Landstar System (NASDAQ:LSTR) reported a strong increase in third-quarter revenue as truck pricing rose sharply and capacity tightened, though elevated insurance and claims costs weighed on results.
President and CEO Frank Lonegro said the freight environment during the quarter featured strong year-over-year truck pricing, low-single-digit truckload volume growth and tight truck capacity. He said market conditions that had favored shippers since late 2022 had “shifted rather rapidly” toward transportation providers.
Total revenue increased 25% from a year earlier. Truck revenue rose 29% to $1.407 billion, driven by a 25% increase in truck revenue per load and a 3% increase in truck loads hauled. Landstar said truck revenue per load increased 7.5% sequentially from the second quarter, representing its second-largest second-to-third-quarter increase over the past 15 years.
Heavy Haul and Key Freight Segments Gain Momentum
Landstar’s heavy-haul offering remained a significant source of growth. Heavy-haul revenue increased 25% year over year to approximately $185 million, as loadings rose 11% and revenue per heavy-haul load climbed 13%.
Jim Todd, Landstar’s vice president and CFO, said the company saw momentum across heavy-haul customers, including data centers, aerospace and defense, electrical projects and heavy machinery. He said 20 individual customers in the vertical increased their volumes by at least 50 heavy-haul loads from the prior-year period.
Transportation logistics segment revenue increased 26% year over year, supported by a 22% gain in revenue per load and a 3% volume increase. In the company’s largest commodity category, consumer durables revenue increased 34%, reflecting a 28% increase in revenue per load and a 5% increase in volume.
Among other commodity categories, electrical loadings increased 44%, while machinery and building-products loadings each rose 1%. Automotive equipment and parts loadings declined 4%. Bill Clement, vice president and chief commercial officer, said Landstar was seeing strength in most verticals, including third-party logistics brokerage, data centers, building materials, energy and power, industrial machinery and consumer goods. He cited softer volumes in automotive and some government business.
Non-truck transportation service revenue, however, declined 13%, or $13 million, from the prior year, primarily because ocean revenue per load fell 18% and ocean volume declined 9%.
Insurance and Claims Costs Rise Sharply
Landstar’s third-quarter insurance and claims costs rose to $55.3 million from $33 million a year earlier. The company recorded approximately $21.9 million in net unfavorable adjustments to prior-year claim estimates, compared with $9.2 million in the prior-year quarter.
Lonegro said the company incurred approximately $22 million of net unfavorable adjustments to prior-year claims estimates. That included roughly $13 million of unfavorable actuarial adjustments to reserves and about $8 million associated with two claims settled during the quarter.
One settlement resulted in a $5 million charge related to a truck brokerage claim in what Lonegro described as an adversarial venue. Another produced a $3 million charge tied to an accident in the fourth quarter of 2025 involving a BCO independent contractor leased to a company subsidiary.
Todd said Landstar’s insurance reserve levels had risen substantially in recent years as claims severity increased across the trucking industry. He declined to provide a quarterly insurance-cost forecast, describing the environment as highly complex and volatile, but said $35 million per quarter “feels probably too light” under current conditions while $55 million “probably feels too heavy.”
Lonegro said the company is focused on reducing incident frequency, settling cases it believes should be resolved and litigating cases where it believes a court outcome could help shape the law. He also cited industry advocacy at federal and state levels related to trucking litigation.
Margins, Cash Flow and Capital Returns
Third-quarter gross profit increased to $126.5 million from $111.1 million a year earlier, though gross margin declined to 8.4% of revenue from 9.2%. Variable contribution rose to $212.1 million from $170.2 million, while variable contribution margin edged down to 14.0% from 14.1%.
The modest decline in variable contribution margin reflected lower margins on truck brokerage carrier revenue, as rates paid to those carriers were 161 basis points higher than in the prior-year period. That impact was mostly offset by a higher percentage of revenue generated by BCOs and independent contractors.
Selling, general and administrative costs increased to $62.4 million from $57 million, primarily due to higher incentive and stock-based compensation. Depreciation and amortization declined to $9.9 million from $11.5 million.
Landstar ended the quarter with $351 million in cash and short-term investments. Cash flow from operations totaled about $99 million through the first 39 weeks of 2026, while cash capital expenditures were approximately $12 million. Over that period, the company paid about $110 million in dividends and repurchased about $65 million of shares.
The board declared a regular quarterly dividend of $0.44 per share, payable Dec. 8 to shareholders of record as of Nov. 17.
BCO Growth, Safety and Fourth-Quarter Commentary
Landstar added 165 net BCO trucks during the third quarter, its strongest quarterly improvement since the third quarter of 2021. BCO truck count was up 91 trucks, or 1%, from the end of the 2025 third quarter and nearly 2% sequentially. The trailing 12-month BCO truck turnover rate improved to 26.6% from 31.4% at the end of 2025.
Matt Miller, vice president and chief safety and operations officer, said gross truck additions increased 11% sequentially while gross truck cancellations declined 6.1%. He said the company’s DOT-reportable accident frequency rate was 0.57 accidents per million miles during the first 39 weeks of 2026, compared with 0.60 in the comparable 2025 period.
Rather than issue formal fourth-quarter guidance, Landstar provided operational commentary because of what Lonegro called a fluid freight, geopolitical and claims environment. Historically, the company expects truck revenue per load and truck loads to each increase about 1% sequentially from the third to fourth quarter, with variable contribution margin typically declining 20 to 30 basis points.
In October, however, truck loads were approximately 7% above the prior-year month on a dispatch basis, while revenue per load was approximately 29% higher on a processed basis. Lonegro said those trends were slightly outperforming normal seasonal patterns.
Landstar also said it continues to invest in technology and artificial intelligence. AI workflows were active in eight independent agent offices, while AI-powered corporate support capabilities had been deployed across the broader agent network. Management said the efforts are intended to improve productivity, service and capacity for growth.
About Landstar System (NASDAQ:LSTR)
Landstar System, Inc (NASDAQ: LSTR) is an asset-light transportation and logistics company headquartered in Jacksonville, Florida. Through a network of independent owner-operators, agents and third-party capacity providers, the company arranges the movement of freight for commercial and industrial customers.
Landstar’s services include truckload transportation, specialized and heavy-haul freight, expedited and time-critical shipping, less-than-truckload transportation, intermodal services and logistics management.
