Swift Says They Have Too Many Trucks And It’s Hurting Their Profits

Swift Says They Have Too Many Trucks And It’s Hurting Their Profits

On Tuesday, Swift Transportation announced that they’ll immediately freeze the growth of their fleet, and may even reduce its size, due to the company’s falling stock price.

Over the last year, the company’s stock price has been cut in half, and touched a one-year low of $14.26 just last week.

Swift’s CEO Jerry Moyes spoke about the company’s poor performance on Tuesday and made the announcement to halt fleet growth in order to increase profitability.

“We are extremely disappointed with the current stock price,” he said. “Effective immediately we will enter into a zero fleet growth mode. Until we reach a best in class utilization level, we will not be adding any new equipment.”

The company blamed falling profits on sagging freight demand, coupled with the over-expansion of their fleet size. The company also said they’re considering selling off some of their fleet.

Wall street analyst Jason Seidl commented on the company’s announcement. “In the past, Swift used to be a grow-grow-grow at any cost type of company. Investors soured on that when it wasn’t good for their profitability,” he said.

According to the Wall Street Journal, Swift expanded their fleet by 831 trucks in the 3rd quarter, bringing their total fleet size up to 13,469, almost a 5% increase from the year prior.

Wow that is not good, I was wanting to start with Swift, But theirs always Prime, Roehl, or FFE

A 5% increase in tractors shouldn't halve the stock price, there's more going on here. A slackening of freight is more likely multiplied by expanding fleet as freight dips. September was the second month in a row that durable goods shipments fell in the USA, that may have more to do with it. They're just pausing expanding the fleet, they'll still need drivers, so when their staff ebbs they'll need replacements.

Anyone have an idea how many new drivers they were taking on a month? It won't be that many, but it won't be zero either.

In 2014 Swift paid $4.4 million to settle a class action lawsuit claiming they neglected to tell more than 10,000 job applicants that they can access and contest the background checks it used in its hiring process.

In 2015 Swift paid $2.6 million to settle with an owner/operator leased to the company who claimed negligent maintenance practices by Swift caused a trailer to run over his foot.

Swift has blamed some of its financial struggles on these issues as well.

Oh trust me, they'll be hiring as fast and hard as ever. They may not buy more trucks right now, but they have over 13,000 of them and the turnover is around 100% in this industry so they'll still be bringing in many thousands of drivers every year. This change isn't something any of us will notice. This is just the normal ebb and flow of business in the trucking industry.

Oh trust me, they'll be hiring as fast and hard as ever. They may not buy more trucks right now, but they have over 13,000 of them and the turnover is around 100% in this industry so they'll still be bringing in many thousands of drivers every year. This change isn't something any of us will notice. This is just the normal ebb and flow of business in the trucking industry.

I have worked in a lot of industries. This has always fascinated me. Why is turnover so high?

Oh trust me, they'll be hiring as fast and hard as ever. They may not buy more trucks right now, but they have over 13,000 of them and the turnover is around 100% in this industry so they'll still be bringing in many thousands of drivers every year. This change isn't something any of us will notice. This is just the normal ebb and flow of business in the trucking industry.

I have worked in a lot of industries. This has always fascinated me. Why is turnover so high?

I am sure others will weigh in on this...my opinion:

A variety of reasons, there are voluntary and in-voluntary terminations. Many new drivers are not prepared for the steep learning curve they will need to absorb during the first 6 months of their truck driving career. That coupled with the long hours, waiting, variable sleep schedule, and long periods of time away from home cause drivers to rethink truck driving as a long term career. This is a difficult job that requires a high degree of commitment to be successful and the ability to be flexible, patient, and prepared for any situation. It's not for everyone. With that said one of the best ways to prepare yourself is to review all of the available material on this website. There is no question it will help you in making an informed decision by eliminating much of the guesswork. See the below links.

Brett's Book

Truck Driver's Career Guide

On the other side of the attrition question is the likelihood for accidents during the first few months of driving. If it's of a serious nature, the new driver risks termination and a significant blemish on their driving record.

I think 3 things make up most of the high turnover. 1) accidents, have a fender bender get fired. 2)lack of hometime, drivers want more hometime and families do too. And when I asked my instructor about it he said 3) failed drug test.

Phil

I would think that a good portion of the turnover is related to the large number of driving opportunities available to drivers too.

I would think that a good portion of the turnover is related to the large number of driving opportunities available to drivers too.

I agree. From all of my research, Swift is good as a starter company, but a lot of drivers move on to other companies once they gain the experience due to better opportunities elsewhere. I've also heard Swift likes you to leave after you've gotten your one or two years of experience so that they can pay less because the more experience you have the more they have to pay you. So that could also be a huge part of the turnover ratio.