Covenant Transportation Group, Inc. provides expedited long haul freight transportation, primarily using two-person driver teams in transcontinental lanes. The company transports full trailer loads of freight from origin to destination without intermediate stops or handling. It provides truckload transportation services throughout the continental United States, into and out of Mexico, and into and out of portions of Canada. The company’s truckload freight services utilize equipment the company owns or leases, or equipment owned by independent contractors for the pick-up and delivery of freight. In most of its truckload business, the company transports freight over non routine routes. The company’s dedicated freight service offering provides similar transportation services. To complement its truckload operations, the company provides freight brokerage services and accounts receivable factoring services. Through its asset based and non-asset based capabilities, the company transports various types of freight for a diverse customer base. Asset-Based Truckload Services (Truckload) The Truckload segment consists of three asset-based operating fleets that are aggregated because they have similar economic characteristics and meet the aggregation criteria. The three operating fleets that comprise its Truckload segment are as follows: Covenant Transport, Inc., its historical primary operation, which provides expedited long haul, dedicated, temperature-controlled, and regional solo-driver service; Southern Refrigerated Transport, Inc., which provides primarily long haul and regional temperature-controlled service; and Star Transportation, Inc., which provides regional solo-driver and dedicated services, primarily in the southeastern the United States. In addition, its Solutions subsidiary has service offerings ancillary to the company’s Truckload operations, including freight brokerage service directly and through freight brokerage agents, who are paid a commission for the freight they provide, and accounts receivable factoring. In its Truckload segment, the company primarily generates revenue by transporting freight for its customers. Sectors Expedited/Long haul: In its expedited/long haul business, the company operates approximately 1,200 tractors, approximately 735 of which are driven by 2-person driver teams. Its expedited services often involve high value, high security, or time-definite loads for integrated global freight companies, less-than-truckload carriers, manufacturers, and retailers. Temperature-Controlled: In its temperature-controlled business, the company operates approximately 1,000 tractors, approximately 200 of which are driven by 2-person driver teams, and also offers intermodal service in longer haul lanes. Dedicated: In its dedicated contract business, the company operates approximately 500 tractors, approximately 20 of which are driven by 2-person driver teams, primarily for manufacturers located in the southeastern United States. Capacity Provider Solutions and Services/Equipment Sales and Leasing: The company primarily provides freight brokerage capacity to customers when the freight does not fit its network or profitability requirements. In addition, it participates in the market for used equipment sales and leasing through its 49% ownership of Transport Enterprise Leasing, LLC (TEL). Customers The company is a major carrier for transportation companies, such as freight forwarders, less-than-truckload carriers, and third-party logistics providers that require a level of service to support their businesses, as well as for traditional truckload customers such as manufacturers, retailers, and food and beverage shippers. UPS, the company’s major largest customer, was serviced by both its Truckload segment and its Solutions subsidiary. Revenue Equipment As of December 31, 2015, the company operated 2,656 tractors and 6,978 trailers. Of these tractors, 2,318 were owned, 115 were financed under operating leases, and 223 were provided by independent contractors, who own and drive their own tractors. Of these trailers, 4,068 were owned, 2,239 were financed under operating leases, and 671 were financed under capital leases. Seasonality The company’s first quarter results historically have been lower than results in each of the other three quarters of the year (year ended December 31, 2015), excluding charges. Over the past several years, the company has seen increases in demand at varying times, specifically May through October, based primarily on restocking required to replenish inventories that have been held significantly lower than historical averages. Additionally, it has seen surges between Thanksgiving and Christmas resulting from holiday shopping trends toward delivery of gifts purchased over the Internet, as well as the impact of shorter holiday seasons. Regulations The company’s drivers and independent contractors must comply with the safety and fitness regulations of the U.S. Department of Transportation, including those relating to drug and alcohol testing and hours-of-service. Other agencies, such as the Environmental Protection Agency and the Department of Homeland Security also regulate its equipment, operations, and drivers. History Covenant Transportation Group, Inc. was founded in 1986. The company was incorporated in the state of Nevada in 1994.
covenant transport grp-cl a
400 Birmingham Highway
Chattanooga, TN 37419
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