The consolidation of the trucking industry in the U.S. is increasing in speed, with large trucking companies along with private equity firms absorbing smaller firms as a regulatory mandate in the country will go into effect while drivers are pushing to receive higher wages.
Thus far in 2017 alone, 44 logistics and freight movement deals have been publicly announced, according to data taken off the Internet. That already tops the 38 deals that were announced last year, and the total is likely higher since most of the deals made are private, said an investment bank managing director.
Trucking businesses by the latter part of December must begin using electronic logging devices called ELDs, in order to track the hours behind the wheel of their drivers.
This new mandate will make it much harder for the trucking companies to dodge the limits placed by federal regulators on the hours that drivers are able to work and will most likely cut into overall productivity, said officials in the trucking industry.
If that happens, it will pressure the already thin margins for most of the smaller trucking companies, fueling more consolidation.
Executives from the larger trucking businesses and private equity companies said they were aggressively searching for deals.
In addition, the trucking industry has been recovering from a tough couple of years, making companies that are still struggling more apt to sell, said one industry analyst on Wall Street.
Last week, Brad Jacobs the CEO at XPO Logistics said the company is holding as much as $8 billion for deals over the upcoming months, and narrowed the targets down to a list of dozens of companies.
XPO used this quick acquisition method to grow from being a small truck brokerage into a hugely diversified company. During a buying spree in 2015 of close to $6.5 billion, XPO acquired Con-way for over $3 billion and Norbert Dentressangle in France for more than $3.52 billion.
CFO Scott Wheeler of Daseke Inc., which is a hauler of industrial equipment for clients such as Deere & Co and Caterpillar on specialized and flatbed trailers, said that acquisitions will help to fuel the rapid growth of the company.
Daseke, with a $597 million market value, has finalized four deals during 2017, with more expected to close before the end of the year.
Daseke is the specialized and opening deck trucking largest carrier. The niche in trucking is worth $133 billion and Daseke’s market share is just 1%.