44 recently acquired Ocean Insights to gain global supply chain vessel visibility and has announced it has expanded its truckload tracking services within Asia. Bringing on this new team of engineers will allow the company to capitalize on strong predictive tools, strengthening the supply chain of its customers.

“We’re going to be expanding deeper into Asia, and from a port perspective, getting data much earlier than competitors,” explained Duboe. “Our freight forwarder integrations will give us much deeper visibility from an end-to-end perspective in these regions.”

Along with the acquired skills the ClearMetal team will bring to project44, it brings a large book of customers, including large CPGs, retailers, manufacturers, distributors and chemical companies. These advanced use cases will strengthen the predictive planning tools, and project44 continues to expand into different customer markets.

“What we gain from ClearMetal is a holistic platform for anybody that joins the platform in the future,” said Duboe. “They have large customers with incredibly demanding and advanced use cases. So when it comes to order and inventory, functionality, supplier onboarding, and moving upstream into those processes, we can capture exceptions earlier on.”

Click here for more articles by Grace Sharkey.

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Amazon battles freight inflation as shipping costs jump 11% in Q3

Amazon reported record operating profitability in the third quarter on Thursday after the market closed, as the e-commerce giant continued expanding its delivery network and robotics investments amid higher transportation costs.

CEO Andy Jassy said investments in same-day fulfillment facilities and ultra-fast delivery services are helping the company attract more customers while lowering fulfillment expenditures.

“We’re on track to reduce cost to serve per unit for the fourth consecutive year,” Jassy said during a call with analysts.

The Seattle-based company reported third-quarter revenue of $201.9 billion, up 12% from $180.2 billion a year earlier. Operating income surged 61% to $28.1 billion, compared with $17.4 billion in the same period last year.

Revenue in the quarter came in below Wall Street estimates of $202.3 billion, while earnings per share came in at $1.89, lower than the expectation of $1.96.

Amazon’s (Nasdaq: AMZN) operating margin reached 13.9%, its highest ever, as improvements across its retail and cloud computing businesses helped offset higher expenses.

“In our fulfillment network, the team navigated higher transportation costs from fuel inflation and higher line haul rates,” Chief Financial Officer Brian Olszewski said.

Despite those pressures, Amazon lowered its overall cost to serve during the quarter through better inventory placement, shorter shipping distances and package consolidation, he said.

Shipping costs increased 11% year over year, compared with 12% growth in units shipped. Excluding fuel and linehaul inflation, shipping costs rose 8%, approximately 4 percentage points slower than unit growth.

Amazon’s North America segment, which includes its U.S. and Canadian retail operations, generated $112.9 billion in third-quarter revenue, up 6% year over year.

Operating income in the segment jumped to $8.7 billion from $4.8 billion a year earlier, an increase of approximately 81%.

North America’s operating margin reached 7.7%.

International revenue increased 5% to $43.1 billion, while operating income climbed to $1.6 billion from $1.2 billion.

Amazon said the timing of Prime Day affected year-over-year comparisons because the shopping event occurred in the second quarter of 2026 for most major markets, compared with the third quarter in 2025.

Excluding that timing change, Amazon estimated third-quarter revenue growth would have been approximately 4 percentage points higher.

Amazon said it achieved its fastest third-quarter delivery speeds ever for Prime members, delivering more than 1.5 billion items on the same day or overnight during the three-month period ending Sept. 30.

Automation remains a major component of Amazon’s strategy to lower fulfillment expenses and increase productivity.

Jassy told analysts the company now operates more than 1 million robots across its fulfillment network.

He said robotics has contributed to improved productivity, reduced operating costs and record-low safety incident levels across its fulfillment operations.

Amazon doubled its fleet of robotic arms, including Cardinal and Sparrow systems, during 2026, according to Olszewski.

The company is also developing robotics foundation models designed to help machines perform increasingly complex physical tasks.

During the question-and-answer portion of Thursday’s earnings call, Jassy said that transportation cost pressures are expected to continue into the fourth quarter.

Responding to an analyst’s question about fuel and linehaul inflation, Jassy said the impact would be somewhat higher in the fourth quarter than in the third.

Amazon implemented a fuel surcharge earlier this year for sellers using its Fulfillment by Amazon service, allowing the company to recover some of its higher fuel expenses.

However, Jassy said the surcharge does not fully offset the increases, leaving Amazon exposed to higher costs for inbound retail shipments and outbound deliveries.

Amazon expects fourth-quarter net sales between $240 billion and $247 billion, representing year-over-year growth of 12% to 16%.

The company forecast fourth-quarter operating income between $28.5 billion and $33.5 billion, compared with $25 billion in the year-earlier period.

Amazon Q3 2026: Key financial and operating metrics

The table below is suitable for inserting after the article’s opening financial results section.

Metric	Q3 2025	Q3 2026	YoY change
Total revenue	$180.17B	$201.94B	+12.1%
Operating income	$17.42B	$28.08B	+61.2%
Operating margin	9.7%	13.9%	+4.2 pts
Net income	$21.19B	$20.69B	-2.4%
Diluted EPS	$1.95	$1.89	-3.1%
North America revenue	$106.27B	$112.85B	+6.2%
North America operating income	$4.79B	$8.72B	+82.1%
International revenue	$40.90B	$43.11B	+5.4%
AWS revenue	$33.01B	$45.98B	+39.3%
Worldwide shipping costs	$25.38B	$28.30B	+11.5%
Fulfillment expenses	$27.68B	$30.00B	+8.4%
Third-party seller services revenue	$42.49B	$46.49B	+9.4%
Online store revenue	$67.41B	$68.47B	+1.6%
Worldwide paid-unit growth	11%	12%	+1 pt

Source: Amazon Q3 2026 earnings release.

