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Reuters article quotes Managing Partner Jim Parham on the rapid pace of M&A activity in trucking

Jim Parham, Managing Partner, was quoted in ‘Reuters’ November 6, 2017 article “U.S. truck firms accelerate into the merging lane”

“It’s (the pace of acquisitions) been as busy as we’ve seen it since we started the business 13 years ago,” said Jim Parham, managing partner Florida-based M&A advisory firm Transport Capital Partners.

“We expect this pace to continue, if not accelerate, in the coming months,” Parham said.

Parham hopes to close four deals between firms with revenue of between $10 million to $250 million in the coming weeks but declined to provide specifics.

In February, Parham helped less-than-truckload carrier Central Freight Lines buy Wilson Trucking Corp out of Waco, Texas, another LTL carrier, to expand into the U.S. Southeast. LTL carriers consolidate smaller freight loads onto a single truck.

Read the full article here.

Analysis: Behind the Wave of Trucking Mergers and Acquisitions

From the June issue of Heavy Duty Trucking

It’s been a long time since we’ve seen the number and size of trucking mergers and acquisitions like we have lately. There’s the merger of Knight Transportation and Swift Transportation, plus numerous acquisitions in the flatbed market by Daseke. Before that, XPO Logistics purchased Con-way, later selling off its truckload component to a Canadian company while keeping the less-than-truckload.

To get some perspective, I contacted Lana Batts. She’s currently partner emeritus of Transport Capital Partners, a consulting firm specializing in transportation mergers and acquisitions. However, she is known for much more than that. Her 40-plus years in trucking includes being president of the Truckload Carriers Association and senior vice president of government affairs for the American Trucking Associations.

Here are the highlights from our conversation, which has been edited for length and clarity.

Read the full article at HDT here.

View a PDF of the article.

Wages Affected by Freight Slowdown

Expectations Lower for Driver Wage Increases

The fourth-quarter Transport Capital Partners (TCP) survey finds carriers predicting smaller increases in driver wages while remaining cautiously optimistic for volume growth in 2016.

The trucking industry saw a slowdown in freight over the fourth quarter of 2015. Expectations indicate that increases in driver wages will be limited in the year ahead as volume expectations were lowered for 2016.

A substantial majority, 70% of carriers surveyed, expect wage increases of only 1% to 5%. Moreover, 22% of carriers expect to see no increases at all. These expectations are similar to TCP survey results from Q4 2010 and Q4 2012, but notably more conservative than the past couple of years.

Richard Mikes, TCP Partner, states:

“Carriers are in a tactical seasonal strategy – the first quarter being weak in loads, more drivers being available from construction in northern climates, and deep cutbacks in truck purchases over the last couple of months. The longer term struggle between business caution and the need to improve driver staffing via driver wage levels will be interesting to watch in 2016.”

Volume Expectations Growth Slows for 2016

Given the poor economic results from the last quarter of 2015, it is not surprising that growth increase expectations for 2016 are at their lowest levels since the fourth quarter of 2012.

This survey found that only one-third of carriers are expecting volume increases in 2016. At this point last year, that number was almost twice as high. Furthermore, half of all survey respondents are looking toward a flat year ahead. This is the highest percentage of carriers expecting volumes to ‘remain the same’ in the history of this survey.

However, this survey’s lowered expectations do carry optimism for the year ahead. A third of carriers are still expecting increases in freight volumes, with only 1/6 expecting decreases.

“While volume and rate expectations have tumbled, there is still no fear of a looming recession in these results,” summarized TCP Partner, Steven Dutro.

Contact:

Richard Mikes
Office: (239) 395-2595
rmikes@transportcap.com

Steven Dutro
Office: (970) 204-1492
sdutro@transportcap.com

The Business Expectations Survey by TCP, now in its seventh year, has given forward-looking guidance from industry leaders through both sides of the economic cycle. Mikes and Dutro both have senior-level experience advising carriers on strategic and operational issues as well as in mergers and acquisitions in the trucking industry.

