Spate of Logistics Acquisitions Could Set Tone for 2024 M&A
With the Forward Air-Omni Logistics merger finally closing in late January after months of contention in court, 2024 could possibly be in store for more deals in the sector.
Two major logistics firms announced they struck new acquisitions Thursday, with Ryder System, Inc. scooping up Cardinal Logistics from investment firm H.I.G Capital and AIT Worldwide Logistics acquiring Netherlands-based Global Transport Solutions (GTS) Group from private equity firm JTC.
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The terms of each deal have not been disclosed, although AIT chairman and CEO Vaughn Moore called the GTS transaction the largest acquisition in the company’s history.
Ryder—which offers a range of logistics and transportation solutions, including fleet management, warehousing and distribution, e-commerce fulfillment, last-mile delivery and truck rentals—already has a massive presence in North America.
Although the $5 billion logistics firm manages nearly 260,000 commercial vehicles and operates roughly 300 warehouses encompassing more than 95 million square feet, Ryder will add 200 more operating locations, 2,900 more vehicles and 3,400 professional drivers into its network with the Cardinal deal.
With Cardinal in tow, Ryder also will gain access to complementary freight brokerage services; and, to a lesser extent, last-mile delivery and contract logistics services. Cardinal primarily serves the consumer packaged goods, omnichannel, grocery, building products, automotive and industrial verticals.
Ryder will fully integrate Cardinal operations, facilities and equipment into its three major business segments: dedicated transportation, fleet management and supply chain businesses, the company says. The transaction is expected to be accretive in 2025 after all integrations between the companies are complete.
In particular, Ryder hopes the Cardinal Logistics deal will further advance its strategy to accelerate profitable growth in its dedicated transportation solutions (DTS) business. The DTS segment is a distant third in revenue at the logistics company, with third quarter sales coming in at $448 million compared to $1.49 billion for the fleet management solutions and $1.19 billion for the supply chain solutions .
“With complementary contractual services in many of the same industries, we gain greater economies of scale, and we can provide even more flexibility for transportation networks when seasonality and fluctuating demand inhibit the continuous use of resources,” said Steve W. Martin, senior vice president of dedicated transportation for Ryder, in a statement. “Combined with our end-to-end visibility and collaboration technology RyderShare, we can deliver tremendous value for customers looking for more dynamic and resilient transportation solutions.”
Ryder announced the deal on Feb. 1, and said it would provide additional details during its Feb. 14 fourth-quarter earnings call.
As for AIT Worldwide Logistics, the company is acquiring a fellow global freight forwarder that specializes in marine spare parts logistics.
GTS has roughly 600 employees and operates 16 locations in Asia, Europe, the Middle East and North America, serving more than 2,000 ports worldwide. With GTS under its belt, AIT also includes nine consolidation hubs totaling more than 484,000 square feet of warehouse space.
AIT Worldwide already operates more than 130 locations in Asia, Europe and North America, also offering full-service logistics options such as customs clearance, warehouse management and international white glove delivery and shipping services.
According to AIT’s chief business officer, Greg Weigel, the acquisition provides the company with a new geographic presence in Greece, Japan and the Nordic region, while also adding significant capacity and subject matter expertise to existing AIT networks in China, the Netherlands and Singapore.
Logistics deals were sparse in 2023 as companies were less willing to make major investments amid a wider freight recession. In the 12 months through Nov. 15, 2023, the transportation and logistics sector saw value decline by 82 percent to $35.2 billion, while the volume of deals was cut to 33 percent to 85 in total, according to an analysis of S&P Capital IQ data by PwC.
But the analysis hinted that strategic investors who benefited from the higher freight rates during the peak stages of the Covid-19 pandemic “may now be more confident in taking a longer-term view of the rate cycle and invest accordingly.”
“We believe deal-making opportunities will continue to emerge in 2024,” the PwC analysis said. “Technology-infused deals that carry the promise of transformational returns will likely continue to be attractive, and strategic buyers may be well positioned to take advantage of such opportunities. Additionally, investments in last-mile delivery capabilities are likely to remain a key focus for companies, as e-commerce purchases have shifted from traditional ‘big and bulky’ goods and non-perishables to food and beverage products and pharmaceuticals.”
