5 Insightful Analyst Questions From Knight-Swift Transportation’s Q4 Earnings Call

By Liz Young

A Trump administration crackdown on foreign truck drivers threatens to take tens of thousands of truckers off the road.

Some of the country's largest trucking companies say the measures could help reverse a prolonged downturn in the trucking industry by reducing the number of drivers and pushing up rates.

"Capacity reduction is clearly under way," said Adam Miller, chief executive of Knight-Swift Transportation Holdings, on a call with investors Wednesday. "Regulatory enforcement of qualifications and safety standards was arguably the most welcome development in 2025 for our industry."

The Trump administration has been pressing states to revoke certain commercial driver's licenses and to restrict the issuance of some new certifications with the goal of improving road safety.

The Transportation Department in September proposed a rule that would sharply curtail the pool of immigrants eligible to earn commercial driver's licenses. Officials said the change would make the country's roads and highways safer, pointing to at least five fatal crashes across the U.S. that involved non-domiciled CDL holders through September of last year.

About 200,000 immigrants in the U.S. hold so-called non-domiciled commercial driver's licenses that allow them to haul freight professionally, representing about 5% of all CDL holders nationwide, according to the Federal Motor Carrier Safety Administration. The licenses are available to drivers who aren't U.S. citizens or lawful permanent residents.

The new proposed rule would in part limit the types of visas eligible for non-domiciled CDLs. The FMCSA estimated about 97% of current non-domiciled CDL holders would no longer be eligible under the new rule.

For now, the change is on hold. The U.S. Court of Appeals for the District of Columbia Circuit issued a stay on the Transportation Department's interim final rule in November, allowing states to continue issuing non-domiciled CDLs.

Transportation Secretary Sean Duffy has meanwhile accused several states of issuing non-domiciled CDLs illegally. These include licenses that expire years after a driver's work authorization is due to run out, or licenses granted to drivers from Mexico and Canada who are supposed to use their existing certifications from their countries.

Duffy this month said the federal government will withhold $160 million from California for its failure to revoke 17,000 licenses that an FMCSA audit found to be illegally issued. He has threatened over the past several months to slash federal funding to other states including North Carolina, New York and Colorado if they don't cancel thousands of similar permits.

A representative for the California Department of Motor Vehicles said the agency was in compliance with federal regulations and state law, and hopes the state will be allowed to promptly reissue legal non-domiciled CDLs.

Law-enforcement officers at the same time have been taking commercial drivers off the road who are deemed not to be proficient in English.

President Trump in April issued an executive order calling for stricter enforcement of a decades-old law requiring commercial drivers to be able to read and speak English sufficiently well to understand road signs and interact with law enforcement. The order reversed guidance issued in 2016 that a driver didn't have to be removed from service if found in violation of the English-language requirement.

Drivers "should be able to read and understand traffic signs, communicate with traffic safety, border patrol, agricultural checkpoints and cargo weight-limit station officers," Trump's executive order said. "This is common sense."

Matt Muenster, chief economist of transportation technology and insights firm Breakthrough Fuel, estimated that about 300 to 400 drivers on average have been removed from service nationwide each week since the executive order was issued.

Duffy said in a social-media post last week that more than 11,500 drivers had been removed from service under the rules.

Big trucking companies such as J.B. Hunt Transport Services, Knight-Swift, Schneider National and Werner Enterprises have said the administration's efforts could help reverse their fortunes after more than three years of grappling with rock-bottom freight rates.

Trucking executives and analysts have in part attributed the yearslong slump in rates to an overabundance of trucking capacity after tens of thousands of new operators entered the industry during a pandemic-driven boom in freight demand. Thousands of small trucking businesses have left the market over the past few years, but the industry still has more carriers on the roads than before the pandemic.

The Transportation Department said the enforcement actions won't hurt trucking service. "These safety actions will not impact the delivery of packages or essential goods to Americans," a representative said.

Spot rates increased in December and have stayed elevated in January, though analysts caution that questions remain about how much impact the enforcement measures will have. DAT Solutions, a load board matching truckers and loads, said average spot prices for flatbed truck transport rose about 6% in December from a year earlier.

"A combination of seasonality, weather, the quirks of the holiday calendar, and constrained capacity drove prices substantially higher, as opposed to stronger freight volumes," said Ken Adamo, DAT's chief of analytics.

Avery Vise, vice president of trucking at FTR Transportation Intelligence, said rates are starting to climb in part due to a drop in capacity. But he said that decrease in capacity has more to do with trucking operators leaving the business due to market conditions, rather than the administration's enforcement actions.

"Those would be contributing factors to a trend that was already happening," Vise said. "It took a long time for the market to finally say, 'OK, we can't just keep holding on to drivers. We have to let them go.'"

Write to Liz Young at liz.young@wsj.com