(Editor's Note: This story has been updated to include information about Omni Logistics' lawsuit against Forward Air.)
Dive Brief:
- Forward Air’s retreat from its planned acquisition of Omni Logistics increases the company’s ability to grow its LTL segment through other M&A and pay dividends and buybacks, President and CEO Tom Schmitt said during the company’s Q3 earnings call Tuesday.
- “All of that, I think, has quite a bit of breathing room with the termination opportunity of the Omni transaction,” Schmitt said.
- Forward Air remains open to more M&A, regardless of whether the Omni acquisition goes through, Schmitt said. Its plans would first include any potential terminal acquisitions from bankrupt LTL carrier Yellow Corp. The focus next would shift to its typical small M&A or possibly other LTL-related deals, he said.
Dive Insight:
Forward Air’s goal in initially pursuing Omni — and joining Estes Express Lines, Old Dominion Freight Line, ABF Freight and other potential bidders for Yellow terminals — was taking a bigger share of what Schmitt described as a $15 billion high-value LTL freight market.
The CEO said achieving this goal can be done organically, but will require either doubling or tripling its commercial sales team of 20 in the next 18 months.
The company reported a 33% year-over-year increase in its LTL direct shipper customer count, which now exceeds 240. Schmitt said Forward Air’s service and record of damage-free, intact, on-time shipments, make it “the most compelling choice for customers with high value freight needs.”
“It seems like on the high-value LTL freight side, this is less consumer discretionary and more industrial,” Schmitt told analysts during the call. “There is actually a bit more momentum in demand that we’re seeing when we talk with our business partners.”
This doesn’t mean the overall freight market is poised for a recovery, he said, noting imports from Asia remained muted. But he said the environment has improved since the end of Q4 last year and the first half of 2023.
“The trends overall are more sound right now,” said Schmitt, who expects a muted Q4 freight season but remains optimistic of a freight recovery in the months ahead.
Omni on Tuesday filed a lawsuit against Forward Air in which it seeks to force the carrier to proceed with the merger to create a $3.8 billion brokerage and LTL services giant.
Dependable LTL service requires terminal infrastructure and warehousing network in key markets, which Schmitt said Forward Air has established through acquisitions and expansion.
He pointed to the company’s January acquisition of Land Air Express, which included 25 terminals and the opening of its third Chicago area LTL terminal in February.