Why it matters: Amazon’s ability to lower per-unit delivery costs despite higher fuel and linehaul expenses illustrates how automation, inventory placement and transportation network optimization could reshape the economics of e-commerce fulfillment and parcel delivery.

First look: TFI Truckload sparkles, but OR at LTL slips

TFI International has tried to get investors to take notice of its Truckload operations, which are substantial but smaller than its more better-known LTL segment. The third quarter results may be the catalyst that gets that recognition to occur.

Where the third quarter LTL segment at TFI (NYSE: TFII) saw its operating ratio rise compared to a year ago, the OR for Truckload strengthened. And it was the Truckload operations that led CEO Alain Bedard’s comments in the prepared statement released Thursday afternoon along with its earnings.

Bedard described Truckload as having a “remarkably strong” quarter. “Our Truckload performance is particularly gratifying, with double digit top line growth despite fewer trucks and operating income that nearly doubled,” Bedard said.

The overall impact of the higher LTL OR and the much improved truckload OR led to a company-wide OR of 89.5% compared to 91.2% from a year ago.

The Truckload segment had operating income of $100.2 million, up 13.3% from a year ago, while LTL’s operating income was $44.4 million, up 6.6%. A year ago, LTL’s operating income was $77.7 million while Truckload was $52.6 million.

TFI’s Logistics segment had operating income that surpassed LTL, coming in at $49.4 million.

Diluted EPS of $1.28, compared to $1.02 a year earlier, is expected to be surpassed in the fourth quarter, TFI said, projecting EPS for the three months to be between $1.30 to $1.40.

Several of the LTL metrics fell sharply, leading to the deterioration in adjusted OR. Revenue per hundred weight excluding fuel, the key yield figure, declined less than 1%. But revenue per shipment excluding fuel fell 22%.

The average weight per shipment was down 3.58%. TFI did see its total LTL shipments rise 4.62%.

With year-ago comparisons on revenue in Truckload impacted by the weak freight market of 2025, Truckload revenue rose 142.1%. But adjusted EBITDA in Truckload was up 24.7% and operating income rose more than 90%.

The Truckload segment was much smaller in size than a year ago, with the truck count down almost 12%. The number of owner operators also declined about 4.8%.

TFI International’s earnings call with analysts will be Friday at 9:30 am EDT.

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First look: Covenant Logistics’ Q3 freight revenue surges 68%

Covenant Logistics Group reported a 19.2% year-over-year increase in third-quarter revenue Thursday, driven by strong growth in its managed freight segment.

The Chattanooga, Tennessee-based carrier (NYSE: CVLG) generated $353.9 million in total revenue for the quarter ended Sept. 30, compared with $296.9 million a year earlier.

Freight revenue excluding fuel surcharges rose 17.2% to $315.1 million from $268.8 million.

Other highlights during the quarter included improved freight pricing, even as the trucking company continued shrinking its tractor fleet and shifting capacity toward long-term contracts.

Net income increased to $10.7 million, or 40 cents per diluted share, compared with $9.1 million, or 35 cents per share, in the third quarter of 2025.

On an adjusted basis, Covenant earned 50 cents per diluted share, up 13.6% from 44 cents a year earlier.

Chairman and CEO David R. Parker said the results marked the first time since the second quarter of 2022 that adjusted earnings per share increased both sequentially and year over year.

“We were pleased with our third-quarter earnings of $0.40 per diluted share, or $0.50 per diluted share on a non-GAAP adjusted basis,” Parker said in a news release.

The company’s operating income increased to $12.5 million from $7.9 million a year earlier. However, its adjusted operating ratio deteriorated to 95% from 94.4%, reflecting continued pressure from operating expenses.

Covenant will hold a conference call to discuss results with analysts at 10 a.m. Friday.

Covenant Logistics Q3 2026 financial and operating performance

Metric	Q3 2026	Q3 2025	YoY change
Total revenue	$353.9M	$296.9M	+19.2%
Truckload total revenue	$204.6M	$199.7M	+2.5%
Freight revenue excluding fuel (companywide)	$315.1M	$268.8M	+17.2%
Truckload revenue per total mile*	$3.03	$2.53	+19.8%
Truckload revenue per tractor per week*	$5,778	$5,445	+6.1%
Managed Freight revenue	$121.6M	$72.2M	+68.4%
Managed Freight adjusted operating income	$7.08M	$3.04M	+133.3%
Expedited freight revenue excluding fuel	$70.6M	$80.2M	-12.0%
Expedited adjusted operating income	$4.16M	$5.14M	-19.0%
Adjusted earnings per share	$0.50	$0.44	+13.6%

Covenant Logistics Group key third quarter performance indicators.

Managed Freight drives revenue growth

Covenant’s Managed Freight segment was the primary driver of the company’s third-quarter revenue growth, generating $121.6 million compared with $72.2 million in the same period last year, an increase of 68.4%.

Adjusted segment operating income more than doubled to $7.1 million from $3 million, while its adjusted operating ratio improved to 94.2% from 95.8%.

The company attributed the gains primarily to the integration of brokerage operations acquired during the fourth quarter of 2025, along with customer rate increases and lower purchased transportation costs.

Parker said the acquired brokerage operations delivered their strongest quarterly performance since joining Covenant.

The company’s existing brokerage business also benefited from sourcing additional carrier capacity to handle overflow expedited freight.

Covenant cautioned that sourcing qualified carrier capacity at prices below contractual freight rates remains challenging as trucking capacity exits the market. Rising insurance and claims expenses also pose risks to Managed Freight profitability.

Truckload fleet shrinks as revenue per mile climbs

Covenant’s combined Truckload operations generated $204.6 million in total revenue, up 2.5% from $199.7 million a year earlier.

