Coyote has helped support UPS in the past during the busy holiday season, the last two of which have caused headaches for the shipping giant. Coyote had $2.1 billion in revenue last year, and while UPS doesn’t break out its full- truckload brokerage revenues, a spokesman, Steve Gaut, said the acquisition would accelerate those sales.
“The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments”, UPS Chief Executive David Abney said. Coyote has a network of 35,000 contract carriers as well as existing software geared toward short-term delivery services. UPS has about seven million empty leg trips annually; utilizing that space will raise revenue. Warburg Pincus first invested in the Chicago-based company in 2007.
“If Coyote gets a match that fits our system and that meets the needs of the customer, then UPS will move that”, he said. Our great people, leading technology and flexible organization will enable us to scale quickly to take full advantage of the added customers, lanes and capacity within UPS.
“With better technology and visibility into supply chains today, there are now more opportunities for transportation providers to be one-stop shops”, Brochmann wrote in a July 23 note after news of a potential deal broke.
Third-party logistics providers have recently been snapped up in a series of deals, including XPO Logistics’ purchase of France-based Norbert Dentressangle SA and Goldman Sachs’ acquisition of Neovia Logistics LLC. The European Commission on Friday opened an in-depth investigation into its almost $5 billion deal to buy Dutch delivery company TNT Express NV, saying it was concerned about the merged company’s dominance in global delivery in some markets.
Analysts said the review of the FedEx-TNT deal wasn’t surprising, given its size, and that it was largely expected by the market. A similar attempt to acquire TNT by UPS collapsed in 2013 when it failed to satisfy European regulators. UPS has expanded this service under its Access Point brand, announcing earlier this week it will offer it in 100 additional U.S. cities.
Silver will stay on board to lead the logistics company as a UPS subsidiary.
