- The Federal Trade Commission (FTC) on Monday cleared the merger between Knight Transportation and Swift Transportation, allowing the two companies to close their deal likely this summer.
- The FTC’s early termination notice came less than a month after the companies’ merger announcement, indicating no competitive concerns could be found requiring further negotiation.
- The new Knight-Swift Transportation Holdings will operate both brands and create a $5 billion, top-5 trucking company based on total revenue.
The speedy approval of the two Phoenix-based companies’ merger shows just how fragmented the trucking industry is and the diminutive effect such consolidations are having on the market.
Antitrust regulators’ role is to ensure market competitiveness and protect consumer interests, and everything about the Knight-Swift merger indicates the move was made not for significant capacity gains, but for financial interests.
In a presentation following the merger announcement, executives highlighted Knight’s 85.3% 2016 operating ratio, compared to Swift’s 92.9% ratio. Together, they claimed, the companies’ 2016 ratio would have been 88.3%, already an improvement before synergies manifest. However, they also noted the two brands would continue to operate independently, and therefore have little effect on the driver force, Overdrive reported.
As a low-margin industry, the best companies in the trucking world are not always measured by capacity, but by management and customer satisfaction. For that reason, the two largest mergers and acquisitions in the industry have been led by smaller-revenue companies taking over large operators. XPO Logistics’ acquisition of Con-way and Knight’s merger with Swift both follow this trend.