Trucking operator Saia didn’t have to look far for a logistics company to buy — Robart Transportation was only about 10 miles away in Duluth, Ga.
By acquiring the $12 million brokerage and logistics operator, the $1 billion less-than-truckload carrier bought a small foothold in the lucrative logistics market.
Saia also joined several other transportation companies pushing ahead with mergers and acquisitions to expand their service portfolios and capacity.
Acquisitions are trending up, according to Dow Jones VentureSource, which reports 110 U.S. venture-backed companies were acquired in the second quarter.
Those deals raised a total of $13.6 billion, Dow Jones VentureSource said.
That’s a slight uptick from the first quarter, when the Dow Jones unit reported 98 mergers and acquisitions, but a 6 percent decline from the year-ago quarter.
A slower growing economy may depress some M&A activity year-over-year, but for those with the cash or financial backing, 2012 is proving a good time to buy.
The technology industry led the M&A activity in the second quarter. Transportation deals tend to be small by comparison, but there were plenty of them.
The largest transportation transaction so far this year would be, of course, UPS’s $6.6 billion cash bid for TNT Express, which even dwarfs IT deals such as Dell's $2.4 billion purchase of Quest Software.
Back in the U.S., Arkansas Best, parent of LTL carrier ABF Freight System, last month bought Panther Expedited Services for $180 million, including $80 million in cash.
Roadrunner Transportation, an LTL and truckload operator, is expanding its truckload, intermodal and logistics business through multiple acquisitions.
Celadon Group, parent of truckload carrier Celadon Trucking, is buying smaller truckload operators primarily to increase its pool of qualified truck drivers.
And XPO Logistics acquired freight broker Continental Freight Services for $3.4 million, the first in a series of acquisitions valued at about $250 million.
One reason it’s a good time to buy asset-based and non-asset transport operators is that so many people want to sell companies, especially smaller operators.
Rising operating costs are putting pressure on smaller trucking companies, especially those that lack the market clout to win rate increases from customers.
Many smaller trucking operators don't even have the cash or access to capital needed to replace aging truck equipment.
Smaller non-asset logistics companies with the potential to grow quickly are being purchased by larger logistics and trucking operators looking to expand.
“We’ll take a $22 million business and over a couple of years turn it into a $50 million or $70 million business,” said Bradley S. Jacobs, chairman and CEO of XPO.
Slow economic growth, strangely enough, is likely to fuel more transportation acquisitions, as companies look for ways to expand faster than organic growth will allow.