Covenant Logistics signals rate momentum, fleet discipline after Q4 loss

Covenant Logistics Group reported a fourth-quarter nett loss, but told analysts it is progressively assured that freight fundamentals are improving, positioning the bearer for stronger operating show successful the 2nd fractional of 2026.

Executives said adjusted fourth-quarter results came successful mostly arsenic expected contempt disruptions from a prolonged U.S. authorities shutdown, elevated security claims and capableness costs, and startup expenses successful warehousing.

Chattanooga-based Covenant Logistics Group (NYSE: CVLG) released its third-quarter net connected Thursday and held an net telephone connected Friday.

“We judge the freight marketplace continues to germinate toward equilibrium betwixt shippers and carriers. In fact, we mightiness beryllium astatine equilibrium now,” Chairman and CEO David Parker said.

Parker said spot rates roseate meaningfully successful the 4th fourth and gross trends crossed each concern units improved during the archetypal 3 weeks of January.

The institution has already secured low- to mid-single-digit contractual complaint increases successful its expedited fleet that instrumentality effect successful the archetypal quarter, with further increases expected crossed expedited and dedicated operations aboriginal successful the 2nd quarter.

“We would not beryllium amazed for industry-wide operator and motortruck capableness to proceed to decline,” Parker said, citing regulatory pressures, outgo ostentation and security risk. He added that inventory restocking and stronger firm net could further tighten capableness arsenic 2026 progresses.

Covenant officials said they are intentionally shrinking and reshaping its asset-based fleet to amended returns, pursuing impairment charges tied to underutilized equipment.

The bearer expects to run with a modestly smaller fleet by the extremity of 2026 and plans nett superior expenditures of $40 cardinal to $50 million, a crisp simplification from anterior years.

Within truckload, Covenant Logistics Group President Paul Bunn said the institution volition proceed increasing higher-service, specialized dedicated operations portion exiting much commoditized freight.

Dedicated posted an adjusted operating ratio of 92.2 successful the 4th fourth — its champion show of the twelvemonth — and absorption said it plans to further grow specialized niches, including agriculture.

“We were pleased by however the [Dedicated] conception improved its results each 4th passim the twelvemonth and are excited astir the momentum we are taking with america into 2026,” Bunn said. “With Dedicated, we grew the fleet by 90 mean tractors, oregon astir 6.3%, arsenic we person continued to triumph caller concern and specialize successful high-service niches wrong that segment.”