Higher costs and less efficient use of its trucks drove Covenant Transportation Group’s profit down 42.7 percent year-over-year in the second quarter to $1.7 million.
Freight revenue fell 5.5 percent from a year ago to $133.6 million, though fuel surcharges helped the truckload carrier boost total revenue 2.3 percent to $172.9 million. In the first quarter, Covenant suffered a $2.5 million loss.
The Chattanooga, Tenn.-based company’s fuel spend rose 28 percent to $56.3 million. Fuel surcharges covered only 70 percent of the carrier’s diesel tab.
The $4.3 million year-over-year drop in freight revenues related to a 1.9 percent drop in average weekly freight revenue per tractor and cuts in Covenant’s tractor fleet. The company had 3,049 tractors at the end of the quarter, down from 3,105 a year ago.
Average freight revenue per total mile increased 7.8 cents per mile, or 6 percent, from a year ago, as miles per tractor dropped 7.5 percent and truckload rates rose.
“We further tightened acceptable lanes and forced more efficiency within our freight network during the quarter,” said David R. Parker, chairman, president and CEO.
Higher costs in the quarter included a 2-cent-per-mile pay increase for drivers from a year ago and 2-cent-per-mile increase in workers compensation costs. Excluding fuel surcharges, fuel costs were 2.3 cents per mile higher during the quarter. The company also settled an “unusually large” number of insurance claims.
Covenant’s brokerage revenue dropped 31.5 percent from last year to $7.4 million, mainly as a result of the termination of some agents and customer relationships.
That contributed to a 14.9 percent year-over-year drop in operating profit at the company’s non-asset subsidiary to $251,000 for the quarter.
Contact William B. Cassidy at firstname.lastname@example.org. Follow him on Twitter at @wbcassidy_joc