Dive Brief:
- Knight-Swift Transportation Holdings’ Q2 operating income fell 32.5% year over year to $63.5 million, the company said in its Q2 earnings report Wednesday.
- Despite growing revenue 18.9% from a year earlier, a $12.5 million auto liability claim settlement from 2020 tanked the carrier’s quarterly operating income.
- The setback hasn’t kept executives from looking ahead, as they pointed to a stabilizing freight market and possible expansion opportunities for its LTL segment. If the company finds a deal to bolster that business “we’ll be very quick to pull the trigger on that,” CEO Adam Miller said on a July 23 call with analysts.
Dive Insight:
Knight-Swift’s LTL business saw revenue gains of 15.1% YoY revenue gains. Miller is encouraged by the segment’s growth and said he believes there is opportunity to seize additional market share if the carrier can fill gaps in its national LTL network, primarily in the Northeast and Southwest.
Scale in all its segments, including its truckload and logistics businesses, creates value sought by “larger customers who only like to deal with the largest players,” Miller said.
The carrier has established relationships in its truckload business, but Miller said many of those shippers haven’t tapped Knight-Swift’s LTL service because it lacked nationwide coverage.
Knight-Swift, along with LTL competitors XPO, Estes Express Lines and Saia have been actively reopening terminals acquired through the Yellow Corp. bankruptcy auction.
Miller said the company is on pace to open 38 locations this year, which includes more than two dozen former Yellow leased and owned terminals Knight-Swift acquired through the auction. The expansion will add over 1,000 doors to its network, a 22% increase since January, he said.
Miller noted that as the company’s LTL unit grows, it will create opportunities for its truckload business. The segment reported a 33% YoY revenue gain, thanks mostly to its acquisition of U.S. Xpress Enterprises.
“We expect these investments will bring opportunities to service additional freight and customers,” Miller said.
Miller did not indicate an LTL deal was imminent, but he said he hoped one could happen in the next year.
“I think we’d be disappointed if weren’t able to get a transaction, at least one transaction to help fill in some of the gaps in those markets,” the CEO said.
