Knight-Swift Buys Abilene Motor Express

Knight-Swift Buys Trucker Abilene Motor Express
Purchase brings 400 trucks and signals the U.S. leader in truckload transport may be back in the market for more acquisitions

DAT Solutions said spot prices in Knight-Swift’s truckload freight market have increased by nearly a third from a year ago. PHOTO:ASSOCIATED PRESS
By
Paul Page
March 16, 2018 1:57 p.m. ET
1 COMMENTS
The biggest truckload carrier in the U.S. appears to be back in the market for acquisitions.
Knight-Swift Transportation Holdings Inc. KNX 0.75% said Friday it is acquiring Richmond, Va.-based Abilene Motor Express for an undisclosed sum, bringing more capacity under the company’s control as strong shipping demand in the U.S. is driving up freight rates and carrier earnings.
The buy in the first for Phoenix-based Knight-Swift since Knight Transportation completed its purchase of Swift Transportation last September, marking the biggest consolidation in several years in U.S. trucking. Before the purchase, Swift was the largest carrier in the truckload market, in which carriers haul full loads on trucks on long distances for a single customer, and Knight was No. 2.
The combined business now holds about 2% of the highly fragmented market, according to estimates by the SJ Consulting research group, which said the biggest 25 carriers by revenue split only 13% of the market.
Abilene brings Knight-Swift a business that includes 400 trucks and an estimated $100 million in annual revenue. Knight-Swift said in a securities filing that the business has an operating ratio “in the low 90s,” indicating its operations are profitable.
KeyBanc Capital Markets wrote in a research report Friday that the buy would add an estimated $0.02 to $0.03 per share to Knight-Swift earnings. It also signals, KeyBanc wrote, the carrier is potentially in the market “for additional tuck-in acquisitions.”
The trucking market has been growing rapidly as a robust U.S. economy has spurred shipping demand, leaving capacity for long-haul services tight and pushing companies to pay more to move goods.
DAT Solutions LLC said the national average spot market rate for vans, the most common type of truck transport, was $2.13 per mile, down 11 cents from January but about 52 cents per mile higher than it was a year ago.