UPS enters European truckload market

UPS enters European truckload market

The acquisition gives UPS entry into the international freight brokerage market.

UPS is entering the truck freight brokerage business in Europe by acquiring Freightex, a British asset-light provider of truckload, less-than-truckload, specialized, and refrigerated trucking. The global transportation company will align Freightex with its US brokerage subsidiary, Coyote Logistics, building a non-asset freight network spanning North America and Europe.

The transaction marks the latest investment by UPS in Europe, where it plans to spend $2 billion to expand and improve its package delivery infrastructure through 2019. UPS, the largest US transport operator, is also the third US-based logistics company to make a road freight-related acquisition in Europe, following recent deals FedEx and XPO Logistics.

FedEx acquired TNT Express last year, gaining an extensive ground freight network in Europe. TNT’s “ability to move these pallets very fast throughout Western Europe is an extensive advantage,” FedEx Chairman, CEO and president Frederick W. Smith said during an earnings conference call last autumn. In 2015, XPO acquired Norbert Dentressangle.

Freightex gives UPS an opportunity to greatly expand the freight network that feeds its parcel delivery operations and offer additional services to its European customers. The European trucking market, like the US market, is highly fragmented, with more than 500,000 carriers, UPS said. Cross-border freight demand has been growing, spurred by e-commerce.

“The UK and Europe are strategic 3PL freight brokerage growth markets for UPS and there is significant cross-border opportunity,” Alan Gershenhorn, UPS chief commercial officer, said. “We intend to align Freightex with Coyote for greater efficiency and continue to invest for further growth,” Gershenhorn said in a statement Monday. Terms of the transaction were not disclosed.

The acquisition expands the industrial trucking arm of the world’s largest transportation and logistics company. UPS entered the non-asset trucking business in 2015 when it acquired Coyote, then a $2 billion-a-year truckload broker, for $1.8 billion. UPS has had LTL operations in North America since 2005, when it acquired Overnite Transportation, now UPS Freight.

Transportation intermediary Freightex, founded in 2001, offers over-the-road freight transportation throughout Europe from its international office in Dover, England. The company uses a network of motor carriers and a dedicated fleet. Freightex CEO Tim Phillips will remain with the company, which will operate, like Coyote, as a wholly-owned subsidiary.

Acquiring Freightex and Coyote enables UPS to expand its truckload business without actually buying truck assets. Coyote has helped UPS better utilize its own tractor-trailers by finding freight that reduces empty miles. Coyote also has helped UPS expand its cross-border business with Mexico. The Chicago-based freight broker also handles imports from Europe.

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @wbcassidy_joc.