Market Pulse

North American logistics and transportation mergers & acquisitions heats up

Over the course of this past week, North America has been the focus of nearly $2bn worth of mergers and acquisitions activity. This brief window has seen game changing deals with the likes of Norbert Dentressangle’s acquisition of Jacobson Companies and XPO Logistics’ purchase of New Breed, not to mention the merger of TransForce and Contrans. Deals like these have the potential to change the nature of the markets in which they take place and to transform the business environment in which companies operate.

The reasons behind this apparent uptick in mergers and acquisitions seem to vary but perhaps an improving economy, fragmented trucking and logistics markets and opportunities in specific vertical industries are among the reasons for this activity. Take for example the three recent deals. Among the many benefits it is expected to achieve, Norbert Dentressangle’s acquisition of Jacobson Companies will allow the French company to expand into the growing US e-commerce market. In Europe, It has achieved success with such e-commerce contracts with ASOS, House of Fraser and Marks & Spencer. Jacobson Companies focuses heavily on the US domestic market with a network of warehouses across the country, 84% are dedicated and the rest are shared user facilities. Almost half of the business is focused on the mid-West with a quarter of revenue generated by transport management.

Meanwhile, in a fragmented logistics market, XPO Logistics can now boast the ability to provide complete end-to-end supply chain capability with its purchase of New Breed and lastly the TransForce and Contrans deal will make the huge trucking company, TransForce, even larger in a market that is seeing increasing regulations and declining drivers.

Indeed, it should not come as a surprise that the trucking industry has experienced a number of mergers & acquisitions this year. Increasing regulations, a shortage of drivers, and nearshoring all spell an environment ripe for consolidation. Previous to its Contrans acquisition TransForce snapped up Vitran and Transport America, further expanding its reach across Canada and into the US. A good move as cross-border continues to increase. Meanwhile, Roadrunner Transportation has been on its own acquisition spree with the likes of Unitrans International and Rich Logistics. Thanks to its numerous acquisitions, Roadrunner has now expanded its services to include less-than-truckload (LTL), truck-load (TL), intermodal, transportation management, warehousing and consolidation and international services.

Because of the issues surrounding the trucking industry, brokerage companies have also been appealing as acquisition targets. A recent example is that of Echo Global Logistics which acquired One Stop Logistics in May. One Stop is a non-asset provider of less-than-truckload and truckload solutions.

The US contract logistics market is not only highly fragmented but also ripe for the picking. XPO Logistics has acquired thirteen companies including white-glove delivery company, 3PD, intermodal provider Pacer and now a contract logistics provider, New Breed. Even though New Breed was described as a “jewel in the crown of contract logistics” in the acquisition press release, it is among many such companies that provides similar solutions. Companies such as XPO Logistics and ROAR Logistics are piecing together such companies to provide a one-stop shop for complete end-to-end solutions to rival the larger players such as DHL, Kuehne & Nagel and UPS. ROAR Logistics’ acquisition of Legend Transportation Group does just this adding less than truckload freight services and managed solutions to its expanding portfolio.

Numerous opportunities exist in the North American logistics and transportation markets. An improving economy, fragmented markets ripe for consolidation, the growth of e-commerce and specific vertical industry sectors all offer opportunities for companies to invest in this region.

Interested in learning more? Transport Intelligence (Ti) offers specialized consulting services for those companies interested in mergers & acquisitions. Also, Ti’s reports such as Global Contract Logistics and Global Freight Forwarding are available for purchase for those interested in further analysis on such markets.

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