Dive Brief:

• Knight Transportation on Friday bought Richmond, Virginia-based Abilene Motor Express (AME), adding $100 million in revenues to its portfolio, according to a Securities and Exchange Commission filing.
• Taking place less than a year since Knight Transportation merged with its Phoenix, Arizona-based rival, Swift Transportation, the deal suggests the U.S.'s fifth largest carrier may be looking to expand further, according to The Wall Street Journal.
• If approved, the purchase would add about 400 "late-model" tractors, 1,000 dry vans and 275 refrigerated trailers to Knight's nationwide fleet, Freight Waves reports.

Dive Insight:

The latest deal may not be a mega-merger — AME does not even list on Transport Topic's top 100 for-hire carriers — but it may still signal the start of a new wave of acquisitions in the truckload market. The Wall Street Journal notes this deal is the largest seen since the Knight-Swift mega-merger in April 2017.

In fact, the industry is ripe for consolidation in 2018. Faced with a capacity crunch, carriers have an incentive to find ways to boost their own fleet supply. Truck orders are one way to do this, but traditionally the industry has turned to buying competing carriers for their brand and assets as the quickest route to expansion.

This year, however, businesses small and large have an added incentive: the tax law passed late last year added a provision allowing so-called "pass-through" entities to deduct 100% of used equipment purchases, up to $1 million a year, through 2022, Commercial Carrier Journal reports. Given the deduction cap, this new rule encourages companies like Knight-Swift to buy smaller carriers, where the deduction benefits could prove advantageous.

In the case of Knight Transportation, buying AME provides an additional strategic advantage. A map of Knight-Swift's combined operations shows the Mid-Atlantic — from Maryland to North Carolina — is one of the few regions where only Swift has a major presence. Although the two carriers are owned by a single holding company, the brands still operate independently.

If past is prelude and further acquisitions follow, carriers in similarly "weak" markets, such as the Northeast or the New Mexico to Oklahoma corridor, may be in the spotlight. 

Rumors of the next wave of trucking acquisitions have been circling for over a year, but to little avail. XPO Logistics, known for its acquisition sprees, has repeatedly stated it is in the market for new deals.

Whether this deal proves to be the smoking gun, or not, the market appears ripe for further consolidation.