However, Truckload freight revenue excluding fuel surcharges declined 3.4% to $166 million from $171.8 million.

The decline was largely attributable to an 8.9% reduction in the company’s average tractor fleet, which fell to 2,186 tractors from 2,400 a year earlier.

Despite operating fewer trucks, Covenant reported improved pricing and revenue productivity.

Average freight revenue per total mile climbed 19.8% to $3.03 from $2.53, while average freight revenue per tractor per week increased 6.1% to $5,778 from $5,445.

Average miles per tractor during the quarter declined 11.4% to 25,081 from 28,306.

President Paul Bunn said higher rates and an improved freight mix helped offset the impact of operating fewer tractors.

However, inflation and costs associated with repositioning equipment and drivers weighed on profitability.

Truckload adjusted operating income declined to $7.9 million from $10 million, while the segment’s adjusted operating ratio deteriorated to 95.3% from 94.2%.

Bunn said truckload operating expenses increased approximately 20.8% year over year on an adjusted basis, compared with a roughly 19.7% increase in freight revenue per total mile.

The company cited rising wages, employee benefits, equipment depreciation, maintenance and technology costs, along with temporary expenses related to starting new customer contracts.

Expedited revenue falls as Dedicated business expands

Covenant’s Expedited segment continued transitioning toward multiyear capacity agreements.

Expedited freight revenue excluding fuel surcharges declined 12% to $70.6 million from $80.2 million a year earlier.

The segment’s average tractor fleet fell 21.4% to 677 units from 861, while adjusted operating income declined 19% to $4.2 million.

Despite the reduction in fleet size, average freight revenue per tractor per week increased 12% to $7,934.

By the end of September, approximately 58% of Covenant’s Expedited tractors were operating under committed capacity agreements, compared with about 40% at the end of the second quarter.

Dedicated freight revenue excluding fuel surcharges increased 4.2% to $95.4 million from $91.6 million.

Dedicated revenue per tractor per week climbed 6.2% to $4,810, supported by expansion in the company’s agricultural protein-related transportation business and its decision to exit less profitable dedicated contracts.

Across its entire asset-based fleet, Covenant said approximately 80% of tractors were operating under long-term contracts at the end of the quarter.

Parker said the company’s longer-term goal is to place substantially all of its asset-based business under dedicated or other committed freight contracts by the end of the current freight market upcycle.

Freight demand holds steady, but costs remain elevated

Parker described freight demand as adequate across most sectors and strong in certain markets tied to U.S. economic growth.

However, he said tightening driver capacity and inflation continue to create significant operating challenges.

“Driver capacity is tight, and the cost of recruiting, retaining, and compensating drivers is increasing significantly,” Parker said.

He added that higher expenses for wages, equipment ownership, maintenance and technology have largely offset the benefits of freight rate increases.

Covenant expects its transition toward committed capacity contracts to reduce earnings volatility and improve profitability as the freight market strengthens.

The company’s Warehousing segment also faced profitability challenges during the quarter.

Warehousing freight revenue increased 7.8% to $26.7 million, but adjusted operating income declined to $888,000 from approximately $2 million a year earlier.

The company attributed the decline to operational inefficiencies at new customer locations and labor inflation.

Covenant forecasts further earnings improvement

Covenant expects a modest sequential increase in earnings per share during the fourth quarter as it continues shifting equipment into higher-margin committed contracts and reduces repositioning expenses.

The company also anticipates growth in its Dedicated fleet and a stable Expedited fleet, with a greater percentage of tractors operating under long-term agreements.

Its 49% ownership stake in Transport Enterprise Leasing contributed $5.7 million in pretax income during the quarter, compared with $3.6 million a year earlier. Covenant expects a lower contribution from the leasing business in the fourth quarter.

As of Sept. 30, Covenant reported approximately $283.9 million in net indebtedness, down $12.4 million from the end of 2025.

The company also reported $75.2 million in immediately available borrowing capacity under its asset-based lending facility.

For the remainder of 2026, Covenant expects net capital equipment expenditures of $35 million to $40 million.

Why it matters: Covenant’s earnings improvement highlights how trucking companies are using higher contract rates, smaller fleets and asset-light brokerage operations to offset persistent cost inflation and uneven freight demand.

How transportation leaders are turning AI and connected data into a competitive edge

AI is gaining ground in transportation, but are companies actually turning that potential into results?

As supply chains face constant disruption, rising expectations and growing pressure to make faster decisions, the gap between adopting new technology and putting it to work is becoming harder to ignore.

To better understand where the industry stands, Blue Yonder and FreightWaves surveyed transportation and logistics decision-makers, combining their insights with industry expertise and real-world examples.

Download the white paper to explore:

How transportation and logistics leaders are approaching AI adoption
Why visibility alone is no longer enough to stay competitive
The biggest barriers to AI implementation and supply chain connectivity
How companies can move beyond basic visibility to improve collaboration and decision-making
What’s next for AI and the future of transportation

Fill out the form to download the full report.

FedEx cashes in on premium logistics services, fuel surcharges

A FedEx van parked at a street corner in Miami Beach on a sunny day, with palm tree in the background.

FedEx Corp. delivered strong third quarter results driven by higher volumes and pricing for premium B2B and B2C shipping services, but bullishness for peak holiday season demand was tempered by expectations for lower domestic margins amid a rise in transitory labor and outsourced trucking costs that likely will spill into next year.

Consolidated revenue grew 12% to $22.9 billion, with adjusted operating income of $1.2 billion, up 16% year over year, the freight transportation giant reported after the market closed on Wednesday, beating Wall Street expectations. Adjusted earnings per share was $3.74, up 28% from the prior year.

