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“We continued to invest in and grow within certain industries with our dedicated fleet services with new start-up contracts, which weighed on third quarter margins but are expected to improve over time,” Parker said in a news release. “We continue to evaluate contracts in the rest of our truckload business for improvement or exit. Overall, we expect modest contraction in our combined truckload fleet and growth in our asset light segments as we allocate capital toward better returning business units.” The company’s truckload segment reported operating income of $9.2 million, down sharply from $23.1 million a year earlier, as rising insurance, wages, and maintenance costs weighed on margins. Freight revenue per total mile increased 5% year-over-year, but lower utilization drove a decline in overall efficiency. The expedited segment saw freight revenue fall 9% year-over-year to $80.2 million, while dedicated operations grew 11% year-over-year to $91.6 million, supported by new contracts in the protein supply chain. Looking ahead, Covenant expects fourth-quarter adjusted earnings per share to decline sequentially, citing reduced contributions from its transport enterprise leasing affiliate, the loss of a major managed freight customer, and continued cost headwinds. Covenant will hold a conference call to discuss results with analysts at 10 a.m. Thursday.
