Surface Transportation

Large US truckload carriers shifting assets to expand dedicated services

By William B . Cassidy

Large US truckload carriers are increasingly focused on dedicated trucking because of the capacity needs of customers and a desire for more stable revenue and margins , with many companies moving greater numbers of trucks and drivers to dedicated divisions .

That shift is a long-term trend , accelerated by a freight downcycle that has lasted nearly three years . It also reflects shipper demand for more stable capacity and is tied to the expansion of shipper-owned private fleets since the COVID-19 pandemic .

“ The freight market is continuing its path towards recovery , and we are playing the long game .”

The growth of dedicated services is leading to a significant rebalancing of the upper tier of the truckload market , which includes giant carriers such as Knight-Swift Transportation Holdings , J . B . Hunt Transport Services , Schneider National and Werner Enterprises .

All of these trucking companies have made dedicated business — in which they provide guaranteed capacity to shippers in the form of an outsourced private fleet — a top priority heading into 2025 . Dedicated is a key part of their broader diversification plans .

Expecting an end to the so-called freight recession — although it is not certain — by the second half of the year , shippers tell the Journal of Commerce they are once again concerned about truck capacity , even though that capacity is abundant and demand slow in the first quarter . That creates opportunities for dedicated trucking providers .

At Green Bay , Wisconsin , Schneider National , 70 % of its 12,700 tractors are now in dedicated service , a percentage bolstered by the $ 421 million acquisition of dedicated trucking company Cowan Systems , company officials told Wall Street analysts on Jan . 30 .

When Schneider became a publicly traded company in 2017 , dedicated services represented only 33 % of its fleet , which underscores the scope of the transformation .

“ Our dedicated business has demonstrated [ a ] resilient earnings profile over freight cycles and is an important part of our strategy to create enduring shareholder value ,” Mark B . Rourke , president and CEO of Schneider , said during a fourth-quarter earnings call .

In contrast , the traditional over-the-road truckload business “ continues to be challenged ” and was not profitable in the last quarter , Rourke said . “ The freight market is continuing its path towards recovery , and we are playing the long game .”

‘ Remarkably resilient ’

That game requires belt-tightening and diversification as carriers roll toward what they hope will be the end of a freight downturn that began in 2022 . Truckload carriers have seen volatile pricing swings since the disruption caused by the COVID-19 pandemic in 2020 .

Dedicated business tends to have higher profit margins and longer-term contracts , encouraging an even greater shift when typical truckload margins are either in single digits or negative . At J . B . Hunt , for example , the average dedicated contract length is five years .

The margin goal for dedicated at J . B . Hunt is 12 % to 14 %, company officials said . The carrier ’ s truckload division had an operating margin of about 4.7 % in the fourth

Truckload carriers Knight- Swift , J . B . Hunt , Schneider and Werner are prioritizing dedicated business in 2025 . Felipe Sanchez / Shutterstock . com

58 Journal of Commerce | March 3 , 2025 www . joc . com