ATLANTA - UPS (NYSE:UPS) will acquire Coyote Logistics, a Chicago-based truckload freight brokerage company, for $1.8 billion. “The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments,” said David Abney, UPS CEO.
Founded in 2006, Coyote reported annual revenue of $2.1 billion in 2014, brokering through 35,000 trucking firms. Closing is expected this month. “This high quality acquisition significantly increases UPS full-truckload scale," Abney said.
Coyote arranges customers’ freight shipments on available trucking capacity contracted to members of its large carrier network. Coyote has experienced very rapid revenue growth since inception and has built extensive relationships with a broad customer base. The company enjoys strong market positions among food and beverage, and consumer goods customers, as well as paper and packaging, industrial and retail segments. Following the acquisition and integration of Access America Transport to its network last year, Coyote added industry leading strength in flatbed serviced segments such as heavy equipment and construction.
During the peak holiday shipping season, UPS often supplements its fleet with contract transportation providers to meet customer demand. Coyote has played a growing role in supporting UPS peak operations over the past few years and the company expects to leverage Coyote’s carrier network even further for this purpose in the future.
UPS has also identified revenue growth and fleet efficiency synergy opportunities by hauling shipments arranged by Coyote using existing UPS backhaul capacity within its tractor/trailer fleet.
“Through the Coyote network, UPS will provide our combined customer base with an even more seamless supply chain solutions portfolio from multi-modal freight shipments to small-package delivery,” said Alan Gershenhorn, UPS executive vice president and chief commercial officer.
“We will now also have the technology to help our customers improve the utilization of their fleets as part of an extended network of carriers,” Gershenhorn said. “We see opportunities for greater customer and UPS fleet asset utilization that will deepen our partnerships with customers.”
“In addition to the core profitability of Coyote, UPS is well positioned to realize a run-rate of $100 million to $150 million of annual operating synergies, from backhaul utilization, purchased transportation and cross-selling opportunities,” said Abney.
Coyote, which will operate as a subsidiary of UPS, uses a suite of proprietary information technologies that provides market-leading transportation management applications. The company also offers several software applications that customers and transportation providers can easily integrate.
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