Dive Brief:
- Knight-Swift expects beleaguered U.S. Xpress, which it acquired July 1, to achieve break-even operating results before interest expense in the first half of 2024, President and CEO Dave Jackson said on an earnings call Thursday.
- The parent company has already found $6 million in monthly cost savings for U.S. Xpress as 10 synergy teams from both brands continue working together, executives said.
- “We still target positive earnings accretion for 2024 and reach the $1 per share of earnings accretion milestone in 2026,” Jackson said.
Dive Insight:
Since the more than $800 million acquisition was announced in March, synergy teams at Knight-Swift and U.S. Xpress have been moving to turn around a business that had three quarters of operating losses.
Several initiatives have been underway, including a network buildout that has already established two terminals with more to come, Knight-Swift CFO and Swift Transportation President Adam Miller told investors this week.
“This will allow the U.S. Xpress team to develop better relationships with drivers, improve turnover, enhance safety, recruit in the local market, develop freight density and regional opportunities, and finally have financial accountability to a detailed P&L,” he said. “This is a significant change for U.S. Xpress.”
Knight-Swift’s strategy also includes removing intermediaries “that often prevent profitability for U.S. Xpress” and dealing directly with shippers, Jackson told investors.
“The revenue opportunities are not only in pure price, but in network strategy, freight selection, lane density, customer mix and cross-brand collaboration, not all of which require an improving market to facilitate progress,” he said.
Pain points have helped existing carriers in the past, with Knight-Swift benefiting from Central Freight Lines' bankruptcy filing and TFI International buying CT Transportation. U.S. Xpress didn't file for bankruptcy but had rounds of layoffs and posted operating losses from Q2 2022 through Q1 2023.
“Most of our focus is the over-the-road U.S. Xpress business that has not performed profitably for some time,” Jackson said. “The need for improvement at Total Transportation in Jackson, Mississippi, and the dedicated segment is less. However, we expect to see meaningful progress there, too.”