A quarter of FedEx’s (NYSE: FDX) revenue growth is attributable to higher fuel surcharges. Results also benefitted from continued structural cost reductions from network optimization initiatives. FedEx so far has closed 260 delivery stations and expects to realize $1 billion in recurring savings because of network and corporate restructuring by the end of the year, and $2 billion in savings by the end of 2027.

Network integration has been completed in large metropolitan areas like Dallas, San Francisco, Phoenix and Washington, D.C., along with Canada last year. Early next year, FedEx will tackle Los Angeles; Charlotte, North Carolina; and Oklahoma City, CEO Raj Subramaniam told analysts during a conference call about the financial results.

This is the first peak season for FedEx operating at scale under its Network 2.0 initiative to consolidate ground and express networks, with about 65% of eligible volume expected to flow through dual-purpose facilities.

FedEx revised upward its full-year outlook. Revenue is now estimated to grow 12% year over year vs the prior estimate of 11% growth and adjusted diluted earnings per share are projected at $18.30 at the midpoint range, up from $17.50.

It was FedEx’s first quarterly earnings report aligned with its new calendar-year reporting framework, following the company’s transition from a May 31 fiscal year-end to a December 31 year-end. As such, FedEx also reported four-month results to cover June, alongside normal quarterly results.

FedEx, much like UPS, has pivoted since 2024 toward high-margin sectors that require end-to-end-logistics services, such as aerospace, automotive, healthcare, and high-tech, and foregoing no-frills, local and regional last-mile delivery for cost-conscious e-commerce retailers. The AI and data center industry was the fastest growing vertical at FedEx during the quarter. A recent Frost & Sullivan report, sponsored by FedEx, discussed how AI is influencing trade patterns in the Asia-Pacific region and trans-Pacific freight movements, which FedEx is capitalizing on.

One year ago, as part of the focus on revenue quality, the company began offering more tailored services for the automotive production market, with a dedicated team, 24/7 support, flexible global pickup capabilities, and enhanced visibility. The effort paid off in the third quarter when it began serving 13 major automotive customers, Chief Commercial Officer Brie Carere said.

FedEx’s realignment of airline operations is also playing a key role in creating a better value proposition for customers, according to management. Under the Tricolor initiative, running parallel to optimization of the North American surface transportation network, the integrated logistics company essentially segregates overnight express parcels from deferred pallet shipments to better utilize aircraft and workforces, with the goal of creating better density, reducing cost and attracting high-value heavyweight cargo from logistics service providers.

Average daily freight pounds grew 15% year-over-year and FedEx is winning share in the air freight market, indicating that the approach towards heavyweight, premium service is paying off, management said. Rival DHL Express is similarly pursuing a strategy of pursuing more heavy freight to fill out available space on package aircraft.

“Our expanding capabilities across key verticals are enabling us to address more of our customers’ logistic needs, unlocking air freight demand from traditionally parcel-centric customers. For example, we drove a 15-fold increase in aircraft engine moves and won new air freight business with an AI data center customer after more than a 40-year largely parcel-centric relationship,” Subramaniam said during the briefing. “Differentiation is increasingly centered on deep customer relationships and tailored service experiences, positioning us to capture more freight volume as we address customers’ needs beyond parcel.”

Domestic

Revenue for the domestic business increased 10% year over year, supported by a 2% gain in average daily package volume. Adjusted operating margins ticked down 20 basis points to 6.6% due to the negative impact of higher costs for fuel and purchased transportation, offsetting savings from network restructuring.

The 4% volume decline for the home delivery Ground Economy product was intentional as FedEx price hikes discouraged budget-conscious retailers from

Management expressed confidence for a good peak season, with revenue projected to be up 10% quarter over quarter, noting that the top 30 customers are planning for about 2% growth in average daily parcel volume from Black Friday through Christmas.

Rising costs could slow profit growth in the fourth quarter. FedEx outsources about 10% of its linehaul and executives said they anticipated about $130 million in higher expenses month over month due to elevated rates in the truckload sector, where capacity is very tight. The company will incrementally insource more linehaul operations next year and take specific commercial pricing actions to address the cost challenges. TD Cowen analyst Jason Seidl suggested FedEx is also likely to shift some volume to railroads, where intermodal costs are lower than truckload.

FedEx also faces pressure from its new pilot contract, with about $100 million of above- normal wage inflation quarterly expected through 2027 and an $80 million increase in aircraft maintenance expense versus the fourth quarter of 2025 because more aircraft are due for comprehensive, heavy inspections.

Management said it expects more bottom line capture of revenue from recently announced peak season surcharges and a 5.9% general rate increase next year.

International

Express international revenue increased 17%, primarily due to higher fuel surcharges, higher pricing for packages and freight, and growth in overseas export and freight volumes. Margins were up 4% year over year.

International freight revenue grew 28%, helped by the data center vertical.

International economy and freight segments experienced strong volumes arising from recovery in the U.S.-China trade lane, which declined last because of the trade war between the countries, and demand from large-scale cloud service and technology companies. Low-yield U.S. exports were down 11% in the third quarter. FedEx next year is likely to squeeze out less desirable freight with higher pricing to improve margins, Seidl said in a client note.

FedEx is also consolidating its fragmented country operations in Europe to make it easier for customers to manage shipments across an integrated network across borders. In France, the company has closed 17 stations, modernized two hubs and 16 stations by installing advanced, automated sorting systems, and equipped 32 stations with new tracking and monitoring technology, said Subramaniam.

In Italy, FedEx is similarly simplifying operations to prioritize higher-value international B2B and export services. As part of this process, FedEx is transitioning from an eight-hub footprint to a highly streamlined three-hub footprint and actively reducing station count, the CEO said. In June, the company reached an important milestone when it consolidated two Milan area stations into a newly upgraded facility that allows more efficient pickup and delivery within one of the most densely populated areas of the country.

