Dive Brief:
- Knight-Swift Transportation Holdings’ LTL portfolio might get its national in-house footprint by acquisition or organic growth, CEO Adam Miller said at a supply chain conference, but his comments suggested that the latter might be more likely.
- In contrast to a TL acquisition, LTL merger and acquisition strategy calls for syncing companies on one system and developing a single network, Miller said Monday during a live video interview for SMC³ Jump Start in Atlanta and Bloomberg’s Talking Transports podcast.
- “So right now we're kind of taking a breather as we, you know, develop some density in the terminal network that we have currently,” Miller said, adding that they’re also not wanting to overextend their capital following rapid growth in their LTL network in recent years.
Dive Insight:
Miller’s comments gave further direction to what the company has given on how it could complete its vision for completing its network.
While the CEO has maintained a dual approach of both M&A and organic growth as future possibilities, Miller said Monday he feels more confident with organic growth than he did in the past.
“A few years ago I would have said most likely it’s going to be an acquisition,” he said. “We’ll still look at M&A as a potential opportunity” but there are risks that come with that approach, Miller added.
Miller also suggested that combining LTL networks provides more upside than doing so in the TL sector. He noted that customers want one progressive rotating order number and prefer not to interline.
He likened a merged network to open-heart surgery, a risky endeavor that should be done selectively.
The trucking giant recently merged businesses in both modes, switching LTL brands to AAA Cooper Transportation and a TL brand, Abilene Motor Express, to Swift Transportation. Brand unity and recognition contributed to the changes, and the Abilene shift also involved a lot of overlap of customers, Miller said on a Q4 earnings call.
“Our entry into the LTL industry and subsequent expansion over the past few years is just the beginning of what we believe will be a multiyear journey with an attractive runway for reinvesting free cash flow towards improving revenues, margin and earnings stability,” Miller said on the earnings call.
