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."
Fruit company McDougall & Sons is running a tighter ship these days, thanks to an automated material handling solution from systems integrator RH Brown, now a Bastian Solutions company.
McDougall is a fourth-generation, family-run business based in Wenatchee, Washington, that grows, processes, and distributes cherries, apples, and pears. Company leaders were facing a host of challenges during cherry season, so they turned to the integrator for a solution. As for what problems they were looking to solve with the project, the McDougall leaders had several specific goals in mind: They wanted to increase cherry processing rates, better manage capacity during peak times, balance production between two cherry lines, and improve the accuracy and speed of data collection and reporting on the processed cherries.
RH Brown/Bastian responded with a combination of hardware and software that is delivering on all fronts: The new system handles cartons twice as fast as McDougall’s previous system, with less need for manual labor and with greater accuracy. On top of that, the system’s warehouse control software (WCS) provides precise, efficient management of production lines as well as real-time insights, data analytics, and product traceability.
MAKING THE SWITCH
Cherry producers are faced with a short time window for processing the fruit: Once cherries are ripe, they have to be harvested and processed quickly. McDougall & Sons responds to this tight schedule by running two 10-hour shifts, seven days a week, for about 60 days nonstop during the season. Adding complexity, the fruit industry is shifting away from bulk cartons to smaller consumer packaging, such as small bags and clamshell containers. This has placed a heavier burden on the manual labor required for processing.
Committed to making its machinery and technology run efficiently, McDougall’s leaders decided they needed to replace the company’s simple motorized chain system with an automated material handling system that would speed and streamline its cherry processing operations. With that in mind, RH Brown/Bastian developed a solution that incorporates three key capabilities:
Advanced automation that streamlines carton movement, reducing manual labor. The system includes a combination of conveyors, switches, controls, in-line scales, and barcode imagers.
A WCS that allows the company to manage production lines precisely and efficiently, with real-time insights into processing operations.
Data and analytics capabilities that provide insight into the production process and allow quick decision-making.
BEARING FRUIT
The results of the project speak for themselves: The new system is moving cartons at twice the speed of the previous system, with 99.9% accuracy, according to both RH Brown/Bastian and McDougall & Sons.
But the transformational benefits didn’t end there. The companies also cite a 130% increase in throughput, along with the ability to process an average of 100 cases per minute on each production line.
Artificial intelligence (AI) and the economy were hot topics on the opening day of SMC3 Jump Start 25, a less-than-truckload (LTL)-focused supply chain event taking place in Atlanta this week. The three-day event kicked off Monday morning to record attendance, with more than 700 people registered, according to conference planners.
The event opened with a keynote presentation from AI futurist Zack Kass, former head of go to market for OpenAI. He talked about the evolution of AI as well as real-world applications of the technology, furthering his mission to demystify AI and make it accessible and understandable to people everywhere. Kass is a speaker and consultant who works with businesses and governments around the world.
The opening day also featured a slate of economic presentations, including a global economic outlook from Dr. Jeff Rosensweig, director of the John Robson Program for Business, Public Policy, and Government at Emory University, and a “State of LTL” report from economist Keith Prather, managing director of Armada Corporate Intelligence. Both speakers pointed to a strong economy as 2025 gets underway, emphasizing overall economic optimism and strong momentum in LTL markets.
Other highlights included interviews with industry leaders Chris Jamroz and Rick DiMaio. Jamroz is executive chairman of the board and CEO of Roadrunner Transportation Systems, and DiMaio is executive vice president of supply chain for Ace Hardware.
Jump Start 25 runs through Wednesday, January 29, at the Renaissance Atlanta Waverly Hotel & Convention Center.
The new cranes are part of the latest upgrades to the Port of Savannah’s Ocean Terminal, which is currently in a renovation phase, although freight operations have continued throughout the work. Another one of those upgrades is a $29 million exit ramp running from the terminal directly to local highways, allowing trucks direct highway transit to Atlanta without any traffic lights until entering Atlanta. The ramp project is 60% complete and is designed with the local community in mind to keep container trucks off local neighborhood roads.
"The completion of this project in 2028 will enable Ocean Terminal to accommodate the largest vessels serving the U.S. East Coast," Ed McCarthy, Chief Operating Officer of Georgia Ports, said in a release. "Our goal is to ensure customers have the future berth capacity for their larger vessels’ first port of calls with the fastest U.S. inland connectivity to compete in world markets."
"We want our ocean carrier customers to see us as the port they can bring their ships and make up valuable time in their sailing schedule using our big ship berths. Our crane productivity and 24-hour rail transit to inland markets is industry-leading," Susan Gardner, Vice President of Operations at Georgia Ports, said.
It appears to have found that buyer in Aptean, a deep-pocketed firm that is backed by the private equity firms TA Associates, Insight Partners, Charlesbank Capital Partners, and Clearlake Capital Group.
Through the purchase, Aptean will gain Logility’s customer catalog of over 500 clients in 80 countries, spanning the consumer durable goods, apparel/accessories, food and beverage, industrial manufacturing, fast moving consumer goods, wholesale distribution, and chemicals verticals.
Aptean will also now own the firm’s technology, which Logility says includes demand planning, inventory and supply optimization, manufacturing operations, network design, and vendor and sourcing management.
“Logility possesses years of experience helping global organizations design, build, and manage their supply chains” Aptean CEO TVN Reddy said in a release. “The Logility platform delivers a mission-critical suite of AI-powered supply chain planning solutions designed to address even the most complex requirements. We look forward to welcoming Logility’s loyal customers and experienced team to Aptean.”
Netstock included the upgrades in AI Pack, a series of capabilities within the firm’s Predictor Inventory Advisor platform, saying they will unlock supply chain agility and enable SMBs to optimize inventory management with advanced intelligence.
The new tools come as SMBs are navigating an ever-increasing storm of supply chain challenges, even as many of those small companies are still relying on manual processes that limit their visibility and adaptability, the company said.
Despite those challenges, AI adoption among SMBs remains slow. Netstock’s recent Benchmark Report revealed that concerns about data integrity and inconsistent answers are key barriers to AI adoption in logistics, with only 23% of the SMBs surveyed having invested in AI.
Netstock says its new AI Pack is designed to help SMBs overcome these hurdles.
“Many SMBs are still relying on outdated tools like spreadsheets and phone calls to manage their inventory. Dashboards have helped by visualizing the right data, but for lean teams, the sheer volume of information can quickly lead to overload. Even with all the data in front of them, it’s tough to know what to do next,” Barry Kukkuk, CTO at Netstock, said in a release.
“Our latest AI capabilities change that by removing the guesswork and delivering clear, actionable recommendations. This makes decision-making easier, allowing businesses to focus on building stronger supplier relationships and driving strategic growth, rather than getting bogged down in the details of inventory management,” Kukkuk said.