DC Velocity - February 2017

28 DC VELOCITY FEBRUARY 2017 www.dcvelocity.com newsworthy

UPS Inc., extending its freight brokerage presence across the Atlantic, has acquired U.K.-based broker Freightex Ltd., which has operations across Europe, for an undisclosed sum.

Under the deal, which closed on Jan. 3, Dover-based Freightex will operate as a wholly owned subsidiary of Atlanta-based UPS. Freightex, which is privately held and doesn’t disclose financial information, provides truckload, less-than-truckload (LTL), specialized, and refrigerated services. It uses an “asset-light” platform, where it controls how the fleet is used but generally doesn’t own the equipment or employ company drivers. Freightex generates most of its revenue from cross-border haulage.

Freightex’s operations are similar to those of Coyote Logistics LLC, a Chicago-based broker that UPS acquired in August 2015 for $1.8 billion, its largest purchase ever. Coyote, like Freightex, operates as a UPS wholly owned subsidiary, reflecting UPS’s decision to allow the brokerage business, a segment with which it is largely unfamiliar, to operate with an unusually wide amount of latitude for a UPS operation.

Acknowledging the common business models between
Coyote and Freightex, UPS said in a statement that it would
attempt to leverage the dual customer and carrier networks,
IT systems, and business processes to improve cross-selling
and generate efficiencies. Both brokers are known for hav-
ing robust IT systems, a must-have given the nature of their
work and the increasing demands being placed on brokers.
Brokers traditionally match loads with carrier capacity, but
their role has broadened in recent years to include services
performed by third-party logistics service providers (3PLs).
Freightex “has developed some interesting technologies
and apps for managing trucking capacity and for provid-
ing customers with a user-friendly interface,” said Evan
Armstrong, president of Armstrong & Associates Inc., a
research consultancy that closely tracks 3PLs and brokers.
“This acquisition should be a good match with UPS’s over-
all transportation management strategy.”
The value of the European 3PL market was expected to
reach $174 billion as of the end of last year, according to
Grand View Research Inc. However, the brokerage segment
is growing faster than the total market, an expansion likely
to continue as more shippers and carriers in the U.K. and
Europe gravitate toward the brokerage model, UPS said.
—M.S.

UPS buys U.K.’s Freightex in first foray into European brokerage

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