Specialist
Former VP, Finance at Swift Transportation Co
Agenda
- US trucking industry trends
- Knight-Swift Transportation's (NYSE: KNX) category costs and likely impact on margins
- Competitive breakdown by product segment
- US trucking industry consolidation prospects
- 2019-20 outlook
Questions
1.
What is your updated perspective on the US trucking and logistics sector, pulling out a few of the key themes or trends that have developed over this past year?
2.
It appears that the market expects spot truck pricing to firm up in H2, allowing for stabilised operating performance headed into 2020. Is that in line with what you would expect, or do you have deviating feelings from that?
3.
Can you explain the relationship between spot rates and brokerage margins, and why they're oppositely correlated?
4.
Would you say that rate concessions have been common across the board, or are they more one-off occurrences? Can you elaborate on what it's been like negotiating pricing on the contract market?
5.
Have there been any situations where you've been able to increase pricing, or would you expect that there have been incidences where firms have been able to increase pricing throughout any of the market?
6.
Overall, do you feel that concerns about the peaking truckload cycle are being overblown? Do you have any thoughts on where we could be in a longer-term demand cycle?
7.
Is the discussion about the ELD [electronic logging device] exemption – for small carriers – basically dead at this point, or is there any way that could be appealed?
8.
Regarding the Class 1 railroad market, with precision railroading taking place as a paradigm shift in the railroading market, does that guarantee that they will get more volume in your experience? How does that dynamic work?
9.
What are your thoughts on Knight-Swift’s recent overall performance, and the company reducing its earnings guidance?
10.
Knight-Swift has kept its networks independent of one another. Can you explain why that would be, and if there are diseconomies of scale when truckload service centres get too large?
11.
How should we assess continued cost savings in the form of equipment and part purchases, fuel and insurance? Two years in at this point, have all those synergies and buying power been realised, or are costs likely to continue decreasing significantly?
12.
Knight-Swift has struggled in managing the profitability of Swift's refrigerated segment. Can you walk through some of the nuances and challenges of that market?
13.
Structurally, there are some inherent challenges for a larger carrier. How does Knight-Swift rationalise that business segment? Is there a possibility that it would divest from that?
14.
I understand the company’s current operating ratio is around 88.6. What are your thoughts on the progress so far? With your knowledge of Knight's best-in-class tactics, how much lower do you think that operating margin could go?
15.
Where is Knight-Swift in the integration process? What one or two strategic objectives do you think it should be focused on as a company?
16.
What are your thoughts on longer-term trend, and the timeline reality and effects of autonomous trucks?
