XPO Logistics’ acquisition of OHL’s freight brokerage
business, Turbo Logistics, is among a growing list of freight brokerage
acquisitions that have been made by US companies this year alone.
So why is there an interest in freight brokerage companies?
According to Jim Bisaha, Vice-President of SDS Partners, “Many established
transportation providers are looking to diversify their book of business.
Acquiring non-asset based transportation companies are a good investment and it’s
a logical extension of expanding the transportation business footprint.”
Indeed, the Turbo acquisition will allow for XPO to expand
further into the expedited transportation and temperature-controlled trucking
services. Similar to XPO’s acquisition is that of another recent acquisition - Echo
Global Logistics’ acquisition of Purple Plum Logistics. Like Turbo Logistics,
Purple Plum Logistics is a non-asset based truck-load brokerage specializing in
temperature-controlled solutions.
Other freight brokerage acquisitions that have been made
this year include Saia’s purchase of the Robart Companies and Roadrunner’s
acquisition of Capital Transportation Logistics and Prime Logistics.
Not only is the need for diversification driving these
acquisitions but perhaps another reason for the interest in freight brokerage
companies is the need for access to additional drivers. As driver shortages
intensify, trucking companies are raising pay rates and offering special perks
to attract drivers, however, the competition among companies to attract drivers
is fierce.
Another likely reason is that of the sluggish US economy. As
Bradley Jacobs, CEO of XPO Logistics, noted in the company’s recent earnings
report, like many freight companies, XPO has felt the effects of the recent
softness in volumes because of a host of political and economic uncertainties. For
those companies with access to cash, the uncertainty and softness in the market
will result in some consolidation within a market in which is heavily
fragmented with regionalized players – a good opportunity for those companies
wanting to expand in specific geographic regions of the US. For example, Roadrunner’s
acquisition of Capitol Transportation Logistics allowed Roadrunner to further
expand its customer base in the US Northeast.
As such, acquisitions are on the increase and will likely to
continue into 2013. “Look for acquisitions to continue in 2013 as
transportation firms look to broaden their footprint,” said James Bisaha.
