Covenant CEO expects another year of double-digit truckload rate hikes in 2027

Covenant Logistics told investors on its third-quarter call on Oct. 30 that it expects another year of double-digit truckload rate increases in 2027. CEO David Parker said carriers still need the money, because costs have risen faster than pricing.

The numbers back up the first half of that claim. FreightWaves reported that Covenant's average freight revenue per total mile rose 19.8% from a year earlier to $3.03, and truckload revenue per tractor per week rose 6.1% to $5,778. According to FreightWaves, citing SONAR's Contract Rate Change Direction index as of Oct. 29, shippers that recently reset truckload contracts are paying about 12.8% more than the rates they replaced. The same index showed 4.1% for the same period in 2025.

The margin story is less rosy. On the call, Parker said most of Covenant's operating ratios improved only about one to two points despite double-digit rate gains, according to the Motley Fool transcript. Management said dedicated customers are being renegotiated one contract at a time, because cost increases have outrun the contractual escalators.

Capacity: enforcement is the swing factor

Covenant's average truckload fleet shrank 8.9% to 2,186 tractors, FreightWaves reported, and the company says qualified team drivers are getting harder to find. Parker estimated on the call that federal enforcement has removed roughly 3% of trucks and 4% of drivers from the market, and that another 3% to 4% could leave. Those are his estimates, not government figures.

He also said he expects FMCSA to keep pressing on driver training schools, CDLs and electronic logging devices, and predicted that third-party certification of ELD providers will eventually be required. He told analysts that a large share of ELD-equipped trucks may be running manipulated records. That claim is Parker's opinion and was not backed by data on the call.

Spot tightness has eased from the second quarter. Parker said Covenant saw about 1.3 loads per truck in the third quarter, down from about two in the second.

What it means for carriers

Rate gains are being absorbed by driver pay, equipment and insurance. Covenant's CFO, James Grant, said higher insurance and claims expense is a growing risk in the brokerage business and that the company will learn more at its upcoming renewal. Carriers heading into renewals should expect that conversation to be harder.

What shippers and brokers should watch

Shippers building 2027 budgets should not assume the 2026 increases were the last round. If enforcement keeps trimming capacity, a carrier asking for more is a reasonable read of the market, not a bluff. Brokers should note that Covenant warned its strong third-quarter brokerage margins may not repeat every quarter, per FreightWaves.

One caution: this is one carrier's CEO talking about next year. It is a signal about pricing intent, not a forecast from a neutral source.