Regulatory capacity cleanup fuels Knight-Swift’s bullish outlook
Knight-Swift Transportation said the rapid improvements in truckload fundamentals that occurred in the second quarter will likely accelerate starting in September and continue throughout peak season. The post Regulatory capacity cleanup fuels Knight-Swift’s bullish outlook appeared first on FreightWaves.
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Regulatory authorities continued to force out non-compliant capacity in the second quarter, creating a “rapid progression in truckload market conditions,” according to Knight-Swift Transportation.
The carrier reported better-than-expected results on Wednesday, highlighted by contract rates that climbed throughout the period and a tender rejection rate that was twice the industry average. It expects the positive momentum to intensify starting in September and to carry through the rest of the year.
“We’ve just never seen the FMCSA, the DOT with the push that they’re making on cleaning up our industry and taking the non-compliant, the bad actors out of it,” said CEO Adam Miller on a Wednesday evening call with analysts. He believes the change the industry is experiencing is “durable” and “raises the floor” for rates in the next downturn.
SONAR: Outbound Tender Rejection Index (OTRI. USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line). A proxy for truck capacity, the tender rejection index shows the number of loads being rejected by carriers. Current tender rejections show a tight truckload market. To learn more about SONAR, click here.
Knight-Swift (NYSE: KNX) reported second-quarter adjusted earnings per share of 63 cents, 28 cents higher year over year and 12 cents better than the consensus estimate. (Management’s EPS guidance range was 45 to 49 cents.) window. googletag = window. googletag || {cmd: []}; googletag. cmd. push(function() {googletag.
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push(function() {googletag. display('div-gpt-ad-1709668545404-0'); }); Revenue of $2. 1 billion was 13% higher y/y and ahead of the $2. 04 billion consensus estimate. Revenue was up 6% y/y excluding fuel surcharges.
Table: Knight-Swift’s key performance indicators – Consolidated Inflationary TL rate cycle just beginning Truckload revenue increased 3% y/y to $1. 1 billion as a 6% increase in revenue per tractor was only partially offset by a 3% decline in average trucks in service. The carrier has improved asset utilization through enhanced load planning tools.
Deadhead was down 140 bps y/y and 70 bps sequentially. Loaded miles per tractor (up 0. 2% y/y) improved y/y for a seventh straight quarter. Before adding any new tractors, management noted that there is significant opportunity to enhance utilization, particularly since some trucks remain unseated.
Table: Knight-Swift’s key performance indicators – Truckload Revenue per loaded mile increased 5. 6% y/y (excluding fuel) to $2. 89. The metric is “just beginning to recover” as contract rates roll over. Most of the rate implementations in the quarter came from bids negotiated earlier this year and didn’t reflect a tighter supply backdrop.
Rate per loaded mile accelerated from low-single digits in April to 8% in June. (The over-the-road fleet saw double-digit increases in June.) The June number had the benefit of some project freight, but it also included a headwind from dedicated (28% of the TL fleet) where rate changes are less volatile and indexed to inflation.
The rate picture continues to improve. The carrier is getting double-digit rate increases on recent bids, and its spot market exposure is up to 15% from 10% at the start of the year. SONAR: Van Contract Rate Per Mile Index (VCRPM1. USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line).
The index shows a 7-day moving average of the initial reporting of dry van contract rates without fuel or accessorial charges. The TL unit posted a 91% adjusted operating ratio (a 9% adjusted operating margin), which was 360 basis points better y/y. US Xpress’ over-the-road fleet was profitable for the first time since the 2023 acquisition. window.
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pubads(). collapseEmptyDivs(); googletag. enableServices(); }); googletag. cmd. push(function() {googletag. display('div-gpt-ad-1665767553440-0'); }); Knight-Swift’s TL guidance calls for a mid-single-digit y/y revenue increase in the third quarter, with the adjusted OR improving 650 to 750 bps y/y (implying an 89. 2% adjusted OR).
Truck count is expected to be stable sequentially (lower y/y), with utilization also remaining level. Higher rates are the catalyst for the y/y revenue increase. Driver pay to creep, not rip higher near-term Management flagged driver pay as a creeping headwind but noted seve
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