Knight-Swift Points to Capacity Cuts for Market Lift

(Knight-Swift Transportation Holdings Inc.)

Knight-Swift Transportation Holdings Inc.’s leadership expressed optimism that capacity reductions will help improve market conditions as the company reported fourth-quarter results Jan. 21.

The Phoenix-based truckload motor carrier posted a net loss attributable to itself of $6.8 million, or negative 4 cents a diluted share, for the three months ending Dec. 31. That compared with a gain of $69.4 million, or 43 cents, during the same time the previous year. Total revenue remained virtually unchanged, dipping 0.4% to $1.86 billion.

“During the fourth quarter, the truckload markets saw demand that was generally stable, but lacking the typical broad base seasonal lift in demand until late in the quarter,” Knight-Swift CEO Adam Miller said during a call with investors. “While we did see some improvement in overall demand and a tightening spot market in December, it was a reduction in available capacity that seemed to be the primary driver of the tightening market.”

Miller pointed to stricter regulatory enforcement as one factor pushing out capacity. He noted that this pressure may also be impacting the secondary equipment market, where he has seen slowing sales trends and falling average prices during the quarter.

“Developments such as these are often a precursor to a more healthy market,” Miller said. “We are pleased that our people were able to deliver meaningful sequential operating margin improvement in our truckload segment, even while demand was short of our expectation for much of the quarter. For the full year, our progress on structurally cutting costs out of the business helped us overcome $125 million decline in truckload revenue.”

Miller added that lower miles during the quarter masked some of the company’s progress in reducing cost per mile. But he is optimistic those cost reductions are permanent and position the company for better incremental margins as volume and pricing recover. He noted the incremental margin opportunity is further enhanced by the room to improve fleet utilization.

“We’ve been investing in internal development and external products to facilitate tech-enabled efficiency gains, as well as better revenue capture, including through AI,” Miller said. “We expect the benefits to begin to be realized in 2026 as we more fully roll out these technologies and as an improving marketplace provides us opportunity to scale more efficiently.”

Knight-Swift Q4 2025 earnings

The Federal Motor Carrier Safety Administration has been pursuing stricter compliance measures involving English proficiency and non-domiciled commercial driver licenses. Miller views the move as helping to reduce the oversupply of capacity that has hurt freight rates.

“When we look externally, there are a number of factors that increasingly indicate the truckload market could begin to grow stronger in 2026,” Miller said. “Capacity reduction is clearly underway. Regulatory enforcement of qualifications and safety standards was arguably the most welcome development in 2025 for our industry. The influx of capacity from 2021 to 2024, much of which was playing by different sets of rules, and operating with different cost structures, has distorted pricing behaviors in cyclical patterns.”

Revenue by Segment

• Truckload: Revenue decreased 2.4% to $1.07 billion from $1.1 billion during the same time the previous year. Operating income fell 72.1% to $21.3 million from $76.4 million. The decline in revenue was driven by a 3.3% decrease in loaded miles. Freight demand generally was softer because seasonal project activities had a shorter duration, a challenge compounded by blockades at the Mexican border. U.S. Xpress continued making progress closing the gap on margin performance.
• Less-than-truckload: Revenue increased 7% to $298.5 million from $278.9 million the prior year. Operating income increased 1.7% to $9.66 million from $9.5 million. The segment encountered a moderating demand environment, but pricing trends generally remained stable. Revenue was boosted by a 2.1% increase in shipments per day and a 5% rise in revenue per hundredweight.
• Logistics: Revenue decreased 4.8% to $160 million from $168 million. Operating income dropped 41.1% to $5.53 million from $9.4 million. A reduction in industry capacity and the application of more stringent carrier qualification standards drove up purchased transportation costs and compressed gross margins during the quarter.
• Intermodal: Revenue decreased 3.4% to $95.7 million from $99 million. The operating loss was $101,000, compared with a loss of $1.45 million the prior year. The revenue decline stemmed from a 6% drop in load count that was partially offset by an increase in revenue per load. The company is working to improve services through cost control, network balance, equipment utilization and growing the load count with disciplined pricing.

Knight-Swift ranks No. 7 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.