Freight Downcycle Emerges in Knight-Swift's Q4; but Easing Backdrop Not Surprising

Diversified trucking and logistics specialist Knight-Swift’s fourth-quarter revenue-before-fuel swung to a 10% year-over-year decline—it was up 9% last quarter and more than 43% in the first half. The general theme is that retailer-sector restocking has dried up (high inventory levels) and industrial end markets are softening, thus pressuring volumes across the board. Also, truckload spot rates corrected meaningfully throughout 2022 and contract pricing is now starting to ease, albeit less-than-truckload, or LTL, pricing is holding up better. None of this is a surprise and we've already been baking in a pullback in 2023, though revenue came in shy of our forecast as conditions deteriorated faster than we thought.