Chattanooga, TN-based truckload carrier Covenant Transport is warning that softening freight demand is going to impact earnings in the second quarter this year.

“The main factor affecting the quarter is a continuation of softer than expected freight demand. Other than a brief period of increased demand in late April and early May, our customer demand has not improved to the seasonal level we expected or needed,” said chairman & CEO David R. Parker.

“This is contributing to lower than planned tractor productivity,” he added. “For the quarter, we expect our equipment utilization, or miles per tractor, to be down 8% to 9% versus the same quarter last year. This compares with an expected decrease of approximately 2% based on our shorter average length of haul and fewer team-driver tractors.”

Parker said Covenant’s average freight revenue per total mile, which excludes fuel surcharges, is expected to increase approximately 8% compared with the second quarter of 2004, but that’s approximately 1% per mile less than the carrier planned on. “Both freight revenue per tractor per week and total freight revenue are expected to be down approximately 1% vs. the same quarter last year,” he said.

On top of that, Parker expects Covenant’s after-tax cost per mile to increase some 10% versus the second quarter of 2004 due in large measure to higher driver pay, increased fuel costs, and a decrease in total miles. The increase in fuel costs, net of fuel surcharge collections, is expected to impact the carrier’s earnings by six cents per share versus the second quarter of 2004.