About ACT Research Co., LLC

ACT Research, a contributor to the Blue Chip Economic Indicators, has been the recognized leading publisher of commercial vehicle (CV) industry data, market analysis, and forecasting services for the North American market since 1986. Their commitment to data quality & integrity; in-depth analysis; and timeliness have made their services the industry standard.

For more information, visit www.actresearch.net.

2016 Will Be A Year of Stability for Trucking

Trucking Continues to Move Forward with Cautious Optimism

The fourth-quarter Transport Capital Partners (TCP) survey finds carriers remaining positive, despite tempered expectations, and looking toward stable growth in 2016.

Undeterred by continuing volatility around the world, the United States economy will likely continue its steady upward climb in 2016. And, as is often the case, the trucking industry presents us with an accurate mirror to movements in the economy at large.

Economic events in the 4th quarter of 2015 left expectations at their lowest levels in over 5 years. However, motor carrier executives remain optimistic that 2016 will bring solid growth for their companies.

“Expectations are lower than in recent years but are still positive for 2016. The indication is for a stable business environment and little fear of a recession,” summarizes Steven Dutro, TCP Partner.

Many, Not Most, Still Positive About Rates

At the beginning of 2015, 79% of the participants in our survey were looking forward to rate increases over the year ahead. Turning the page into 2016, that number had dwindled to 41% – the lowest percentage we have recorded since 2009.

Despite this dampened optimism, positive expectations remain strong. Forty-one percent of those surveyed still expect their freight revenue rates to rise this year.

“In this survey, and in carrier discussions with TCP, we are seeing more variation in the opinions of individual carriers than in prior years. Any further tightening, caused by a small increase in demand or driver shortages, will have a proportionally greater upward impact on spot and contract rates,” notes Richard Mikes, TCP Partner.

Carriers Most Positive About Capacity

Perhaps most telling of industry expectations for 2016 is that a strong majority – 61% of carriers – expect to expand their fleets this year.

“Growth expectations are not quite as robust as they were in 2014 and 2015. But, this number is still relatively consistent with the expectations – and the modest growth – of the past few years.” -Steven Dutro, TCP Partner

Read the full survey results here.

Contact:

Richard Mikes
Office: (239) 395-2595
rmikes@transportcap.com

Steven Dutro
Office: (970) 204-1492
sdutro@transportcap.com

The Business Expectations Survey by TCP, now in its seventh year, has given forward-looking guidance from industry leaders through both sides of the economic cycle. Mikes and Dutro both have senior-level experience advising carriers on strategic and operational issues as well as in mergers and acquisitions in the trucking industry.

About ACT Research Co., LLC

ACT Research, a contributor to the Blue Chip Economic Indicators, has been the recognized leading publisher of commercial vehicle (CV) industry data, market analysis, and forecasting services for the North American market since 1986. Their commitment to data quality & integrity; in-depth analysis; and timeliness have made their services the industry standard.

For more information, visit www.actresearch.net.

Wall Street Journal quotes TCP regarding “Trucking Makes a Comeback, but Small Operators Miss Out”

Wall Street Journal quotes TCP regarding “Trucking Makes a Comeback, but Small Operators Miss Out – Their costs are rising, and new U.S. regulations add to their expenses”.

Read the full article here.

The Perfect Buyer

“With all the news about company bankruptcies, increased government regulations, higher equipment costs and economic uncertainty, some motor-carrier owners are looking for options.

They are asking themselves: “Should I buy another company to get larger and spread the overhead of more regulations?” or “Should I sell? And if so, to whom?”

If selling is the preferred option, owners then find themselves looking for the “perfect buyer.”

The “perfect buyer” usually: (1) is willing to acquire either 100% of the business or a minority interest; (2) does not get involved in the day-to-day operations of the business; (3) pays fair market value; (4) offers flexible terms; (5) offers the seller the option of paying no capital gains tax on the sale; and/or (6) provides some upside participation in the future performance of the business….”

