The leaders of U.S. Xpress Enterprises Inc. expect they will build on 2021’s double-digit contract rate increase with more hikes next year—but they said their contract prices will stay well below spot rates for the majority of 2022 as the very tight market persists.
Speaking to analysts and investors on a conference call Oct. 21 on the heels of releasing his team’s third-quarter results, President and CEO Eric Fuller said he doesn’t see catalysts to change either the supply or demand dynamics in the transportation sector today. Echoing several of his peers of late, Fuller told those on the call that drivers remain in very short supply—only a global recession, he said, might bring them back in significant numbers—and that the labor shortage has contributed to “some pretty significant cost creep” in U.S. Xpress’ operations of late.
To help offset those rising expenses, Chattanooga-based U.S. Xpress plans to push through more rate increases—Fuller said his team is aiming for hikes in the high single digits—in 2022. But Fuller added, that still won’t be enough to get contract rates to the level of their spot counterparts; he expects the latter to stay “at a healthy premium relative to contract rates” for most, if not all, of 2022.
“Businesses are shipping early and, where possible, by truck in order to make sure they have inventory, but this means using the spot market or higher-priced carriers to cover their loads,” Ken Adamo, chief of analytics at DAT, said earlier last week. “If you’re accustomed to having the right truck in the right place at the right price, you can have one or two of those things but probably not all three.”
Fuller and CFO Eric Peterson spent a good portion of their Oct. 21 call asking analysts and investors to focus not so much on the company’s tepid third-quarter numbers—a net loss of $5.5 million on operating revenue of $491 million versus of a profit of nearly $11 million on $431 million in sales, respectively, in the same time period a year ago—but on the long-term promise of the investments they’re making in their Variant OTR platform and other projects.
Investors weren’t in the mood Oct. 22 to take that long-term view: In afternoon trading, shares of U.S. Xpress (Ticker: USX) were down 14% to about $8. That drop left the company's shares about 10% above where they started 2021.
