Landstar joins rising tide and raises guidance

Gattoni believes recent capacity tightening was partly the result of some drivers being concerned about contracting COVID or passing it to a family member. Also, he said unemployment benefits provided during the pandemic allowed drivers to sit out, especially when rates were low.

The increase in spot rates has helped the freight broker as half of its business is fixed margin, meaning as rates increase the company captures more gross profit. Landstar’s third-party business is more contractual in nature, with the company sharing margin compression and expansion on a 50-50 basis with the providers.

In addition to improvement in the dry van market, Gattoni said flatbed trends are firming. Flatbed loads, roughly one-third of Landstar’s business, were down 5% year-over-year in July and off 4% in August, but rates per load have improved from a 9% year-over-year decline during July to up 1% in August.

Landstar’s new revenue guidance is in a range of $1.02 billion to $1.06 billion, significantly higher than the previous range of $885 million to $935 million and the current consensus estimate of $914 million.

The company’s second quarter reflected the depths of the pandemic, with revenue declining 21% year-over-year and EPS of $0.63.

Shares of LSTR are flat on the day.

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