UPDATE: June 30, 2020: TFI has outbid PS Logistics for the acquisition of CT Transportation, after a late offer led to an auction mid-June. Read more here.
Dive Brief:
- PS Logistics will acquire CT Transportation, a flatbed company, after CT's parent company, Comcar, declared Chapter 11 bankruptcy. Terms of the pending sale were not disclosed.
- Comcar, the Florida-based parent company of five operating companies, announced its intention to file Chapter 11 and sell its five subsidiaries, in a Sunday blog post.
- PS Logistics has been on an acquisition streak in the last few years, buying Celadon Logistics from Celadon Group in April 2019, when the Indianapolis-based TL carrier was in trouble. Celadon later filed Chapter 11 bankruptcy. Since the end of 2017, PS Logistics has acquired six companies: Riechmann Transport in February 2019; Robinette Trucking, in December 2018; D. Mosley Trucking in August 2018; Shelton Trucking Services in January 2018; DT Freight in November 2017; and Celadon’s flatbed division in September 2017.
Dive Insight:
A number of trucking firms will be in position to snap up distressed properties as COVID-19 continues to disrupt the economic environment, accelerating bankruptcies and consolidations in the industry. PS Logistics, a flatbed and TL carrier based in Birmingham, Alabama, has been in growth mode for more than two years, well before the pandemic.
Opportunities to buy, brought about by failures and over competition, also abounded before the coronavirus. In the first three quarters of 2019, as the freight boom evaporated, more than 800 carriers filed for bankruptcy, according to Broughton Capital. Then came the Celadon bankruptcy and closure in December 2019, which put about 4,000 drivers out of work.
A "black swan," there was no way for trucking firms to foresee the coronavirus crisis. But the avoidance of major debt and the accrual of cash benefited a number of players. At the same time, the temporary freight boom caused by panic shopping has dissipated since late March, and carriers running on the edge of profit are likely to need federal assistance if they are to survive through the year.
XPO CEO Bradley Jacobs recently said his company has $2 billion in cash and $500 million in credit, and had an eye out for new business in 2020, if the right circumstance pops up.
"I don’t rule out doing [mergers and acquisitions]," Jacobs told Transport Topics. "We're good at M&A. We've got great success at buying 17 of the best companies that were in the industry and then highly integrating them."
As the pandemic continues, there is concern about at least one major carrier, YRC Worldwide. The company declined to take questions after its May 11 earnings call. YRC announced it would likely not make lenders' EBITDA guidelines in Q1 2021, while being $800 million in debt.
The next day, Stifel Financial suspended its estimate and ratings for YRC.
