XPO sells truckload business
to TransForce
XPO Logistics Inc. sold its truckload business, the former
Con-way Truckload, to Canadian transport and logistics
firm TransForce Inc. for $558 million in cash, a move that
removes XPO from the asset-based truckload business
and catapults TransForce near the forefront of the North
American freight market by giving it an operation with a
significant U.S.-Mexico cross-border presence.
The sale ends a year-long saga that began shortly after
XPO announced in September 2015 it would buy Con-way
Inc., the parent of Con-way Truckload, for $3 billion. It was
clear from the start that the truckload unit did not figure
prominently in XPO’s plans. As the 19th largest U.S. truckload carrier in a crowded market, it did not have the scale
demanded by XPO Founder, Chairman, and CEO Bradley
S. Jacobs, whose mantra in building XPO into a $15 billion-a-year transport and logistics giant is to acquire and build
assets that are either number one or number two in their
respective markets.
Jacobs said although the truckload unit was profitable,
it could not differentiate itself from the thousands of carriers in the North American truckload market. “We didn’t
have an edge” in truckload, especially when compared with
XPO’s competitive positions in its other segments, Jacobs
said in a phone interview.
Last fall, Jacobs disclosed that he had fielded several offers
for the truckload unit from unidentified bidders. However,
Jacobs rejected the offers and chose to keep the truckload
unit in the fold. In the interview, Jacobs said the offers
received last year were inadequate. He characterized the
TransForce offer as a “fair deal.”
TransForce was not involved in last year’s bidding and
had approached XPO just two months ago, Jacobs said.
The truckload unit, which was known as Contract
Freighters Inc. before the old Con-way bought it in 2007
for $750 million, was considered an albatross for Con-way,
largely because of its inflated purchase price. Analysts last
year pegged the unit’s value at no more than $400 million.
EXPANDED PRESENCE IN MEXICO
For Montreal-based TransForce, which owns approximately
60 companies in the parcel, less-than-truckload, truckload,
intermodal, and logistics sectors, the purchase significantly
expands its reach across the NAFTA trades. TransForce
will control approximately 3,000 tractors and 7,500 trailers, supported by operations in 29 locations. Perhaps most
important, the former XPO unit generates 35 percent of its
business from U.S.-Mexico cross-border traffic, which will
augment TransForce’s presence in the U.S.-Canada trades
as well as within the U.S and within Canada. Until now,
TransForce has had virtually no presence in Mexico.
The company is run by Alain Bédard, whose vision of
building a superior one-stop shop of supply chain assets
through acquisitions mirrors that of Jacobs. The XPO
acquisition “significantly strengthens TransForce’s presence
in the North American truckload landscape with prominent
market positions in domestic U.S. and cross-border Mexico
freight,” Bédard said in a statement.
TransForce has “acquired a high-quality truckload business with a rich heritage and demonstrated solid operating
and financial performance,” Bédard said, adding that his
company is buying into the truckload space “at a critical
time.” He didn’t elaborate.
TransForce’s biggest leap into the U.S. market came in
July 2014 when it acquired Transport America, an Eagan,
Minn.-based truckload and logistics company that operated
about 1,500 tractors and 4,400 trailers.
For his part, Jacobs said XPO will stay active in the U.S.-Mexico and intra-Mexico markets through its intermodal,
expedited transport, brokerage, and contract logistics operations. “We will continue to have a significant presence in
Mexico,” he said in the interview.
—Mark Solomon
go figure …
$26.7 billion
The projected size in 2024 of the global market
for “smart packages,” which hold goods and also
provide services such as shipment tracking and
moisture protection.
SOURCE: GRAND VIEW RESEARCH INC.
To enhance its cross-border service with Mexico, DB
Schenker has opened a new facility in Laredo, Texas,
with 30,960 square feet of logistics space. The new facility will become a certified foreign trade zone (FTZ), with
a dedicated customs broker/import manager on site.
… Crown Equipment Corp. has opened a new facility
near Los Angeles to meet growing customer demand
in the region. As one of eight North American regional
training facilities, the new location features a large
parts department and extensive equipment inventory,
while also providing customers with a variety of training opportunities. … Material handling and warehouse
automation specialist Vanderlande has opened a state-of-the-art office building in Veghel, Netherlands.
ground breakers
