Dive Brief:

• TFI acquired D&D Sexton on Monday, according to a company news release. The Missouri-based reefer company has 120 tractors and nearly 400 reefer and dry van trailers. The reefer company will be folded within TFI's CFI brand.
• Also on Monday, Werner acquired New England Home Delivery Services, known as NEHDS, for $64 million. The Connecticut-based carrier has 400 delivery trucks in the Northeast and Midwest and delivers big and bulky products to residential and commercial customers, according to Werner. 
• Possibly driving the demand for reefer capacity is a near-complete recovery for grocers and restaurants, according to Bob Costello, American Trucking Associations chief economist. Costello, speaking during a ATA economics webinar on Tuesday, said grocery store sales grew 11% in 2020, and are up 9% in October, year over year. And restaurant sales are up 29% in October, year over year, after falling 19% for 2020 because of the pandemic. Overall, "retail freight is going to remain strong for a while," Costello said.

Dive Insight:

The end-of-the-year M&A activity indicates big fleets are closing 2021 by snapping up capacity and books of business that have become more valuable during the economic recovery. 2021 was predicted to be a big year for M&A in the trucking sector, and it was hardly a disappointment.

Affordable financing and high, sustained spot rates — which attracted capital from Wall Street and private equity — have driven the trend. Big fleets could afford to shop around.

Many fleets eyed a holistic strategy, looking to diversify with carriers that went outside of their normal scope. For TL giant Knight-Swift, that meant an unusual acquisition of an LTL carrier in July. It spent an eye-catching $1.35 billion for Alabama-based AAA Cooper. Also in July, Werner closed its first TL deal with ECM Transport Group for $142 million, acquiring 80% of the company.

Nikhil Sathe, managing director of Logisyn Advisors, told Transport Dive in July that the jump in transportation M&A behavior was partly a diversification strategy. Diversification "buffered" companies from the ups and downs of a sub-sector such as LTL, TL or 3PL, he said.

At the same time, the M&A behavior of 2021 indicates carriers are not content to focus on TL, LTL and 3PL. They're also looking at final-mile trucking firms, as e-commerce continues to grow. Werner CEO Derek Leathers said in a statement that the addition of NEHDS "represents a significant step forward" in its final mile offering.

TFI has led the M&A charge over the past several years. In 2020, M&A activity was largely overshadowed by the COVID-19 pandemic, and some carriers put things on the back burner. But not TFI.

The Montreal-based trucking firm bought nine carriers in 2020, and 88 total carriers since 2008. TFI was growing so well, Cowen's Jason Seidl, a managing director covering airfreight and surface transportation, told Transport Dive in November 2020 that he expected the Canadian company to consider relocating its corporate suite in the United States, so it could capture more investment on a U.S. stock exchange. (TFI currently trades on the Toronto Stock Exchange.)

To kick off 2021, TFI bought UPS Freight for $800 million, scooping up UPS' LTL business.

TFI has embarked on an aggressive growth-by-acquisition strategy. Transport Topics, which ranks carriers by revenue, said TFI overtook Knight-Swift in size and is now the No. 5 for-hire carrier in North America.