Industry Trends
Biden Administration Agrees to $1 trillion Infrastructure Deal
The infrastructure plan, worth nearly $1 trillion, would fund improvements to roads, bridges, transits, airports and enhance the infrastructure for broadband, water, and electric vehicles, and other forms of infrastructure. Contracting and construction companies would benefit from new, large-scale projects and contracts funded by the government, resulting in profitable assignments. The draft bill will be voted on in the House, and if successful, make its way to the Senate.1
Regional Package Carriers Get Involved with the E-Commerce Rush
Regional package carriers are growing in the shipping industry as national carriers reach capacity, and retailers continue to require quick and inexpensive ways to ship packages. The growth is a result of the accelerated digital demand due to the COVID-19 pandemic, which has also placed tremendous pressure on the national carriers. This trend illustrates how businesses have a growing need for shipping services as national carriers are pushed to their limits. There are no plans for the demand to slow down, which further illustrates that regional carriers and new carriers will be able to enter the market and profit. Despite the recent growth, regional carriers still account for approximately 10% of the total parcel delivery market.2
Hotels and Restaurants Struggle to Recover
Due to supply chain and production issues, prices for raw materials and ingredients such as corn, wood, or glass have increased significantly, resulting in increased prices to cover the higher costs. In addition, there is a worker shortage which is causing even more pressure in the hospitality industry. As a result , many companies find it very difficult to rebound similar to companies in other industries.3
Automakers Move Away from the "Just in time" Model
The “Just in time” model that auto manufacturers once used has proven very difficult and almost devastating during the COVID-19 pandemic. Many materials used in automobile production, such as resin or semiconductor chips, are in short supply in our current conditions. Consequently, many brand-new vehicles are sitting in lots waiting for the necessary parts. Going forward, automobile manufacturers will take additional steps to ensure that any future supply chain bottlenecks are not as devasting.4
Chinese Port Shutdown Threatens the Holiday Shipping Business
The Yantian port, one of the world's busiest ports, serves as a significant gateway for containerized exports like electronics, furniture, home appliances, and car parts traveling to western countries. According to shipping executives, nearly 50 container ships and another 350,000 loaded shipping containers on land are stuck in the port. This situation will likely lead to a short supply of specific products and increased prices due to the shipping costs. Experts anticipate that the effect of the port’s closure will be felt throughout the holiday season.5
New York City Subway Riders Face Service Disruptions
Leaders of the New York City subway system announced that riders will likely to face delays and disruptions in the near future due to staff shortages caused by the COVID-19 pandemic. The subway will be critical to New York City's recovery as it is essential to transport people around the congested city. It is up to the state to hire more people and train more people to have the system running at full capacity soon. The state has said that they have an aggressive plan to hire the necessary number of employees so that the system can support the entire ridership again.6
Experts Believe Commodity Prices Will Remain Elevated
During the COVID-19 pandemic, commodity prices soared due to supply chain issues and the global lockdown. As the world reopens and regains a sense of normalcy, commodity prices have decreased, but not to their pre-pandemic levels. High commodity costs are viewed negatively since they would increase the costs of goods. Still, higher commodity prices are a sign that investors are investing to benefit from the growth and protect their portfolios against inflation. Federal Reserve Chairman Powell is on record attributing the high materials costs to supply bottlenecks and other factors that are not expected to last in the long term as economies move further from lockdown.7
New Technology Eases Warehouse Strain
Warehouses and product distribution centers have seen immense growth recently as a result made of technological advances by giants like Amazon, as well as by the pressures of the COVID-19 pandemic. As a result, tech companies are developing new tools, such as exosuits to help ease the strain on warehouse workers. In addition, the technology is being used to increase worker efficiency, and, hopefully, the technology will help retain employees. Although the technology is still in the developmental stage, the result would be an improved supply chain.8
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
- Elizabeth River Crossings concession
- Abertis Infraestructuras, S.A.; John Hancock Life Insurance Company (U.S.A.)
- $2,315.78
- Transurban Chesapeake assets
- Canada Pension Plan Investment Board; UniSuper Limited; AustralianSuper Pty. Ltd.
- $2,188.02
- SEACOR Holdings Inc.
- AIP, LLC
- $1,234.55
- AIT Worldwide Logistics, Inc.
- The Jordan Company, L.P.
- $1,200.00
- Substantially all assets of Donlen Corporation
- Athene Holding Ltd.
- $891.00
- UPS Ground Freight, Inc.
- TFI International Inc.
- $800.00
- Certain Gulf Coast Marine and Terminal Operations and Assets of Dow Inc.
- BlackRock, Inc.; Royal Vopak N.V.
- $620.00
- Cryo-Trans, Inc.
- Lineage Logistics Holding, LLC
- $500.00
- Hall's Warehouse Corp.
- Americold Realty Trust
- $481.00
- TForce Worldwide, Inc.
- TFI International Inc.
- $225.00
Source S&P Capital IQ as of 7/14/2021 and PCE Proprietary Data
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Data Assumptions This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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