The recent acquisition of Panther Expedited by Arkansas Best
highlights the growing interest in the US expedited trucking sector. The expedited trucking market has undergone
many changes over the years. However, the basics remain the same – this niche
segment provides time-sensitive, door-to-door delivery of various goods,
particularly those of a “just-in-time” nature.
The segment is difficult to size due to its fragmented
nature. It includes numerous smaller region-specific carriers. However,
according to SJ Consulting, FedEx Custom Critical is considered the largest
expedited carrier in the US with $329m in revenue for 2011, a growth rate of
14% over 2010. According to the director of operations for FedEx Customs
Critical, the company is growing in the upper single digits so far this year.
The other major players include Panther Expedited, UPS Express Critical,
Landstar Express America and Express -1. Combined, these top five expedited
carriers had estimated revenues of $938m, an almost 10% increase over 2010.
Besides the time-definite nature of the business, security
is priority for many shippers that utilize this service. For high-valued goods such as electronics,
pharmaceuticals, arts and financial, lost and/or stolen property can result in
big losses.
While security is the
top priority when using expedited trucking, many are also turning to this
segment to manage capacity. Although capacity within the trucking industry
appears to have lessened somewhat recently, it still remains fairly tight.
Also, due to economic concerns and supply chain changes, some shippers are
opting for leaner inventory levels. As a result, shippers are willing to pay a
slightly higher price for already agreed-upon capacity and security instead of
relying on other options such as the spot market.
Premium solutions are also on the increase. FedEx Custom
Critical recently announced it expanded its SenseAware service to customers in
aerospace, arts and finance. This service, originally designed for its
pharmaceutical customers, allows for real-time monitoring of high-value,
time-sensitive shipments as well as for those goods that require temperature
control. Also, as the delivery vehicle travels along a designated route, the vehicle
is under constant two-way, on-board satellite monitoring, and instant alerts
are issued if the vehicle deviates from the given route.
Other premium solutions offered within the expedited
trucking segment include refrigeration, special handling, trade-show support
and consolidation services.
As demand for such services continues, larger trucking
companies are expanding service offerings to meet the needs. For example, Pitt-Ohio launched its Fast
Track service in May. The service
includes same-day delivery, next-day and second-day delivery service to all
points in North America and many international destinations. Fast Track is
customizable based where and when the customer needs their expedited freight
delivered and also provides mobile alerts for customers.
For some carriers,
such as Arkansas Best, the decision is to acquire specialized expedited
carriers. In fact, over the past year or so, mergers & acquisition activity
in this space has increased - Express-1 was acquired by Jacobs Private Equity
LLC and renamed XPO Logistics and Canadian small parcel carrier, Transforce
acquired US-based Dynamex.
It is likely mergers & acquisition activity will
continue in this segment – particularly as trucking companies look to diversify
and expand their service offerings. Smaller, region-specific expedited carriers
are likely more at risk for takeovers as larger carriers expand their
geographic reach.
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