Item 1A. Risk Factors
ITEM 1A. RISK FACTORS
While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. Our 2020 Annual Report in the section entitled "Item 1A. Risk Factors," describes some of the risks and uncertainties associated with our business. In addition to the risk factors set forth in our Form 10-K, we believe the following additional risks and uncertainties should be considered in evaluating our business and growth outlook:
Our acquisition of ACT presents certain additional risks to our business and operations.
On July 5, 2021, we acquired ACT, a leading LTL carrier that also offers dedicated contract carriage and ancillary services. The acquisition presents certain additional risks to our business and operations, including, among other things:
• prior to the acquisition of ACT, our management team had limited experience with LTL operations and therefore may be challenged in managing the LTL operations, particularly if there were a loss of the ACT management team;
• LTL operations are more capital intensive than truckload operations, including the need for additional terminals and types of equipment;
• LTL operations require more human capital than truckload operations, including the need for dock employees and maintenance technicians, both of which are difficult to recruit and retain given the tight labor market;
• potential adverse reactions or changes to business relationships resulting from the completion of the acquisition, including potential breakdown of alliances between ACT and its capacity providers that are needed to meet customer requirements; and
• increased workers' compensation incidence rates generally associated with LTL operations.
In addition to the risks regarding unionization set forth in our Form 10-K, the unionization of any of our employees, including within ACT’s LTL operations, could have a material adverse effect on our business, customer retention, financial condition, results of operations, and liquidity, and could cause significant disruption of, or inefficiencies in, our operations, because:
• restrictive work rules could hamper our ability to improve or sustain operating efficiency or could impair our service reputation and limit our ability to provide certain services;
• a strike or work stoppage could negatively impact our profitability and could damage customer and employee relationships;
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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.
• shippers may limit their use of unionized companies because of the threat of strikes and other work stoppages;
• unionization of any of our LTL operations could lead to pressure on our remaining LTL and truckload employees to unionize;
• collective agreements could result in material increases in wages and benefits; and
• an election and bargaining process could divert management’s time and attention from our overall objectives and impose significant expenses.
In addition, material differences in results as compared with those expected from the acquisition could arise due to those risks and uncertainties described in our Form 10-K Risk Factors, including, among other things, business disruption, operational problems, financial loss, technology and financial reporting and internal controls integration, legal liability to third parties and similar risks, any of which could have a material adverse effect on our business, customer retention, financial condition, results of operations, or liquidity.
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