Knight, Celadon Resist Pressure to Cut Capacity

Not all motor carriers see cutting excess capacity as the best road to higher rates and improved profitability. Knight Transportation and Celadon Group are among those holding onto trucks and banking on being able to pick up freight from competitors in a recovery.

“With freight demand seemingly have bottomed, we decided to maintain our fleet size and prepare for the opportunity for growth rather than reduce the fleet size,” Knight Transportation said in its third quarter report. Its tractor count fell by 48 from a year ago to 3,752 units. But while it cut 220 company trucks, it added 172 owner-operators.

“We believe that our level of profitability, fleet renewal strategy, and use of owner-operators should enable us to internally finance attractive levels of fleet growth when demand conditions are right,” the company said.

Celadon actually increased its tractor fleet 8.5 percent year-over-year in the quarter, bringing it up to 3,221 units, while decreasing the number of trucks it owns by about 600, the Indianapolis-based carrier said in its report. It has 460 tractors — worth $43.4 million — on order for delivery over the next three quarters. Owner-operators account for 9.8 percent of Celadon’s capacity, or 317 tractors, up 39.7 percent from a year ago.

Earlier this year, Chairman and CEO Steve Russell said the company would benefit from deep cuts other carriers made in their fleets. Shippers have asked Celadon to step in when other carriers folded or no longer had the capacity to meet commitments, he said.

Other carriers are transforming their equipment pools.USA Truck grew its owner-operator fleet by 58.9 percent in the quarter, to 143 units.

Contractors still operate only 6.2 percent of the Van Buren, Ark.-based company’s total fleet of 2,292 tractors, but USA Truck is making a concerted effort to expand its owner-operated fleet. “More than ever before, a greater portion of our fleet is comprised of tractors for which we have made no capital investment,” the company said.

Contact William B. Cassidy at wcassidy@joc.com.