Nuclear Verdicts: $86M awarded despite NO negligence? [Trucking Crisis]

Speaker 1 [0:00] We have a real treat. We have David Parker, the founder and CEO of Covenant Logistics. David, I have a I have a habit of saying Covenant Transport, so I gotta get. Speaker 2 [0:08] I do. I do too. Speaker 1 [0:08] Old habits. Did you have you done this to any of your your ever investor calls? Speaker 3 [0:13] Yes, I have. Speaker 1 [0:14] So you guys just had your conference call. Congratulations. I understand this is the biggest revenue in your history. Speaker 2 [0:20] Yes. Speaker 1 [0:20] Yeah. So what do you? I mean, obviously the market’s helping them out. What do you attribute that to? Speaker 2 [0:24] I tell you, at the end of the day, it’s what we started eleven years ago and. Refocusing the company and getting into the various segments. You know, we’re not into the OTR segment, very little. I mean, we may have 100 trucks running in the OTR segment, and we have really focused on the 4 areas that we’re involved in, which is expedited, dedicated, freight management, and warehousing. And we’ve been going down that path for a while. Speaker 1 [0:52] So that’s a— I mean, obviously over the last, you know, 14 years, you’ve talked about just the transition of the company. It is a very different operator. Speaker 4 [1:01] Yeah. Speaker 1 [1:01] If you followed it historically, it’s a very different operator than historically has been. But there is something special about the way you guys have repositioned the business. What, what part of the business are you most proud of in terms of the progress that you’re making right now? Speaker 2 [1:12] Well, I tell you, number one, I’m proud of all 4 of ’em. If I leave one out, I’ll get in trouble. Speaker 4 [1:17] Love all your kids equally. Speaker 3 [1:19] That’s right. Speaker 2 [1:20] I love all my children. Speaker 1 [1:21] Everyone, which I have 5 kids, it depends on the moment. Speaker 2 [1:23] I love ’em all. Speaker 3 [1:24] Be honest. Speaker 2 [1:24] I love ’em all equally. But, All of them have made some great headway. I look at our Legacy Dedicated that we had them all down yesterday for meetings and they have just done a great job. I mean, they have turned that thing around so well. I’m proud of them. There’s no doubt that the freight management, which is brokerage as well as a small management of freight, It has been, it’s been tough. We went from doing great until you couldn’t find capacity, and then our margins have squeezed. And, and, and so we continue to, we continue to focus on that to make sure that we can either raise rates or find carriers that do it cheaper. And I got a feeling raising rates is easier. Speaker 1 [2:13] Yeah, well, look, misery loves company because every public truckload carrier that we’ve covered Has had the one part of their business has struggled, and you can go through the list. I, in fact, I don’t think we’ve covered asset-based carrier that’s done well in brokers. No, revenue is doing well despite all the noise. RXO, we’re going to hear from next week. I would suspect that they’re doing well, but it seems that the asset side of the business, these logistics operations, are there to serve the truck. Julie and I’ve talked about that. Usually it’s a the truck is going to win out in terms of how you guys think about the business. Speaker 2 [2:48] You know, and that’s interesting because that is one spin. Ours really isn’t. Uh, our assets— keep in mind, we do no OTR, so we’re very focused. So our, our asset side only handles about 0.5%— Speaker 1 [3:02] Wow. Speaker 2 [3:02] —of the broker freight. Speaker 1 [3:04] And, you know, why do you think it’s— why do you think it’s underperforming versus some of the other businesses? Speaker 2 [3:08] Uh, strictly because, uh, capacity rates Got it. Have gone up faster than we’ve been able to raise. Speaker 1 [3:15] So you have contracted business that longs towards the side of it. Speaker 2 [3:17] It’s about, it’s about 70/30. Speaker 1 [3:19] The spread of it’s hard. Speaker 2 [3:20] It’s hard. Speaker 1 [3:20] In this kind of environment. Speaker 2 [3:21] It’s harder. Now eventually it’s gonna catch up. Speaker 1 [3:24] Well, I mean, we’re still early cycle. I mean, every, Julie and I were talking earlier on this call, every CEO’s talked to, I think they’ve all, they all use the same words. Speaker 4 [3:32] Yeah. They read each other. Speaker 1 [3:32] Yeah. We’re in the early innings. Do you agree with that? Speaker 2 [3:34] Yes, I do. Speaker 1 [3:35] Derek says that we’re in the 3rd inning. Where would you describe it? Speaker 2 [3:37] Yes, I, I, I, I believe that we’ve reached 1st base. I use baseball analogies. So we hit the ball. Speaker 1 [3:41] We still, we’re still We’re still in the innings, okay. Speaker 2 [3:44] That’s right. We hit the ball last October. It’s when the DOT really started focusing because of the August accident that happened in Florida that we’re all well aware of. DOT took over in October, and to me, that was hitting the ball, and I b