FedEx plans to reduce domestic capacity by 20% in Italy by 20%, 30% in the United Kingdom and 40% in France. “The second part of our strategy is to improve the mix. Given the network utilization, we are now focusing our commercial teams on driving more intercontinental and intra-European volume and reducing lower-yielding intra-country volume,” Subramaniaam said.

The integrator is on track to reach its target of $650 million in adjusted operating income in Europe by the end of 2029, he added.

FedEx said it has returned the majority of its MD-11 tri-engine freighters to service after fixing a design flaw, per Boeing instructions, that had the potential to allow fatigue cracks in the engine pylon. U.S. authorities forced operators to ground their fleets for several months following the fatal crash last November of an MD-11 operated by UPS.

Adjusted results exclude $270 million in costs related to expenses for network restructuring or the spin off of FedEx Freight last summer. FedEx rewarded investors by using some of its profits to buy back $2 billion in shares during the quarter.

FedEx earlier this month completed the sale of its contract logistics unit, FedEx Supply Chain, to France-based shipping and logistics giant CMA CGM for $1.4 billion as it focuses on its core freight transportation business.

Meanwhile, consortium of investors is nearing the completion of the $9.2 billion InPost deal, which will give FedEx a 37% share in the European express delivery company and greater opportunities in the B2C parcel sector without having to divert resources from core B2B operations.

Earlier this week, FedEx announced the appointment of AutoZone executive Jamere Jackson as its next chief financial officer.

Equity analysts continue to recommend FedEx, citing volume growth trends and higher profit margins once the U.S. ground network is fully merged next year and streamlining efforts in Europe take root. FedEx stock price was up less than a point to $307.08 a share in late day trading on Thursday.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

FedEx taps AutoZone executive to be finance chief

FedEx boosts revenue behind premium parcel, freight volumes

Saia’s expanded terminal network delivers record revenue, tonnage

a red Saia daycab pulling a 53-foot Saia trailer on a highway

Less-than-truckload carrier Saia continued to see outsized volume growth in the third quarter as it leveraged an expanded terminal network. The period delivered record revenue and tonnage for the company, with its focus now centered on improving operating results at the new locations.

Saia’s (NASDAQ: SAIA) reported third-quarter earnings per share of $3.41 on Thursday before the market opened. The result was 60 cents higher y/y and 11 cents better than the consensus estimate. A $3.6-million decline in net interest expense was a 10-cent y/y tailwind.

(The comparison to the 2025 third quarter excludes a $14.5-million net impact from real estate gains and impairments, resulting in adjusted EPS of $2.81.)

Revenue of $983 million was 17% higher y/y and $15 million better than analysts’ expectations. (Diesel prices were 48% higher y/y in the quarter.)

Tonnage was up 9% y/y as shipments increased 1% and weight per shipment grew 8%. On a y/y comparison, tonnage increased 7.8% in July, 8.7% in August and 10.3% in September. Tonnage is up 10% y/y so far in October.

Since 2022, the company has opened 45 new terminals and relocated or expanded another 25. While its 219-terminal network is still smaller than other national carriers, management said the company is finally “on equal footing.”

September marked the ninth straight month of expansion for the U.S. manufacturing complex, which is a significant source of LTL freight. Also, Saia REV has reduced transit times in over 2,000 lanes, providing an additional source for “outsized volume growth.”

Table: Saia’s key performance indicators

Revenue per hundredweight (yield) was 2% lower y/y, excluding fuel surcharges. However, higher shipment weights and a 1% decline in length of haul were headwinds for the metric.

Revenue per shipment (ex-fuel) was up 6% y/y even with continued weakness in the Los Angeles market, which carries higher freight bills. The company’s national expansion and improved service give it confidence that it can push pricing and close the gap to peers.

“Frankly, the service levels that we’ve been providing … support that,” said President and CEO Fritz Holzgrefe on a Thursday call with analysts.

Saia implemented a 7.1% general rate increase on July 6, which was 120 bps higher and three months earlier than last year’s rate hike. It said the GRI is performing well and that it continues to “see great results from that.”

Contractual rate renewals averaged 10.8% in the quarter, up 15.9% on a two-year-stacked comp.

The company logged an 87.6% operating ratio (inverse of operating margin), which was flat y/y and just 70 bps worse than the second quarter. It normally sees 150 to 200 bps of margin degradation from the second to third quarter.

The y/y comparison had the added headwind of two wage increases in the quarter. There was no pay bump in the 2025 third quarter as the increase wasn’t installed until October, while this year’s increase occurred as normal in July. Also, the new terminals are operating at a low-90% OR, but 40 bps better y/y.

It normally sees 250 to 300 bps of margin deterioration from the third to the fourth quarter, but is calling for just 200 bps of degradation this year, implying an 89.6% OR (230 bps better than the 2025 fourth-quarter unadjusted OR).

It said it will continue to lean on the cost advantage that the railroads provide.

Purchased transportation expense (as a percentage of revenue) increased 220 bps y/y. Saia’s rail and truck partners accounted for 15.7% of total linehaul miles during the quarter, but the company was able to manage outside rate-per-mile inflation to just 4%. It expects further cost inflation on purchased transportation, but noted that contracts with providers are staggered.

Saia announced a $250-million share repurchase program on Thursday. It has done most of the heavy lifting on the growth capex front. It expects capex to total 13% to 14.5% of revenue next year, with 12% to 15% the longer-term target.

Full-year net capex is now expected to total $350 million this year, down from the prior guidance range of $350 million to $400 million. Net capex was $544 million in 2025 and $1.05 billion in 2024.

