Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
In one fell swoop, Kevin P. Knight has become king of the truckload industry hill.
Knight's company, Phoenix-based Knight Transportation Inc., made history today by merging with hometown rival Swift Transportation Co. in a $6 billion all-stock deal that creates the nation's biggest truckload company. The transaction is the largest trucking deal ever, doubling Greenwich, Conn.-based XPO Logistics Inc.'s $3 billion purchase of trucking and logistics firm Con-way Inc. in 2015. The Knight-Swift deal, which has been approved by both boards, is still subject to shareholders' approvals. Knight said in a statement that certain unidentified shareholders have already voiced support for the deal. It is expected to close sometime in the third quarter.
The companies will conduct their daily operations independently and will maintain separate brands, moves designed to avoid the difficult process of integrating and re-branding two such large firms. However, economies of scale at the corporate level should generate pre-tax savings of $15 million in the second half of the year, and a combined $250 million in 2018 and 2019, Knight Transportation said in a statement.
Kevin Knight, 60, who was Knight's CEO from 1993 to 2014 and has been its executive chairman since January 2015, will become executive chairman of Knight-Swift Transportation Holdings Inc., as the company will be known. Knight will also become president of the Swift operating entities. David Jackson, Knight's CEO, will assume the same role with the new entity, while Knight CFO Adam Miller will become the new company's CFO. The new board will be comprised of all current Knight directors and four current Swift directors.
From an accounting standpoint, Knight will be considered the acquiring carrier. Swift shareholders will own 54 percent of the shares in the new entity.
The odd man out is Richard Stocking, the highly regarded Swift president and CEO, who will leave the company after the deal closes. At 46, Stocking was part of the next generation of trucking CEOs that is ready take over from their aging founders. Last September, Stocking became co-CEO along with Swift Founder Jerry Moyes. However, Stocking immediately assumed all day-to-day responsibilities, effectively forcing Moyes out, according to John G. Larkin, transport analyst for Stifel, an investment firm. This didn't sit well with Moyes, Larkin said.
Stocking's departure resulted from a lost power struggle with Moyes, who still wields enormous influence, Larkin said. "People often underestimate (Moyes') business savvy and his access to top-notch advisors. Plus, he values loyalty highly," according to Larkin. If Moyes felt betrayed by Stocking, "the game was over," he said.
Moyes, 72, will serve as a non-employee senior advisor to Kevin Knight and Gary Knight, Kevin's cousin and one of four Knight family members who founded the company in 1990. Moyes' continued involvement with the new entity reflects the companies' long, interlocking history. Randy Knight, another cousin of Kevin Knight, helped three members of the Moyes family, including Jerry, grow Swift's business to about $25 million by the mid-1980s before going on to co-found Knight Transportation. Kevin Knight worked for Swift between 1975 and 1984, and again from 1986 to 1990. During those intervals, he was executive vice president and president of Cooper Motor Lines Inc., a Swift subsidiary.
Jerry Moyes took his namesake company private in 2007, and then took it public in 2010.
The Knight-Swift deal creates a $5.1 billion transportation and logistics giant with footprints in dry van and refrigerated transport, dedicated contract carriage, cross-border Mexico and Canada operations, truck brokerage, and intermodal. The fleet will consist of approximately 23,000 tractors and 77,000 trailers. The combined company will have about 28,000 employees. Swift, with about 18,000 tractors, is the nation's largest trucking company based on fleet size.
Benjamin J. Hartford, transport analyst for Robert W. Baird & Co. Inc., an investment firm, said he was bullish on the deal because it combines Swift's scale in truckload and intermodal with Knight's history of strong operating performance and return on invested capital. For 2016, Knight reported an operating ratio—a measure of revenue versus expenses—of 85.3, up from 82.6 in 2015. Knight blamed the higher 2016 ratio on increased net fuel expense, lower gains on equipment sales, and rising driver-related costs.
The truckload industry will spend much time in the near term figuring out the deal's ramifications, according to Eric Fuller, CEO of US Xpress Enterprises Inc., a large, privately held truckload carrier based in Chattanooga, Tenn. Speaking at the NASSTRAC annual shippers conference in Orlando today, Fuller said the deal, in and of itself, may not reshape the industry landscape. "Whether you operate 7,000 trucks or 20,000 trucks, it's probably not going to make much of a difference," he said.
The bigger question, according to Fuller, is whether the merger whets the public markets' appetite for more consolidation among big truckload carriers in a $600 billion segment that remains highly fragmented. On Friday, Schneider National Inc., the nation's largest, privately held trucking company and a huge player in the truckload space, began trading publicly, raising about $550 million in its initial public offering, and valuing the company at about $3.3 billion.
"We will see more consolidation because it is in the economic self-interest of every truckload carrier to gain the benefits of scale," Benjamin Gordon, who heads BG Strategic Advisors LLC, a Palm Beach, Fla., transport and logistics mergers-and-acquisitions firm said in an e-mail.
Fuller lauded Knight and Swift for deciding to operate independently. "It is tough to marry companies in this industry, especially two companies that are this big," he said. "I know that we would run separate if we were in the market for an acquisition."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.