Editorial: Industry Consolidation Warming Up

This Editorial appears in the April 17 print edition of Transport Topics. Click here to subscribe today.

With the Ringling Bros. and Barnum & Bailey Circus closing down “the greatest show on Earth,” it appears that truckload executives and investors are pitching in to fill the void.

There will be no exotic animal acts on flatbeds or acrobats shot out of cannons, but stock analysts are saying the Knight-Swift deal announced last week (story, p. 1) is but the opening salvo of the great truckload mergers and acquisitions-palooza of 2017.

Swift Transportation Co. and Knight Transportation Inc., both Phoenix-based carriers, will merge through an all-stock transaction to form Knight-Swift Transportation Holdings Inc. The company should generate more than $5 billion in annual revenue working in dedicated contract carriage, refrigerated transportation, intermodal and brokerage in addition to basic truckload work.

Swift and Knight are Nos. 6 and 29, respectively, on our Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada, with Swift the largest truckload company on the list. While this merger would create a very large corporation, Knight-Swift will in no way dominate the truckload industry, which has more than $360 billion in annual revenue, according to American Trucking Associations figures.

The analyst reports that fill our inbox say we could be approaching interesting times for truckload, which is constantly searching for drivers. Added to that is an anticipated improvement in manufacturing and construction, which are big customers of trucking, and a decrease in driver productivity because of the coming federal rule insisting on electronic logging devices.

Even if these changes are only incremental, the stock pickers say, established truckload carriers could find they are very popular and courted vigorously for their services.

Prior to last week’s announcement, Schneider and flatbed specialist Daseke Inc. joined the ranks of publicly traded truckload carriers, and Canada’s TFI International re-established Contract Freighters Inc. from XPO Truckload to pair with Transport America, which it already owned.

At the Transportation Intermediaries Association meeting, we heard that private equity firms and other investors are well capitalized and eager to buy, in general, and some of them have their eyes on transportation firms (see story, p. 11).

Predicting the North American economy with certainty is a daunting task, but we expect to be very busy over the next 18 months, or so, reporting on changes in the transportation landscape and who its major players are.

Trucking has gone through waves of consolidation in the past, and this has the makings of yet another round.

We might need a big top and three rings to contain the activity.