Loaded and Rolling: Private fleets expand; trucking mergers and acquisitions; and detention on the rise
(Photo: Jim Allen / FreightWaves)
Private truck fleets are expanding with rising spot rates
According to a recent report by the National Private Truck Council, private fleets continue to expand due to high spot market rates and dwindling capacities in the market. Less capacity means less service, and service metrics remain an important factor for in-house transport. For large transport companies (they carry other people’s cargo) this can be a challenge as both private and transport companies target the same labor market. The NPTC report highlights an average private fleet revenue of 14.25%, compensation of over $ 75,000 per year, an average driver work week of 42.4 hours, and 71% of drivers at home every night. Surprisingly, private freight forwarders are facing greater competition from joint freight forwarders due to higher spot rates and freight demand. Michael Zimmerman, partner at Kearney Consulting, said, “Common carriers are making even more efforts to attract drivers from private fleets, for money.” General airlines have access to lucrative sign-up bonuses, semi-regional or semi-dedicated route options, and even student loan refunds .
Private fleet trends:
The central theses:
At higher rates, expect higher private fleet investments and dedicated contract pricing to hedge against higher rates. Service scores and customer service stability are the main reasons private fleets expand in low capacity environments. The LTL segment, with most drivers driving home every night, is an attractive option compared to long-haul segments, but recent salary increases and recruitment drives have resulted in greater competition for a limited driver pool. Shared carriers with dedicated customers or semi-dedicated contract lanes may experience disruptions or integrations depending on the expansion of the private fleet as some customers may target high volume lanes for private fleet savings. Backhaul traces and utilization remain priorities for all fleets in this area.
Mergers and Acquisitions: When to Build and When to Buy, Trucking Edition
Meme Invest Image courtesy of Facebook
There have been a number of trucking and logistics mergers and acquisitions this year, partly due to record-low lending rates, growth in FreightTech innovation, and a scorching freight market. Large fleets that posted record profits are now sitting on cash reserves and traditionally struggling to grow their fleets organically as other airlines compete for drivers. One solution to this dilemma is to buy a company that has both trucks and drivers and add them to your fleet. The fun part comes from the actual integration of the operations and whether the investment is paying off, as between 70 and 90% of mergers and acquisitions fail, according to the Harvard Business Review. Below are some key M&A events from 2021 that you can keep an eye on and see if they can break the spread.
- Uber Freight completed the acquisition of Transplace, a $ 2.25 billion transaction that required an additional $ 550 million investment. The aim of this acquisition is to connect Uber’s digital brokerage with the Transplace TMS platform, which is heavily used by many shippers.
- Knight-Swift entered the LTL market with a $ 1.35 billion acquisition of AAA Cooper. As the middle mile merges with e-commerce, an LTL acquisition is a great opportunity to expand the trucking network and achieve end-to-end control and savings on the last mile.
- Canadian airline TFI International Inc. acquired UPS Freight for $ 800 million and added 197 UPS Freight facilities, 6,300 trucks and 23,000 trailers to its LTL network.
- Werner acquired the regional airline ECM Transport Group for $ 142 million. This transaction represents an adjustment of the long-term capital employed in order to include acquisitions as a growth tool. The deal added 500 drivers to Werner’s fleet, which previously comprised 7,800 units, and increased its presence in Ohio, the Mid-Atlantic and the Northeast with a greater commitment to cargo options ranging from 200 to 300 miles in length.
Businesses are difficult to hire and grow, and in the current business environment it is much easier to buy the scale than to increase it. Expect additional business as the technology offers greater scalability and traditional trucking companies venture into the LTL space to expand their presence in the booming e-commerce sector. Don’t take my word for it. Avery Vise, Vice President Trucking at research company FTR, said, “This is going to be a trend. [The] The time was when shippers moved goods either by truck load or LTL. But these labels don’t really matter anymore. I think we’ll see more of that. ”
Market update: hurry up and wait – waiting time in custody at record levels
Image courtesy SONAR
Nationwide average wait times are at a record high of 138 minutes, a reflection of the use of geofencing and telematics to determine time spent idling rather than driving at a shipper or recipient. Increased waiting times for incarceration affect the bottom line of a haulier through operational inefficiency, lack of pickup or delivery times, and lower driver revenue due to fewer kilometers driven. If you have SONAR plug in WAIT.USA for national numbers.
Routing Guide: Links from the Internet
New truck drivers over 50 could be a possible solution to driver shortage (FreightWaves)
Echo CEO on private: “Make me run faster” (FreightWaves)
Transportation Managers Say Supply Chain Shift Will Last Until 2022 (FreightWaves)
Apple offers self-repair service for iPhones (Axios)
That’s $ 9: Coffee prices are the highest in nearly a decade (Bloomburg Quint)