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Covenant Transportation Group Inc. reported a net loss of $3.2 million in the third quarter of 2019, compared with net income of $11.6 million in the same quarter of 2018.
Earnings per share were minus 17 cents, compared with 67 cents a year earlier.
Total revenue was $222.9 million, a decrease of 8.4% from $243.3 million in 2018.
The CEO of the Chattanooga, Tenn.-based dry van and refrigerated truckload carrier said the freight environment was much weaker compared with the 2018 quarter, as excess industrywide trucking capacity and weak shipping demand combined to pressure both freight rates and volumes.
In addition, freight brokers placed additional pressure on the irregular-route truckload market by competing for market share based on what Covenant Transportation officials said was “unsustainable” pricing.
“In general, our dedicated truckload and managed freight operations were profitable and exhibited moderate year-over-year market volatility,” said David Parker, CEO and chairman. “Our irregular route expedited and refrigerated truckload operations exhibited significant volatility and swung to being unprofitable for the quarter, with the largest factors being lower rate per mile, and combined insurance and capital cost increases versus the prior-year quarter.”
Parker said the freight environment touched a “low point” during the third quarter and remains “muted but not worsening.”
“Our average freight revenue per tractor per week, which excludes revenue from fuel surcharges, was approximately the same in the second and third quarters of 2019,” he said.
Parker added that costs regarding health insurance, workers compensation, casualty insurance accruals and incentive compensation negatively impacted financial results.
Still, the company expects improvement in financial results for the fourth quarter of 2019.
“Based on falling new truck orders, reports of competitors exiting the industry, and a rapidly building inventory of used trucks on dealers’ lots, we believe the path toward supply and demand equilibrium has begun, assuming economic factors remain constant,” Parker said.
The company’s subsidiaries include Southern Refrigerated Transport, Star Transportation, Landair Holdings and Covenant Transport Solutions.
Covenant Transport Services ranks No. 42 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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