Knight Transportation, Inc. and Swift Transportation Company plan to merge, according to an April 10 announcement by the two publicly held companies. Knight-Swift Transportation Holdings Inc., the name of the new entity, will represent the industry’s largest full truckload company. The transaction is expected to close by the third quarter of 2017, and is likely to impact trucking panel counsel opportunities.
Knight-Swift combined operations will include 23,000 tractors, 77,000 trailers, and 28,000 employees. The new truckload transportation company will have $5 billion in annual revenue and a “Top 5” truckload presence in dry van, refrigerated, dedicated, cross-border Mexico and Canada, as well as a significant presence in brokerage and intermodal.
From an operating perspective, Swift and Knight will share common ownership and best practices while maintaining separate brands with separate trucking operations, separate service inner-networks, and separate drivers.
One of the goals of the merger is to “identify significant realizable synergies that would create value for both sets of stockholders,” according to Knight Executive Chairman, Kevin Knight. Cost synergies are projected to emerge quickly, with estimates of $15 million in the second half of 2017, $100 million in 2018 and $150 million in 2019. The identification of “purchasing economies” is one way the companies expect to reduce expenses, along with shared best practices and improved yields.
The new company will continue to be based in Phoenix, Arizona.
Knight Transportation, Inc., a public company headquartered in Phoenix, AZ, is a provider of multiple truckload transportation services using a nationwide network of 29 regional service centers in the U.S. to serve customers throughout North America. Service centers are located in AZ, CA, CO, FL, GA, ID, IL, IN, KS, LA, MN, MS, NC, NV, OH, OK, OR, PA, TN, TX, UT, WA and WI. Knight operates one of the country’s largest tractor fleets, and also contracts with third-party equipment providers.
Swift Transportation, based in Phoenix, Arizona, operates a tractor fleet of approximately 18,000 units driven by company and owner-operator drivers. The company operates more than 40 major terminals positioned near major freight centers and traffic lanes in the U.S. and Mexico. Swift offers general, dedicated and cross-border U.S. / Mexico / Canada service, temperature-controlled, flatbed and specialized trailers, in addition to rail intermodal and non-asset based freight brokerage and logistics management services.
Trucking Panel Counsel Programs
Many trucking companies maintain their own trucking panel counsel program with outside counsel, as part of a self-insured retention (SIR) program. This is in addition to trucking panel counsel programs maintained by insurers, creating additional opportunities for law firms that serve the trucking industry.
The Trucking Industry Defense Association (TIDA) is the leading industry group in this field, bringing together 1,600 insurance, legal and trucking industry professionals in both the United States (U.S.) and Canada. A TIDA goal is to reduce loss costs to the trucking industry.
“Nuclear verdicts” in trucking accidents have caused leading insurers AIG and Zurich to pull back from providing truck insurance in the for-hire trucking fleet market, according to an article we recently published titled, “AIG and Zurich Throttle Back on Truck Insurance.”
The combination of Knight and Swift is a reflection of the consolidation that is also taking place across the insurance industry. Although it is too early to tell, it would seem likely that the synergies promised to shareholders will force a review of overlapping administrative areas. Like the recent Ace / Chubb merger, Knight and Swift are likely to be comparing notes on integrating the litigation management functions across the two tucking giants.
Law firms that are on the panel for either Knight or Swift will want to stay in close touch with their clients to monitor the situation. Other trucking panel counsel programs may also be subject to more competition, as at-risk panel members with either Knight or Swift look to other motor carriers for fresh revenue streams.
Of course, this is also a good reason to actively seek new panel opportunities. As we say, never stop marketing!
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Disclaimer: Information in this article is taken from various company and industry news sources, and is believed to be reliable.