Covenant sees tightening capacity, rate momentum building in 2026

Covenant Logistics Group executives struck a much optimistic code connected Friday’s net call, pointing to tightening truckload capacity, rising complaint discussions and improving request trends contempt a weaker-than-expected archetypal quarter.

The Chattanooga, Tennessee-based bearer reported first-quarter net earlier this week that missed expectations, with nett income falling to $4.4 million, oregon $0.17 per share, arsenic wintertime upwind and substance costs weighed connected results.

But CEO David Parker said conditions improved meaningfully arsenic the 4th progressed — and are continuing into Q2.

“We judge [conditions] volition proceed to amended passim the year,” Parker said, citing a strengthening pipeline of committed truckload capableness and increasing lawsuit demand.

Covenant Logistics Group (NYSE: CVLG) provides truckload, expedited, dedicated, and logistics services crossed the U.S.

A cardinal taxable from the telephone was tightening manufacture capableness — peculiarly among qualified drivers — aft a prolonged downcycle.

“For the archetypal clip successful 40 months drivers are starting to get choky retired there,” Parker said, noting that operator wage discussions are reemerging crossed ample lawsuit accounts.

Executives said the operation of reduced fleet capableness and improving concern request is mounting the signifier for complaint increases, though rising operator wages could offset immoderate of that upside.

Parker added that the institution is already seeing stronger engagement from shippers seeking dedicated capacity.

“We’re seeing much radical privation to speech astir dedicated capableness astir since ’21 oregon ’22,” helium said.

Management emphasized that Covenant’s dedicated and managed freight segments are positioned to payment archetypal arsenic the freight rhythm turns.

Dedicated operations proceed to expand, supported by specialized instrumentality and semipermanent contracts, portion Managed Freight gross surged astir 60% twelvemonth implicit twelvemonth successful Q1 pursuing late-2025 acquisitions.

However, executives acknowledged that borderline unit remains successful the adjacent term, peculiarly successful expedited trucking, which underperformed during the 4th owed to little utilization.

While complaint momentum is building, Parker cautioned that outgo ostentation — particularly operator wages — volition sorb portion of the gains.

“Driver [costs are] 30% to 40% of full costs… what you get from the lawsuit whitethorn not nett the aforesaid arsenic before,” helium said.

That dynamic could temper borderline enlargement adjacent arsenic pricing improves, peculiarly if wage ostentation accelerates alongside tightening labour supply.