Strong Online Shopping Offers Blessings, Curses for Covenant Transportation
Covenant Transportation Group is poised to grab a share of the growing e-commerce market, which delivered a mixed bag of blessings and curses during the Christmas holiday rush, the Chattanooga, Tennessee, trucking company said Jan. 26.
On the plus side, a growing e-commerce market — which represented more than 7% of all retail sales in the third quarter of last year — generated freight demand. Longhaul trucking companies such as Covenant and U.S. Xpress Enterprises, also based in Chattanooga, are positioned to win long-distance shipping contracts with clients such as Amazon.com Inc.
U.S. Xpress ranks No. 18 and Covenant ranks No. 46 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
"It's every dot-com, e-shipper that's out there," Covenant founder and President David Parker said. "Amazon may be the big gorilla, but there are a lot of smaller ones out there that are doing the same things."
Increased shipments from Amazon and other online retailers helped boost revenue for Covenant in the fourth quarter and boosted company profits ahead of analysts' expectations last year.
Covenant's earnings report for the fourth quarter helped boost shares of the company by more than 10% Jan. 26, reversing half of the 20% drop Covenant had previously suffered in stock values since the first of 2016.
According to the U.S. Census Bureau, online sales have increased every quarter for at least a decade. In the third quarter of 2015, e-commerce sales hit $87.5 billion. Fourth-quarter e-commerce sale numbers from last year will be released next month.
This past holiday shopping season, however, there were jam-ups in the e-commerce supply chain, Covenant officials said during a conference call Jan. 26. Covenant took on Amazon as a direct customer in the quarter.
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|By Alex Green|
Chattanooga (Tenn.) Times Free Press
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