Knight-Swift Earnings: Trucking Downturn Persists, but No Major Surprises

Diversified trucking and logistics specialist Knight-Swift Transportation’s decline in revenue before fuel accelerated in the second quarter, at 18% year over year. Revenue had swung negative in the first quarter following robust growth throughout 2021 and most of 2022, rooted in the pandemic-driven freight surge. Retailers have been destocking elevated inventories, and industrial end markets had softened by the end of 2022, pressuring volume across the board. Also, truckload spot and contract rates are correcting meaningfully (although less-than-truckload pricing is holding up better) as truckload capacity has loosened significantly. Second-quarter revenue came in short of our forecast for the legacy Knight and U.S. Xpress operations (acquired July 1), but the overall trucking downturn is not unexpected; we'd already been baking in a pullback this year.