Mergers and acquisitions in the transportation world are likely to pick up speed in 2012, as financing falls into place and “organic growth” hits a ceiling.
That’s the message from experts in the supply chain field such as Tompkins Associates, which predicts 2012 may be the biggest year for buyouts since 2007.
In the maritime shipping world, carrier losses linked to low rates and overcapacity could drive a round of consolidation, Peter Tirschwell warns in a recent column.
Nearly the reverse is true in trucking, where truckload and LTL rates are rising, tractor-trailer capacity is tight and equipment and labor costs keep climbing. For many truckers, however, buying the competition is the most cost-effective means of expansion, especially when freight demand is growing slowly.
Slow economic growth puts a low ceiling on “organic” growth for motor carriers, and rising capital and operating costs lower that ceiling a few more feet.
The fastest way for a motor carrier to grow, then, is not just to buy capacity, but customers. Trucking companies ultimately are shopping for shippers.
They’re also looking for “bolt-on” deals that quickly bring them more customers in a specific niche, whether that niche is a type of service or a territory or market.
Some recent examples from the past month:
* Diversified Canadian trucking group Contrans acquired dry bulk hauler Wilburn Archer Trucking;
* Trucking and logistics operator Walden Smokey Point expanded its flatbed operations by acquiring E.W. Wylie Trucking;
* Pacific Alaska Freightways added direct service to Kodiak, Alaska, to its portfolio by buying Southern Alaska Forwarding.
We’re likely to see more accretive acquisitions of this nature in 2012, as capital becomes readily available to companies with goodbalance sheets.