Pacific Coast-based Gordon Trucking is pointing its business toward the East Coast. The Pacific, Wash.-based truckload carrier is acquiring Central U.S. truckload carrier Buske Lines of Edwardsville, Ill., extending its reach in the Midwest and the Northeast, bringing new customers, new trucks and new truck drivers.
It also extends a gradual post-recession consolidation taking place in the transportation and logistics world as financially sound operators flex financial muscle to add scale and reach.
The acquisition gives Gordon Trucking, which has 1,850 tractors, greater density in the U.S. Midwest and a foothold in the Northeast, which is largely new territory. Buske Lines also brings Gordon more than 100 additional truck drivers, an important gain in a tight driver market.
“We allowed all of their driving force to apply with Gordon, and as long as they met our standards, they were offered positions,” said Loren T. Shane, a spokesman for the $320 million company.
The Gordon-Buske deal is the latest in a string of acquisitions in trucking and logistics spurred by tight truck capacity and rising freight demand, as well as higher profits at some companies and rising operating costs across the industry. Companies are expanding their capacity not by purchasing new vehicles, but by acquiring other carriers lock, rolling stock and driver.
Merger and acquisition fervor has been building steam in the transportation industry all year, despite an increasingly stressed and weakened economy. Companies eager to sell or buy last year or in early 2011 are just as eager today, either to secure more capacity or to get out of a business they can’t grow or maintain.
More than half of the truckload carriers polled in a recent Transport Capital Partners survey said they would be interested in buying or selling their business. About 48 percent of the carriers said they want to buy other companies, while almost a quarter of the company executives said they might sell their own.
The TCP survey also found only 53 percent of carriers believe they are getting an adequate return on investment, despite recent rate hikes. That indicates a fair number of truckers see their companies becoming less viable as stand-alone businesses without the kind of rate increases they aren’t likely to win.
The consulting firm found 58 percent of truckload carriers with more than $25 million in annual revenue were looking to add capacity through acquisitions.
“The carriers are looking for partners to ‘tango’ with as volume and rate expectations are very positive,” said Richard Mikes, a TCP partner.
In recent months, Roadrunner Transportation Systems acquired M. Bruenger Trucking, a regional truckload carrier based in Wichita, Kan., and then acquired West Coast intermodal drayage operator The James Brooks Co. Deutsche Post DHL, the world’s largest logistics operator, purchased Standard Forwarding, a Midwestern less-than-truckload carrier, in June. Tampa-based long-haul and regional truckload carrier Integrated Freight acquired Cross Creek Trucking of Medford, Ore., in April.
And those are just a few of the asset-based acquisitions. Third-party companies such as Transplace, Echo Global Logistics and Hub Group also are buying competitors to build bigger networks that can deliver capacity. “We’re very active in looking at other strategic acquisitions,” George Abernathy, executive vice president and COO of Transplace, said after purchasing chemical logistics specialist SCO Logistics in April. “We’re looking at verticals where we don’t already have a broad footprint.”
Many of these deals differ from the big transportation mergers of the 1990s and 2000s in that they are aimed squarely at building density in specific regions or market niches. Gordon Trucking’s purchase of Buske Lines follows the pattern.
Gordon has been growing in the Midwest for several years, opening terminals in Green Bay, Wis., Indianapolis and St. Louis.
“We’re predominantly West Coast, but we have operations spanning the Midwest,” Shane said. Buske’s central location and its shipper base attracted Gordon. The customer list includes Anheuser-Busch and Procter & Gamble.
“They had five to seven companies they did most of their business with, and then several smaller companies, and most were new to us. We retained most of them.”
He said freight demand is still strong, despite the weakened economy. “We’re seeing growth firsthand,” Shane said. Gordon expects its revenue to increase about 19 percent this year to $380 million. “We’ve got credibility with our customers, and we’re able to offer additional capacity. The good trucks are moving right now.”