Knight-Swift Actively Seeking Acquisitions in the Trucking Industry

Knight-Swift Transportation, the largest truckload carrier in the U.S., is actively pursuing acquisitions to enhance its less-than-truckload (LTL) operations and aim for a $2 billion national presence. The Phoenix-based company is focusing on expanding its LTL network, which showed more stable earnings compared to its main truckload segment, currently under strain from a drop in freight demand.

In 2021, Knight-Swift increased its stake in the LTL sector by acquiring AAA Cooper Transportation and Midwest Motor Express. These additions, however, only contributed about 15% to the company’s revenue in the first quarter of this year, totaling approximately $240 million. Despite its smaller size, the LTL division boasted nearly the same operating profit as the much larger truckload sector, highlighting its efficiency and profitability.

Adam Miller, Knight-Swift’s chief, emphasized the company’s dual strategy of organic growth and strategic acquisitions, particularly targeting companies that would strengthen its presence in the Southwest and Northeast regions. “Our medium-term goal is to establish a nationwide LTL network generating $2 billion annually,” Miller noted. This expansion is expected to open up more freight opportunities, enhance customer relations, and improve profit margins while synergizing with the nationwide truckload operations.

The drive to expand in the LTL market gained momentum following the downfall of Yellow, a major player in the industry, which led to the availability of former Yellow terminals at bankruptcy auctions. Knight-Swift seized this opportunity, acquiring around 25 of these properties.

The LTL market, distinct from the larger truckload market in its operational structure similar to hub-and-spoke models used by airlines, presents high entry barriers due to the scarcity and cost of suitable terminal real estate. According to Satish Jindel, president of SJ Consulting, the LTL market’s challenges and opportunities make acquisitions a practical growth strategy. “Since 1980, only two new LTL carriers have started, and acquiring existing operations remains the most feasible expansion path,” Jindel explained.

With a total market size of $52.3 billion last year, compared to the $280 billion truckload industry, the LTL sector offers a lucrative yet competitive landscape for companies like Knight-Swift as they navigate through the ongoing economic pressures and capacity imbalances in the broader logistics market.