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UPS buying Coyote Logistics for US$1.8 billion to boost FTL services
THE world's largest courier company, United Parcel Service (UPS) will be spending US$1.8 billion to buy Chicago-based Coyote Logistics from private equity firm Warburg Pincus to expand its full-truckload (FTL) services, the latest deal in a rapidly consolidating logistics industry.
Coyote Logistics connects customers to its network of 35,000 trucking operators in North America and caters to the food and beverage, consumer goods, paper and packaging, industrial as well as retail markets, Reuters reported.
Freight brokers such as Coyote Logistics and XPO Logistics Inc. have reported rapid revenue growth in the past few quarters as the demand for trucks jumped due to widespread bottlenecks on rail networks.
"This deal shouldn't move the needle at UPS, but could support shares of smaller brokers near-term by driving further consolidation speculation," Susquehanna Financial Group analyst Bascome Majors wrote in a note, when Bloomberg reported of a possible UPS-Coyote Logistics deal.
The US freight market is estimated to be worth $300 billion, with full-truckload shipping accounting for just over half of that, according to logistics company G-Force Shipping.
Third-party logistics providers have recently been snapped up in a series of deals, including XPO Logistics' purchase of France-based Norbert Dentressangle SA and Goldman Sachs' acquisition of Neovia Logistics LLC.
"The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments," UPS chief executive David Abney said.
UPS has worked with Coyote Logistics in the past to add capacity during peak holiday shipping seasons.
Coyote Logistics, which reported revenue of $2.1 billion last year, is the sixth-largest US truckload services provider, according to research firm Armstrong & Associates Inc.
Coyote Logistics connects customers to its network of 35,000 trucking operators in North America and caters to the food and beverage, consumer goods, paper and packaging, industrial as well as retail markets, Reuters reported.
Freight brokers such as Coyote Logistics and XPO Logistics Inc. have reported rapid revenue growth in the past few quarters as the demand for trucks jumped due to widespread bottlenecks on rail networks.
"This deal shouldn't move the needle at UPS, but could support shares of smaller brokers near-term by driving further consolidation speculation," Susquehanna Financial Group analyst Bascome Majors wrote in a note, when Bloomberg reported of a possible UPS-Coyote Logistics deal.
The US freight market is estimated to be worth $300 billion, with full-truckload shipping accounting for just over half of that, according to logistics company G-Force Shipping.
Third-party logistics providers have recently been snapped up in a series of deals, including XPO Logistics' purchase of France-based Norbert Dentressangle SA and Goldman Sachs' acquisition of Neovia Logistics LLC.
"The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments," UPS chief executive David Abney said.
UPS has worked with Coyote Logistics in the past to add capacity during peak holiday shipping seasons.
Coyote Logistics, which reported revenue of $2.1 billion last year, is the sixth-largest US truckload services provider, according to research firm Armstrong & Associates Inc.
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