Werner not deterred by July slowdown

Executives from Werner Enterprises sounded unfazed by the seasonal slowdown in truckload spot market trends during July. Chairman and CEO Derek Leathers told investors Tuesday that the supply-led recovery shows no signs of slowing as the current administration is not backing off its crackdown on bad actors.

Tender rejections peaked in June and spot rates have continued to slide from the Fourth of July (holiday) high. The summer lull has investors jittery. Second-quarter earnings reports were solid, but shares of most carriers have sold off by mid-single to mid-teen percentages since.

“There’s no concern, if you will, from my perspective about … some of these little snippets of news that we’ve seen in July,” Leathers said at Deutsche Bank’s Chicago Industrials Summit. 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. The top of the funnel has been significantly narrowed.

Leathers estimates that 850 to 900 CDL schools have been forced to close due to insufficient training standards. That’s in addition to roughly 10,000 training programs that have been removed from the FMCSA’s Training Provider Registry.

A ban on ELDs that allowed drivers to manipulate service hours is significantly affecting capacity, with Leathers explaining that “10 trucks were able to behave like 15.”

Well before regulatory enforcement ramped up last year with stricter oversight of English-language proficiency and non-domiciled CDL restrictions, carriers were exiting the market due to weak economic conditions.

After an extended downturn, numerous fleets continue to struggle to stay afloat, meaning the recent uptick in rates might have arrived too late for some. Leathers also believes more enforcement is on the way as the FMCSA is likely to see an increase in funding from its annual budget allocation in October.

Even with only modest demand, Leathers said the supply-driven turnaround has legs. “Christmas is still going to come, peak season is still going to be a reality.” He noted an “increased acceptance” from shippers that the supply crunch “is real,” which bodes well for an industry that “hasn’t been reinvestable in several years.”

Inventories at some of Werner’s retail customers are a little lean while others are holding satisfactory stock levels. The company sees a normal peak season this year. But unlike last year’s, this year’s peak will have the benefit of significantly higher rates. SONAR: National Truckload Index (linehaul only – NTIL.

USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line). The NTIL is based on an average of booked spot dry van loads from 250,000 lanes. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. Rates remain significantly higher on a y/y comparison in August.

During the second quarter, Werner’s (NASDAQ: WERN) one-way TL fleet saw a big turnaround following a restructuring. Revenue per truck per week (excluding fuel surcharges) jumped 28% year over year, as miles per truck were up 16% and revenue per total mile increased 10%.

The rate increase was notable as Werner had only half the spot market exposure it had a year ago, and length of haul was up nearly 100 miles in the recent quarter. (Longer lengths of haul usually accompany lower per-mile rates.) Under the restructuring plan, the company exited non-profitable accounts, and repurposed or disposed of under-utilized trucks.

The one-way fleet was 34% smaller y/y at 1,700 units at the end of the second quarter. Higher pricing and better utilization pushed the total TL segment’s adjusted operating ratio (inverse of operating margin) to 94. 5%, 270 basis points better y/y. Werner expects one-way rate per mile to increase by 10% to 13% y/y in the third quarter.

With the turnaround largely complete, the company will now look to grow this fleet again. 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 dedicated fleet, roughly 80% of Werner’s total TL network, is capturing low- to mid-single-digit contractual rate renewals. Revenue per truck per week (ex-fuel) was 5% higher y/y in the second quarter. Werner acquired dedicated carrier FirstFleet for $245 million in January.

Excluding FirstFleet from the results, Werner’s legacy dedicated operation recorded a roughly 8% increase in revenue per truck per week. The metric is expected to increase by 3% to 5% y/y for full-year 2026. While the consolidated TL margin was over 10 percentage points worse than the prior peak, it was the unit’s best margin p