Knight Transportation CEO says growing a business requires sacrifice

• Kevin Knight, founder of a Phoenix-based trucking giant, said growing a company requires sacrifice.
• Knight operates about 5,000 trucks today.
• The company is seeing positive economic trends.

Kevin Knight, the founder, CEO and chairman of Knight Transportation Inc., told a crowd of business leaders Thursday that growing a family operation into an industry giant requires sacrifice.

Knight, along with his brother Keith and cousins Randy and Gary, established the Phoenix-based trucking company in 1990, and took the company public in 1994.

"We really had to divert a lot of our attention from our families and into the business," he said. "We were gone a lot."

The business grew rapidly, and following an acquisition earlier this year of Barr-Nunn Transportation Inc. of Iowa, has a fleet of about 5,000 trucks. In the third quarter of this year, Knight reported profits of $25 million, a 67 percent increase from a year ago.

"We were always focused on bringing in the next 100 trucks, and then the next 100, and then the next 100," Knight said.

The families remain close and work together well, he said. Many family members joined Knight as he addressed the monthly meeting of the Economic Club of Phoenix, presented by W.P. Carey School of Business at Arizona State University.

Knight revealed last month that company President David Jackson will succeed Knight as CEO in January, while Knight will remain chairman.

Knight, his brother and cousins, all worked for Jerry Moyes, whose family established Swift Transportation as a trucking giant in Phoenix.

"We were very very fortunate to work for Jerry," Knight said of Moyes, who has been involved in other ventures such as the Phoenix Coyotes hockey team. "No matter what you may have read in the newspaper, he is a terrific guy."

He said the brothers and cousins learned from the mistakes of the trucking companies launched before them. They established the company about a decade after the Motor Carrier Act of 1980 deregulated the interstate trucking industry.

"It was maybe the way Southwest Airlines looked at it," he said. "We said, let's do things maybe a little bit different. Let's develop a model that allows us to compete on cost no matter what economic environment we end up in."

The best days on the job were bringing home the first truck (he and the family might have spent the night in it), making the first deliveries, and ringing the bell on Wall Street.

Worst days include the company's first accident (nobody was seriously hurt) and the day in 1993 Sol Price, founder of Price Club warehouse stores, called to tell him the company was merging with Costco and would be using their trucks.

That was just months ahead of Knight's initial public offering, and Price Club was the company's biggest customer, representing about 10 percent of the business.

"They didn't even give us an opportunity to maintain the business," Knight said. "I told (my wife) not to shop at Costco."

Eventually Knight won over Costco as a customer though, he said.

The trucking industry had a preview to the Great Recession, Knight said, with business prospects falling off sharply in late 2006, well before the rest of the nation began to suffer.

"I've got to tell you, we thought it would be better by 2010," he told moderator Jeff Cunningham, a professor of practice at the business school.

"When you are in trucking, you are affected by everyone's problems," Knight said. "There never is a hurricane that hits land in the U.S. that we are not intimately involved with."

He said economic indicators are picking up, especially with oil prices falling recently, which gives consumers more spending cash.

"We are seeing an ever improving economy," he said. "It is slow but sure. It just feels like things are getting better."