NEW YORK (Reuters) - Knight-Swift Transportation Holdings Inc (KNX.N) posted a higher quarterly net profit on Wednesday, citing higher charges for the freight it carries and strong volumes, but warned it was struggling to hire and retain enough drivers.
North America’s largest truckload carrier said freight demand was stronger than normal in the quarter, allowing the carrier to charge more to carry cargo not already under longer-term contract. It expects contract rates to increase by high single-digit to low double-digit percentages this year.
But the company continues to struggle to hire and retain enough drivers amid a chronic driver shortage in the industry and a tight overall U.S. labor market, which has curbed the number of trucks it can put on America’s highways.
“We continue to face perhaps the most difficult driver-sourcing challenge we have seen,” Chief Executive Dave Jackson told analysts after Knight-Swift reported first-quarter results.
The Phoenix, Arizona-based company reported first-quarter profit of $70.36 million, or 39 cents per diluted share, up from $14.87 million, or 18 cents per diluted share in the year-ago period.
Adjusting for one-time items, Knight-Swift reported earnings per share of 44 cents. Wall Street analysts expected 40 cents.
Knight-Swift posted revenue of $1.27 billion, below the $1.3 billion analysts expected.
Recruiting and retaining truck drivers has been a lingering problem for U.S. trucking companies as they compete for qualified ones at a time of low U.S. unemployment, while striving to keep pay, a huge expense, as low as possible.
Shippers are facing one of the tightest trucking markets in years, as they struggle to find capacity for their cargo and complain of persistent service problems on U.S. railroads.
The company said its effective tax rate for the first quarter decreased to 21.2 percent from 35.3 percent in the same quarter last year.
The average number of trucks in its fleet was down 1.9 percent at Knight and 8 percent at Swift year-over-year. The company plans to spend between $525 million-$575 million on tractor and trailer replacements.
A new federal mandate that drivers electronically log their hours on the road is expected to speed up consolidation in the deeply fragmented $676 billion U.S. trucking market and potentially reduce capacity further.
Knight-Swift also said on Wednesday it had acquired Abilene Motor Express, a Richmond, Virginia-based truckload carrier with about $100 million in annual revenue in March for an undisclosed sum.
Reporting by Eric M. Johnson; Editing by Dan Grebler and Scott Malone