Consolidation continues to be very active this year, due to a variety of reasons: CSA compliance, Hours of Service, e-logs, the speed limiters, the cost of equipment and plaintiff lawsuits.
Many small to medium-sized trucking and logistics companies have made the decision that they want to protect their net worth, while they can. The continued pressers of consolidation, rules and regulations, and continual government intervention, have prompted many to sell.
Freight companies expand services to meet demand. More and more transportation companies are broadening their services to offer both asset and non-asset based businesses. The larger companies feel that they can control a larger segment of the shipper’s revenue by offering “one-stop shopping”. Many of the larger carriers started with a very small, non-asset based business, and developed it into a separate operating platform. However, for small to medium-sized freight brokers or logistics companies, to consider purchasing assets which increase their debt load and exposure, would not be a good idea in today’s environment.
Plaintiff lawsuits are on the rise. Ahernrecently did a study of 39 lawsuits that showed staggering results. With pending legislation to increase the auto liability limits for truckers that is just another way for plaintiff lawyers to increase the settlements for their clients. Until such time as there are mandatory regulations placed on the private passenger components of the industry, it will be very difficult for many trucking companies to survive. A truck can be parked on the road, in a safety zone, and if they are hit by a third-party, they can still be held liable. Too many trucking lawsuits today are based upon empathy and not fact.
Driver turnover still continues to be an issue. Throughout the first quarter of 2015, driver turnover continued to be an issue. Despite all that the industry has done to attract attention to the next generation, we are still short approximately 35,000 – 40,000 drivers in our system; and within the next 10 to 15 years, that shortage will increase to 200,000+ drivers. Although there are many experts that say they can solve the problem, the problem really is one of attracting the next generation, based upon their wants and needs. There is no single solution; but ultimately, the trucking industry will find a solution to the problem by changing the dynamics of their operations.
In reference to Mergers & Acquisitions, Radiant Logistics closed the purchase of Canadian-based Wheels Group. The acquisition combines 2 North American logistics companies with Radiant being based in Bellevue, Washington.
FedEx makes a bid for TNT. In a recent release, FedEx stated it intends to buy Dutch package and freight carrier TNT Express for $4.8 billion, in an effort to bolster its operations in Europe and challenge US rivals. UPS, Inc. and Germany’s Deutsche post DHL Group. This is an all-cash acquisition that will be funded through FedEx’s available cash and debt.
Industry executives scold Congress for indecision. Executives from 4 of the largest US transportation companies directed a clear message to federal lawmakers: do what’s needed to support infrastructure improvements now or risk real damage to the economy and competitiveness down the road.
The American Trucking Association stated that the federal government has failed to comply with a Freedom of Information request, for transcripts of deliberations about the use of hair testing to detect drug use in truck drivers.