Capacity Conundrum: Diverging Views on Market Dynamics and Margin Expectations in 2025 Earnings Call

Truckload Business Performance:
- The Truckload segment experienced an improvement in adjusted operating ratio by 260 basis points, with adjusted operating income growing 87.5% year-over-year.
- Revenue per loaded mile, excluding fuel surcharge, was flat year-over-year, despite loaded miles declining 2.8%.
- The segment grew profitably despite a soft freight environment, driven by productivity improvements and focused cost control.

LTL Segment Growth and Challenges:
- The LTL segment increased revenue by 28.4% year-over-year, with a significant 21.7% rise in shipments per day.
- However, adjusted operating income declined 36.8% year-over-year due to expansion costs and integration issues.
- Growth is driven by network expansion and new customer acquisition, but margin pressure arises from early-stage operations and integration costs.

Intermodal Segment Challenges:
- The Intermodal segment saw a 13.8% decline in revenue year-over-year, with a 12.4% decrease in load count.
- The decline is attributed to reduced import volumes on the West Coast, impacting both revenue and load count.
- Cost reductions and network balance efforts are underway to mitigate the negative revenue impact.

Cost Management and Margin Improvement:
- Knight-Swift achieved a 1.5% reduction in cost per total mile over the trailing 12 months.
- Efforts to reduce variable costs and maintain fixed costs led to margin improvements despite a challenging market environment.
- Continuous cost reduction initiatives and process improvements are expected to enhance efficiency and leverage as the market recovers.