Third quarter trucking earnings are likely to show a slide in profits, particularly for truckload carriers, experts warn.
That’s according to an Oct. 11 Goldman Sachs research note, which lowered earnings per share forecasts for firms such as Knight-Swift Transportation Holdings, Schneider National and Werner Enterprises.
The investment banking firm noted it remains “somewhat concerned that the velocity of recovery may not be the typical sharp bounce off the bottom that we might normally see around goods,” and put more optimism in higher asset-intensive transport, such as rails and parcels, as opposed to truckload.
After Knight-Swift acquired U.S. Xpress Enterprises in June, the carrier lowered its full-year adjusted earnings guidance in July to a new range of $2.10 to $2.30 per share, anticipating losses from the Tennessee-based company would initially continue.
Goldman Sachs is forecasting Knight-Swift will hit the bottom of the company’s estimated earnings per share range. But Knight-Swift isn’t alone in bracing for an earnings dip: The investment firm also projected Schneider will hit the bottom of its range, too.
“We're all very much focused, particularly for trucking companies, on the rate that they're able to charge,” Citi Managing Director and Head of Global Transportation Research Chris Wetherbee told Trucking Dive Monday. “The third quarter is when you see the full brunt of that renewal show up.”
Meanwhile, “volumes diverted as a result of Yellow bankruptcy and the associated favorable impacts to the remaining LTL participants – should bode well for XPO and TFI,” Goldman Sachs analysts said in the research note.
Month-to-month changes in carrier exits will also indicate how firms are processing a sluggish market and how a recovery in the market could play out.