- Knight-Swift, through one of its subsidiaries, acquired 100% of RAC MME, the parent company of Midwest Motor Express and Midnite Express, for $150 million cash, the companies said in press releases Monday.
- Midwest Motor Express and Midnite Express are referred to as one entity, MME. MME is a 100-year-old business headquartered in Bismarck, North Dakota, that provides LTL, TL, and specialized and international logistics transportation services across the upper midwest and northwest regions of the U.S.
- "The MME regional footprint complements our current southeastern and midwestern LTL presence," alongside its acquisition of AAA Cooper in July, Knight-Swift said. "The MME acquisition reflects progress on our ongoing commitment to building a nationwide LTL footprint, leading to the further diversification of our revenue streams."
High trucking rates have propelled M&A in the industry as 2021 comes to a close. Big fleets are shopping for smaller ones that would diversify their services and expand geographic coverage, equipment and even the number of drivers on payroll.
Knight-Swift said it is acquiring MME's 30-plus service centers with about 800 doors, as well as some 800 employees.
"Less-Than-Truckload is an integral part of our nation's supply chain, and we had deep conviction in the industry's tailwinds supporting this segment of logistics transportation," Nicholas Antoine, co-founder and a managing partner at Red Arts Capital, said in a press release. Red Arts Capital is the private equity firm from which Knight-Swift acquired RAC MME.
The rise of e-commerce increased the strategic importance of LTL services. Shipments that once may have required one TL move are being broken up into multiple hauls. LTLs with vast networks have an advantage in the market, as they're able to get closer to consumers.
Knight-Swift, which generates the most revenue of all U.S. TL dedicated carriers, entered the LTL market in July with the acquisition of AAA Cooper. AAA Cooper ranks 15th on the list of top LTLs; MME ranks 26th.
"MME is our next step toward a nationwide LTL network," Knight-Swift CEO Dave Jackson said in a press release. "MME and [AAA Cooper] have minimal regional overlap, and we expect they will be a benefit to one another."
The importance of having a diverse portfolio of business is one of the many lessons fleets have learned during the pandemic. As consumer habits changed, firms that could change along with them kept trucks moving, and those who could not were sidelined.
Knight-Swift has diversified its offerings since 2019
TFI and Werner announced acquisitions last month to bolster diversification. TFI bought reefer company D&D Sexton, which it plans to roll into its CFI brand. Werner bought a last-mile company known as NEHDS.
Diversification plays a role in Werner's journey to return to at least mid-single-digit revenue growth and double-digit earnings growth, CEO Derek Leathers said on that call.
"To do that, you have to have a portfolio that is structured in a way that is more diversified, that [has] more that customers can buy, and we can meet them where their needs are — ... one that can survive the ups and downs and cyclicality of the one-way market," Leathers said.