Covenant's CEO expects double-digit truckload rate hikes again in 2027 — and says ELD enforcement will keep pulling capacity out

Truckload contract rates are headed for another year of double-digit increases in 2027, Covenant Logistics Group CEO David Parker told analysts on the carrier's third-quarter earnings call on Friday — because driver pay, equipment and insurance costs leave carriers no choice — according to FreightWaves on Oct. 30.

Asked directly whether the company expected another year of double-digit contract rate increases in 2027, Parker replied, “That's my expectations.” He put the reason plainly: “We're going to continue to raise rates. We have to because of the cost.” The market data behind him supports the direction. As of Thursday, shippers who reset their truckload contracts in recent months are paying about 12.8% more than the rates those contracts replaced, according to SONAR's Contract Rate Change Direction index — up from 4.1% during the same period in 2025. The index counts a change only when the old base rate had held steady for more than 90 days, so it measures genuine resets, not churn.

Covenant's own third quarter shows both sides of that market. Total revenue rose 19.2% year over year to $353.9 million, and adjusted earnings per share rose to $0.50 from $0.44. Truckload revenue per total mile climbed 19.8% to $3.03 — rates are doing real work — even as the average truckload tractor fleet shrank 8.9% to 2,186 tractors from 2,400 a year earlier, and truckload freight revenue excluding fuel surcharges slipped 3.4% to $166 million. Fewer trucks, higher revenue per mile: that is the capacity story in one company's numbers.

The company's biggest strategic move is a shift out of traditional one-way expedited trucking into multiyear committed capacity agreements, driven, Parker said, by demand for high-security transportation — including technology shipments and data-center equipment. “Technology loads have just been exploding,” he said. About 25% of Covenant's expedited trucks ran under dedicated arrangements at the start of 2026; by the end of September that was about 58%, up from about 40% at the end of the second quarter, and Parker expects 75% to 80% by the end of the year. Some customers are signing two-to-four-year contracts, and the arrangements pay Covenant to maintain secure capacity even while trucks wait — a different model from maximizing miles, since some specialized operations run about 3,000 miles a week against about 5,000 in the traditional expedited network.

That model runs straight into the driver market. Executives said finding qualified team drivers for high-security freight is getting harder, and recruiting and training them takes more time and resources, which limits how fast the specialized business can grow. Managed freight, meanwhile, carried the quarter: revenue up 68.4% to $121.6 million, with adjusted operating income up about 133% to $7.1 million, helped by brokerage operations acquired in late 2025 — though management cautioned that the unusually strong third-quarter brokerage margins may not repeat every quarter.

Parker also weighed in on enforcement, and his comments matter for capacity. He said he believes FMCSA remains committed to enforcement involving driver training schools, commercial driver's licenses and electronic logging devices, and that he had spoken with FMCSA officials the previous day and did not believe the agency was retreating. “We have been working closely with FMCSA, and we think they're doing a great job,” he said. Parker predicted regulators would eventually require third-party certification of ELD providers to address falsified hours-of-service records, and said — as his own estimate — that 30% of trucks using ELDs may be operating with manipulated records. “I think it's a gigantic number,” he said. He expects continued enforcement to remove additional capacity from the market, particularly in team-driver operations.

For drivers and small carriers, the takeaway is twofold. On rates: if a top-25 truckload carrier is publicly planning a second straight year of double-digit contract increases, and the reset index already shows 12.8%, contract freight is repricing upward into 2027 — owner-operators negotiating renewals and drivers weighing pay packages should treat that as leverage, because carriers themselves are citing driver-compensation inflation as the reason rates must rise. On capacity: the same executive is telling investors that ELD and CDL enforcement will keep pulling trucks — especially teams — out of the market. Compliant drivers become more valuable in exactly that environment; drivers running manipulated logs are the capacity he expects to disappear.