It generated over $240 million in free cash flow through the third quarter and ended the period with over $100 million in net cash.

Shares of SAIA were up 3% at 2:51 p.m. EDT on Thursday compared to the S&P 500, which was down 0.6%.

Why it matters? Saia is one of a few publicly traded LTL carriers. Its quarterly results provide insight into a subsegment of trucking where few public datasets exist.

More FreightWaves articles by Todd Maiden:

Why container rates are climbing despite cooling demand

Container freight rates climbed on major Asia-Europe and trans-Pacific routes last week despite signs of cooling demand, as congestion and canceled sailings supported prices.

Carriers’ accelerating return to the Red Sea is reshaping shipping schedules, analyst and SONAR data contributor Freightos (NASDAQ: CRGO) said in an update, while a potential strike at Los Angeles-Long Beach adds another source of uncertainty for cargo owners.

Nearly two-thirds of capacity deployed between Asia and Europe is now routing through the Red Sea, according to Alphaliner. Its survey of the 10 largest carrier networks found that 24 of 46 direct services were using the passage, representing 63% of deployed capacity. The share was higher on Mediterranean routes, at 70%, than on North Europe services, at 58%.

Israeli carrier Zim announced a return to the Red Sea for its joint Asia-U.S. East Coast service with Mediterranean Shipping Co. The move is notable because Yemen-based Houthi rebels backing Hamas in Gaza declared the Bab el-Mandeb Strait in the southern Red Sea closed to Israel-linked vessels as recently as August.

The return remains uneven. Some services are using the Suez Canal on voyages toward Europe while continuing to sail around Africa on their return journeys, emphasizing carriers’ continued caution about the route.

Typhoon Champi brought fresh disruption to East Asia last week, closing Taiwanese container ports, including Kaohsiung, Keelung and Taipei, on Friday. The storm largely spared East China port operations before weakening as it moved toward Japan.

Major Chinese container hubs are still recovering from earlier summer storms, with many yet to return fully to normal operations. That congestion has helped support freight rates even as demand eases after the peak shipping season, according to the update.

The shift back to the shorter Red Sea route may also be complicating the recovery. Ships arriving ahead of schedules built around longer Africa voyages can bunch together at destination ports, adding pressure to terminals already working through backlogs.

Asia-Europe freight prices have risen since mid-October, supported by congestion and carriers’ efforts to restrict available capacity through blank sailings, or canceled departures. Carriers are seeking further increases in November, although forwarders have reported discounted offers and questioned whether the higher prices will hold.

The Freightos Baltic Index put last week’s Asia-North Europe rate at $3,551 per 40-foot equivalent unit, or FEU, up 3%. Prices to the Mediterranean rose 8% to $4,252 per FEU.

Carriers are pairing their November pricing plans with additional sailing cancellations. Drewry reported eight blank sailings scheduled on Asia-Europe routes for the following week, compared with two in the current week. European forwarders nevertheless said carriers had discounted their published rates during October and expected similar concessions in November.

Trans-Pacific prices also rose, defying expectations of a slowdown after China’s Golden Week holiday. Asia-U.S. West Coast rates increased 3% to $8,368 per FEU, while East Coast rates jumped 9% to $10,565, a high for the year.

Daily East Coast prices have since retreated but remained about $200 per FEU above the previous week’s level, Freightos said. The analyst noted forwarders are seeing signs that demand is cooling and space is becoming easier to secure.

At LA-Long Beach, approximately 250 port watchmen have authorized a strike that could begin Nov. 1 if contract negotiations fail.

Although the workers account for only about 2% of the ports’ International Longshore and Warehouse Union workforce, their role could give a walkout a much wider impact. The Pacific Maritime Association said terminals employing the watchmen handle roughly 85% of Long Beach’s cargo and 33% of Los Angeles’ cargo.

The employers’ association warned that other ILWU members were not expected to cross Local 26 picket lines, potentially stopping vessel, yard and gate operations at affected terminals. Negotiations remain underway, and a strike has not been confirmed.

Any work stoppage would add to existing delays affecting rail-bound containers at the port complex, according to the supplied update.

U.S. trade policy presents another approaching deadline. The White House extended its trade truce with China in late September, preserving the current arrangements on tariffs and other parts of the agreement until early January, according to the supplied update.

However, U.S. port fees on China-linked vessels remain formally scheduled top resume Nov. 10. Although much of the shipping industry expected those charges to be deferred alongside the broader truce, the U.S. Trade Representative had instead opened a request for comments on postponing them until January. That step points toward a possible delay but does not itself suspend the fees.

The update also said USTR expects to complete Section 301 investigations into excess manufacturing capacity in China and 15 other countries by year-end.

Those investigations could provide a basis for restoring tariffs to levels previously imposed under the International Emergency Economic Powers Act. Following the Supreme Court’s invalidation of IEEPA-based tariffs, replacement duties left some countries, including China, facing rates below their negotiated levels, according to the supplied account.

Even if the investigations conclude by December, the required public-comment and hearing process could push implementation of any resulting tariffs back by another couple of months, leaving a further gap between the findings and new duties.

Why it matters: Importers face uncertainty over both shipping costs and delivery times, even as the return to the Red Sea promises shorter voyages. More capacity does not automatically mean cheaper or more reliable shipping when congestion, canceled sailings and labor disputes interfere.

Read more articles by Stuart Chirls here.

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Fresno carrier DTL to run 75 Kodiak driverless trucks

Red tractor-trailer equipped with the Kodiak Driver parked beneath the Fresno arch sign in Fresno, California

Kodiak AI signed a binding agreement Wednesday to put its autonomous driving system in 75 trucks owned and operated by DTL Transport, a Fresno, California, carrier that runs cross-country team loads for grocers.