Excerpt from “Opinion: Looking for the Perfect Buyer?” by Ronald J. Gilbert, President of ESOP Services Inc. and Jim Parham, Managing Partner of Transport Capital Partners, published on the Transport Topics online newspaper. 

Read the full article here.

Capacity Growth An Inevitable Result of Lowered Utilization

Commercial Carrier Journal (www.ccjdigital.com) and TruckingInfo.com both recently ran stories highlighting TCP Survey data from the 4th Quarter Business Expectations Survey.

The survey showed a large majority of carriers expecting to grow capacity, and many moving to replace their aging vehicles.

The new hours-of-service rules have resulted in lower utilization of equipment. As a result, carriers are being pushed to increase capacity and raise driver pay.

The number of carriers indicating they are not going to add capacity has been trending down, and is now at its lowest level yet for the TCP survey, at just 27 percent.

Larger carriers expected to be more aggressive in adding equipment than smaller carriers. Thirty-nine percent of larger carriers expected to add between 5% to 15% compared with only 27% of smaller carriers.

“We suspect that all the 2007 pre-buy tractors are being traded out. If smaller carriers are not able to replace older, less fuel-efficient equipment (and their higher maintenance costs), those carriers will not be well positioned to benefit from looming good times,” says TCP Partner Richard Mikes.

TruckingInfo.com Article: http://www.truckinginfo.com/news/story/2014/01/capacity-growth-an-inevitable-result-of-lowered-utilization.aspx

Commercial Carrier Journal Article: http://www.ccjdigital.com/monday-money-carriers-to-add-capacity-freight-indices-mixed-union-votes/

Carriers Finding Re-Negotiation of Accessorials Challenging

TodaysTrucking.com shared TCP survey results (from the 4th Quarter BES) that show 42% of carriers expecting their customers to resist re-negotiating accessorials.

Fifty percent of smaller carriers and 38 percent of larger carriers expressed pessimistism about accessorials. However, carriers small and large were more positive about re-negotiating detention times – 43 percent expected to re-negotiate.

“Credit availability and carrier profitability go hand–in-hand, both are essential to replace aging fleet assets and to grow capacity. Carriers with stronger profitability and cash flows will find credit available and affordable and will be better positioned to gain market share,” said Steven Dutro, TCP Partner.

Full article here.

Entry-Level Drivers Will Be Sought

With the many changes taking place in the regulatory and economic environment, many carriers are reviewing their labor policies. Highlighting 4th Quarter BES results, Commercial Carrier Journal (ccjdigital.com) recently reported on these trends.

The TCP survey showed less than 30% of carriers hiring inexperienced, entry-level drivers. But that number is set to grow. Slightly over half of all carriers expect to soon be training and utilizing inexperienced, entry-level drivers.

While this majority is slight, a stunning 84 percent of carriers are willing to support allowing younger, properly trained drivers to enter the driving pool.

“We believe this means they support other carriers hiring and training younger driver so that they can then poach them later,” says Richard Mikes, TCP Partner.

Read the article here.

Carriers Optimistic On Near-Term Volumes & Rates

A recent article in Commercial Carrier Journal (ccjdigital.com) references the TCP Fourth Quarter 2013 Survey to highlight carrier optimism for volume and rate growth.

Continuing the positive trends of the previous quarter, more carriers are expressing optimism for increases in volumes and rates. Since the fourth quarter of 2012, positive volume expectations have risen from 29 percent to 61 percent.

With those increasing volumes, a majority of carriers are also expecting rates to climb over the coming months. There are now close to three times as many optimistic carriers as pessimistic carriers.

“Volumes and rates continue to be more entwined as positive GDP numbers are laid on top of effective capacity brought down by the FMCSA driving hour mandates,” says Steven Dutro, TCP Partner.

Check out the full article here.