M&A in the Trucking Market: Should Buyers be Concerned?

By IBISWorld, Inc.

September 03, 2015 at 9:57 AM

By Scott Winters, Procurement Research Analyst 

It’s official: the transportation and logistics industry is a hotbed of mergers and acquisitions.  

Major transportation company FedEx is currently in the process of finalizing its most recent deal to buy European delivery company TNT. The $4.8 billion TNT acquisition marks the shipping giant’s second major acquisition of the year, and it is not alone. 

Other major players in the transportation and logistics sector, including UPS, C.H. Robinson and Stagecoach, have purchased subsidiaries, boosting their marketshares and obtaining access to more operational capacity and capital. According to the Journal of Commerce, 54 M&A deals were struck in the first quarter of 2015 alone, for a total value of $27.2 billion. Not only is the number of acquisitions climbing, but deal values have been massive as well, with 55% valued at more than $1 billion.

A combination of factors is spurring these “megadeals.” First, large companies are looking to expand, but organic growth in the transportation business has been sluggish as of late due to tightening regulations and a severe lack of capacity. For large companies with strong balance sheets, an easy way to gain additional trucking capacity is simply to buy it, and this is exactly what has been occurring.

Second, transportation and logistics companies are constantly looking to broaden their service offerings and geographic reach. For example, FedEx’s acquisition of Genco helped FedEx boost its ability to process returns and provide other third-party logistics services, and its intended purchase of TNT will significantly help it expand into the European market. 

Strategic moves such as these are helping companies take on their competition and expand into new markets. Analyst Jason Seidl of Cowen & Co. sums up this practice: “The M&A market is thriving because it’s still hard to get drivers, and acquisitions are the easiest way for a carrier to grow.”

For buyers, this M&A activity can be troubling. Increasing marketshare concentration can lead to reduced competition and higher prices as the largest companies begin to dominate the market. This trend is already taking effect; the transportation and logistics sector is anticipated to become much more concentrated in the coming years as a result of these acquisitions. Chairman and CEO of XPO Logistics Bradley Jacobs (quoted in Transport Topics, a trucking and freight transportation publication) said that he expects that two or three companies will eventually control 50% to 80% of the global market for logistics services.

 national trucking services benchmark price.jpgFortunately for buyers, however, the trucking market will remain fragmented in the next three years in spite of increasing M&A activity. With smaller trucking suppliers moving into more specialized roles, the overall number of suppliers is not anticipated to fall. As such, buyers need not worry too much because competition is expected to remain high. 

For example, prices for national trucking services are forecast to rise an annualized 3.6% in the three years to 2018 due to increasing demand and a lack of capacity, but continued heavy competition will keep buyer power in this market intact. For now, growth-hungry transportation and logistics companies continue to eat up their competitors through M&As while buyers stand ready to grasp at opportunities.

scott winters.jpg

Scott Winters is Procurement Research Analyst at IBISWorld. 




Listen to the My Purchasing Center podcast interview with Scott Winters, The Trucking Industry, Megadeals and the Impact on Procurement

Tags: purchasing logistics Supply chain management Procurement sourcing trucking
Category: News Article

IBISWorld, Inc.

Recognized as one of the nation’s most trusted independent source of market research, IBISWorld offers a comprehensive database of unique information and analysis on hundreds of procurement categories. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business and purchasing decisions while saving time and money. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit www.ibisworld.com or call 1-800-330-3772.

Please add a comment

You must be logged in to leave a reply. Login »

Related Content

Thought Leadership and the Demise of Your Third-Party MRO Outsourcing Program: Part 4

George E. Krauter

When one defines third-party MRO (3PMRO) success, one assumes that fundamental operations are being executed and that expectations are being met (i.e., ROI goals are surpassed} Read More

Guidance for Addressing the New Talent Acquisition Challenge

Dennis Bouley

The US Labor Department reported in March of this year that there were 6.6 million job openings, a record high. Although most of us applaud these numbers Read More

Millennials in Supply Chain Management Seek Advancement and Development Opportunities

Marisa Brown

Millennials working in the supply chain management field don’t fit the mold that the older generation assumes for them. APQC’s recent study Read More

Supplier Profiles


Staples Advantage is the one supplier that offers all the business solutions you need, all with the expertise of a specialty vendor. Read More


It started in 1972 with an idea, a new concept in distribution. Today, Digi-Key Corporation is one of the fastest-growing electronic component distributors in the World. The stimulus for this growth is Digi-Key's customer-centered business philosophy… Read More

Lunney Advisory Group

Lunney Advisory Group was founded in 2007. Our firm is not your typical consulting company. Some members of our firm are highly qualified and experienced industry executives/practitioners while others are full time or adjunct university professors.… Read More


What CEOs Expect Of Purchasing

Guest Contributor

Procurement and supply management leaders have a seat at the table, and management’s expectations are high. But what do CEOs really want, and is purchasing delivering on these expectations? This webcast looks at how procurement and supply management … Read More

Growing Purchasing Influence On Indirect Spending

Guest Contributor

At world-class companies, purchasing’s influence touches just about every area of spending. But, how exactly do procurement teams get to the point where other departments approach them for help with sourcing such indirect categories as human resource… Read More

Procurement-Finance Collaboration

Guest Contributor

Procurement & finance are two business functions which are often at loggerheads with each other. One reason for this is the lack of perception alignment on an important metric of procurement and finance performance - 'savings'. Read More