The deal moves Kodiak’s Driver-as-a-Service model from Permian Basin sand hauling onto interstate freight lanes, though Kodiak has yet to run a driverless truck on a public highway. Kodiak is ranked No. 12 in the 2027 FreightTech 25 list.

Under the agreement, DTL will own and operate the trucks and pay Kodiak a per-mile fee to use the Kodiak Driver. DTL, a family-run carrier that has hauled dry and refrigerated freight for more than 36 years, runs a fleet of more than 100 trucks. The release did not disclose the rate, the contract term or when the first of the 75 will run without a driver.

“This binding agreement reinforces what I have said from the beginning: The Driver-As-A-Service business model is tailor-made for commercial trucking,” said Don Burnette, Kodiak’s founder and CEO.

Lanes target hours-of-service limits

DTL will start on two lanes Kodiak has already tested: between Dallas and El Paso, Texas, and on Interstate 20 between Dallas and Atlanta. In 2023, Kodiak began hauling Forward Air freight on the Atlanta lane with teams of safety drivers aboard.

Carriers run teams to get past a solo driver’s limits under federal hours-of-service rules, which bar a property-carrying driver from driving more than 11 hours within a 14-hour window after 10 consecutive hours off duty.

Kodiak said the two routes give DTL the opportunity to operate beyond current service-hour limitations, with more lanes to be added over time. The release did not say whether the driverless trucks will replace DTL’s teams on those lanes.

“By integrating this technology into our fleet, complementing our experienced, professional workforce, we can expand capacity, enhance safety and drive innovation forward,” said Lucky Dosanjh, DTL’s president and CEO.

California pilot preceded the deal

The agreement follows a September pilot in which the Kodiak Driver hauled perishable goods for DTL 225 miles from Fresno to Los Angeles on Interstate 5 and State Route 99. A safety driver stayed behind the wheel, as required by the testing permit the California Department of Motor Vehicles granted Kodiak in August, Heavy Duty Trucking reported.

Kodiak said those were the first commercial goods autonomously hauled by a Class 8 truck in California.

Kodiak’s highway launch still ahead

Kodiak plans to launch driverless highway service by the end of this year, hauling IKEA freight on Interstate 45 between Dallas and Houston, and still has to close its long-haul safety case. Its Autonomy Readiness Measure reached 93% at the end of August, up from 84% in February.

As of June 30, Kodiak’s 35 customer-owned driverless trucks ran for Atlas Energy Solutions in the Permian Basin. Kodiak has committed to growing that fleet to 100 trucks by mid-2027.

The company reported second-quarter revenue of $3.5 million, up from $503,000 a year earlier, and a $43.7 million operating loss. It ended June with $151.1 million in cash, cash equivalents and marketable securities. Kodiak AI’s third-quarter earnings are set to release Thursday, Nov. 5 after market close.

Why it matters: Driverless trucks suit team expedite work, where freight has to keep moving past a solo driver’s hours limit. DTL can’t put that to work on its 75 trucks until Kodiak closes its long-haul safety case and launches driverless on public highways.

RXO’s earnings still coming out, had solid profitable quarter

RXO remains a publicly-traded company as it prepares to be acquired by C.H. Robinson, posting its earnings Thursday that showed mostly positive numbers in all key categories.

Given the pending deal with C.H. Robinson, RXO (NYSE: RXO) did not hold an earnings call with analysts. The summary slides that also accompany earnings were not released either.

On the growth side, the company’s revenue was $1.9 billion in the third quarter, compared to $1.4 billion a year ago. Revenue was $1.8 billion in the second quarter.

One key metric that was slightly negative was company-wide gross margin at 14.6%, compared to 16.5% a year ago. However, the third quarter performance was improved on the 13.9% margin in the second quarter.

Adjusted EBITDA numbers were improved. The $51 million recorded in the third quarter came with a 2.7% EBITDA margin, up from 2.3% a year ago when EBITDA was $32 million. The EBITDA margin in the second quarter also was 2.3%.

RXO’s EBITDA of $51 million exceeded the forecast of $35 million to $45 million issued by RXO in its second quarter earnings. “We exceeded the high end of our third-quarter profit outlook, demonstrating the momentum we’re building across RXO,” RXO CEO Drew Wilkerson said in the company’s prepared statement releasing earnings.

One of the more positive figures in the earnings was the fact that RXO made money for the second consecutive quarter. RXO had adjusted net income of 2 cents per share in the third quarter after a second quarter net income of 6 cents per share. Profitability at RXO has been spotty for several years, with some positive net income quarters reported but more frequently showing red ink.

Brokerage volume for the company–the specifics of which are not disclosed by RXO–was up 2% from a year ago. RXO also said truckload volume increased all three months of the quarter.

The mix at RXO’s truckload segment shifted heavily toward the spot market in the quarter. It accounted for 51% of volume, up from 59% a year ago and 42% sequentially.

“This helped drive the largest sequential gross profit per load growth rate in more than four years,” the company’s prepared statement said.

LTL volume was up 2% from a year ago, RXO said. The company’s Last Mile segment–which C.H. Robinson (NASDAQ: CHRW) touted as an attractive part of the RXO business that would strengthen the acquiring company–recorded a 5% increase in stops compared to a year ago.

Jacobs, RXO’s creator, backs its acquisition by C.H. Robinson

Wall Street analysts positive on C.H. Robinson deal; S&P more cautious

RXO, post-Montgomery, sees benefit in its insurance, vetting

Florida trucking CEO warns soaring diesel costs are squeezing carrier profits

JACKSONVILLE, Fla. — Rising diesel fuel prices are putting increasing financial pressure on Florida trucking companies, with fuel costs surpassing driver compensation as the largest operating expense for some fleets.

