Dive Brief:
- ArcBest, the parent company to ABF Freight and other brands, is set to acquire MoLo Solutions, a TL broker based in Chicago. The deal includes a cash payment of $235 million, and it is expected to close in Q4, according to an announcement Wednesday.
- The acquisition would double ArcBest's brokerage capacity, making it a top-15 U.S. TL broker with access to more than 70,000 carriers, the press release said." The addition of MoLo fortifies our ability to win truckload, which is a biggest area of logistics spend for our customers," Judy McReynolds, president and CEO of ArcBest, said on a call with investors on Wednesday.
- "There is tremendous market opportunity in the truckload brokerage business, and we are pleased with continued growth and progress in that area," ArcBest President of Asset-Light Logistics and Chief Yield Officer Danny Loe said in the announcement.
Dive Insight:
ArcBest anticipates growing the non-asset side of its business will result in gains elsewhere, as well. Over 60% of customers who use asset-light services also utilize the company's asset-based services, said McReynolds.
"ABF Freight flourishes and is most effectively utilized when working alongside solid asset-light services, because of the options we're able to provide our customers. We have especially seen the benefit of these capabilities over the last few years. For this reason, the addition of MoLo and the progress it will facilitate toward a balanced revenue mix will benefit all of our logistic services," said McReynolds.
The industry's largest trucking firms have gotten significant boosts from their brokerage arms this year. XPO Logistics, Knight-Swift, Schneider and U.S. Xpress reported that the freight surge in Q1 fed their load-booking platforms.
"The truck brokerage market is white-hot," XPO CEO Bradley Jacobs said in an earnings call in May.
That trend is expected to continue. According to the Council of Supply Chain Management Professionals' annual State of Logistics Report, authored by Kearney, the brokerage market is expected to more than double by 2024.
MoLo is short for "Modern Logistics," and modernization has been propelling the industry forward. The CSCMP report said the growth would be due, thanks in large part, to a pandemic-induced acceleration in digitization.
That was one of MoLo's selling points for ArcBest.
"MoLo's expertise with larger customers that have significant needs, many of whom are digitally connected, will provide a unique opportunity for us. The increased scale of the business provides more data and enhanced intelligence to better serve our customers and carriers while operating more efficiently," McReynolds said.
Andrew Silver, CEO of MoLo, said in the press release the company has achieved $600 million in annual revenues with only 500 shippers. ArcBest said it expects the acquisition to drive higher revenue, earnings and retention, due to increased cross-selling across its expanded portfolio of solutions.
CFO David Cobb said during the investor presentation that ArcBest expects the combined TL brokerage to generate more than $1.2 billion next year.
Aside from TL, MoLo offers LTL/partial, flatbed, dedicated, expedited, reefer, dru van, GPS integration and 24/7 tracking services, according to its website. Andrew Silver is the son of Jeff Silver, who founded Coyote Logistics and is the CEO of TMS provider Mastery Logistics Systems. Loe noted in the investor call that MoLo is built around that TMS.
