US truck giants look to consolidate market dominance

Freightliner semi with a Knight Transportation trailer.

Phoenix, Arizona — Knight-Swift Transportation has closed on the acquisition of US Xpress Enterprises after the purchase was approved by shareholders.

Based in Chattanooga, Tennessee, US Xpress generated approximately USD$2.2 billion in total operating revenue in 2022 while serving its blue-chip customer base through a network of around 14 facilities, primarily located across the eastern United States.

Market volatility and ongoing economic uncertainty, fuelled by the recent collapse of trucking enterprise Yellow, which filed for bankruptcy this week, following the layoffs of hundreds of nonunion employees, is seeing a realignment of the major players in the market.

US Xpress’ fleet includes approximately 7,200 heavy trucks and 15,000 trailers, including vehicles provided by an estimated 900 independent contractors.

The company’s workforce includes approximately 7,700 drivers, 300 maintenance technicians, and 1,900 non-driver employees.

The announcement by Knight-Swift Transportation follows Schneider National, another of the top tier fleets, acquiring West Bridgewater, Massachusetts-based M&M Transport Services.

A 500 truck and 1,900 trailer provider of transportation, intermodal and logistics services, M&M Transport provides custom solutions for the retail and manufacturing segments, including some Fortune 500 companies, from 12 locations in the Northeast, Midwest and Southwest.

More recently, Luminus Management LLC acquired Mexico-based carrier Jaguar Transportation, a former subsidiary of the bankrupt Celadon, in an all-cash stock purchase transaction.

The acquisition includes over 775 tractor-trailers and five freight facilities throughout Mexico, according to a news release.

Focused on cross-border trade with the US, Jaguar Transportation is based in Monterrey, Mexico.

In 2017 Knight merged with Swift Transportation to create a trucking giant valued at USD$5 billion. Still considered one of the biggest amalgamations in industry history, the two companies have maintained distinct brands and operations ever since.

“We are grateful for the efforts of so many who worked diligently to bring about such a significant transaction in the truckload industry,” said Knight-Swift CEO, Dave Jackson.

“Against the current backdrop of a particularly difficult business environment, the chance to add one of the largest brands in our industry, with significant opportunity to improve earnings, gain customers and reach more professional drivers, is a compelling part of our plan to drive higher highs and higher lows across successive truckload freight cycles.

“As we have engaged with more of the US Xpress organisation since the announcement, we have even more confidence that our combined efforts will lead to achievement of the profitability targets we communicated.

“Our cross-functional synergy teams made up of leaders from Knight, Swift, and US Xpress are off to a great start collaborating on plans to share best practices, improve operations and leverage economies of scale – and now they have the green light to fully engage.”

Knight-Swift management anticipates that consolidated second-quarter results will be lower than previously expected.

The decline in operating performance is largely driven by the full truckload market, where persistent soft demand has caused volumes and pricing to be under greater pressure than originally anticipated, while costs remain stable on a sequential basis.

This dynamic is expected to drive an estimated 1,100-1,200 basis point degradation in consolidated operating margins year-over-year for the quarter.

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