Florida Trucking Association CEO Scott Perry said the combination of higher diesel prices, insurance premiums, equipment costs and driver wages is squeezing motor carriers already struggling with tighter margins.

“Traditionally, driver pay was the number one line item on the P&L,” Perry told FreightWaves during an interview at the WEX OTR Summit in Jacksonville, Florida. “Fuel has surpassed that in many instances, and it’s extremely challenging for them to absorb that if they don’t have good fuel charge mechanisms or recapture ability with their customers.”

Perry, a trucking industry veteran with more than 35 years of experience, said carriers without adequate fuel surcharge arrangements are particularly vulnerable to sudden price increases.

He cited a roughly 70% year-over-year increase in fuel costs, warning that such a surge could be catastrophic for carriers unable to recover the additional expense from customers.

While he said he was unaware of any Florida Trucking Association members that had closed or laid off workers specifically because of the recent fuel increases, he acknowledged that financial pressures are mounting.

“I’ve had several that it’s definitely compressing their ability to operate with increases in insurance that they’ve been absorbing over the last three, four, five years or more, the pressure on wages from a driver retention standpoint,” Perry said.

“All of that combined adds up to generally a negative margin business that can’t be sustained forever.”

Perry said Florida trucking companies are becoming somewhat more optimistic about freight rates heading into 2027 as trucking capacity continues to tighten.

However, he cautioned that much of the improvement is being driven by fewer available trucks rather than a significant increase in freight demand.

“I think there is some improved confidence with rates and what they’re seeing in rate structures right now,” Perry said. “As we’ve heard and read, there’s not a real demand increase in many instances. It’s capacity is being taken out of the market.”

Perry said higher freight rates could help carriers recover some of their operating expenses, but much of the additional revenue is currently being absorbed by rising diesel costs.

He also said some shippers have attempted to reverse the substantial rate increases granted during the COVID-19 pandemic, despite trucking companies facing significantly higher operating expenses than they did before 2020.

“We’ve seen insurance costs go up substantially. Diesel rates are up substantially. Labor rates are up substantially,” Perry said. “Those don’t align with the depressing rates back to pre-COVID era. It just doesn’t.”

Perry said trucking companies need sustainable rates to maintain profitability and continue investing in their fleets.

He warned that many carriers are delaying equipment replacement because of financial pressures, potentially creating additional challenges involving reliability, productivity and driver retention.

“There’s got to be realism in the rates,” Perry said. “There’s got to be recognition that those costs are real. There has to be the ability for those carriers to make a profit so that they can reinvest in their businesses.”

Florida expands truck parking along I-4 corridor

Beyond operating costs, Perry said Florida is making progress on one of the trucking industry’s longstanding infrastructure challenges: the shortage of safe truck parking.

He said the state began 2026 with approximately 2,100 public-access truck parking spaces and is moving forward with a four-phase project to add another 922 spaces.

A groundbreaking ceremony for the project took place in July.

Most of the additional parking spaces are planned along the Interstate 4 corridor, which connects the Tampa and Orlando regions and carries significant commercial truck traffic.

“That will absolutely help put a dent in the need for secure parking, easily accessible parking,” Perry said.

However, he emphasized that the additional spaces would not eliminate Florida’s truck parking shortage.

“Will 3,000 public access parking spaces serve the entire need for the industry? No, it won’t,” Perry said. “Is this a significant step in the right direction? It absolutely is.”

Perry said the shortage can force drivers to choose between complying with federal hours-of-service regulations and stopping in potentially unsafe locations, including highway shoulders and exit ramps.

He said that expanding truck parking is essential to both driver safety and fleet productivity.

“We need to provide them with solutions that give them access to maximize their productivity for their driving hours, have a safe place to park and get their rest break,” Perry said.

Florida carriers support stronger enforcement

Perry also expressed support for federal efforts to strengthen trucking safety enforcement, including increased scrutiny of non-domiciled commercial driver’s licenses, English-language proficiency requirements and electronic logging device compliance.

Florida trucking companies generally support efforts to identify carriers that circumvent federal regulations and gain an unfair competitive advantage over compliant fleets, he said.

Perry specifically praised Federal Motor Carrier Safety Administration Administrator Derek Barrs, who previously served with the Florida Highway Patrol.

“They appreciate the fact that he’s pushing to eliminate those carriers who are breaking the rules, bending the rules, manipulating the rules,” Perry said.

He also supports proposed safeguards aimed at preventing the manipulation of electronic logging devices, which are used to track drivers’ hours of service.

Tampering with ELD records can allow drivers to operate beyond legally permitted hours, creating risks for truck drivers and the traveling public.

“Anything we can do to make sure that drivers aren’t operating beyond the legally allowable hours and there’s no manipulation of ELDs to extend those hours and create unsafe circumstances … can only improve public safety,” Perry said.

He said the association supports enforcement measures that promote a level playing field among motor carriers while improving highway safety.

Carriers need sustainable margins heading into 2027

Perry said trucking companies remain hopeful that improving freight rates will eventually provide some relief from years of weak margins.

However, he warned that a meaningful recovery must allow carriers to cover operating expenses and invest in replacement equipment.

New trucks, insurance and labor have become substantially more expensive, he said, making it increasingly difficult for carriers to operate profitably at freight rates comparable to those before the pandemic.

Delaying equipment investments can create additional problems for fleets already struggling to retain qualified drivers and maintain productivity.

“If they’re not able to reinvest in their business, they’re just buying time and postponing the inevitable,” he said.

Why it matters: Sustained operating cost increases could force trucking companies to delay equipment purchases, reduce investment or face greater financial distress despite signs of a freight market recovery.