COVID-19 Impact on M&A
Transportation & Logistics had less monthly M&A volume in December 2020 (16 transactions), compared to December 2019 (24 transactions). Total M&A transaction volume for the Transportation & Logistics industry between March 22 – December 31 is down over 21% (116 transactions) compared to the same period in 2019 (147 transactions). Transaction volume within the Trucking subsector made up over 42% of transactions (49 transactions), followed closely by Air Freight and Logistics, making up nearly 33% of transactions (38 transactions) between March 22 – December 31, 2020. Strategic buyers drove over 88% of all transactions closed between March 22 – December 31 (99 transactions). In comparison, 2019 saw nearly 80% of transactions (107 transactions) completed by strategic buyers within the same period.
Pfizer and Moderna Create Supply Chains for Vaccine Distribution
Pfizer and Moderna have worked to create dedicated supply chains to distribute the vaccine in the U.S. Due to the ultra-cold temperatures that Pfizer’s vaccine must be stored at, they are limited on how much they can ship at once because aircraft can only carry a limited amount of dry ice due to the risk of CO2 buildup when it melts. Moderna has partnered with McKesson Corp., a distribution company of healthcare supplies, and FedEx to handle the distribution logistics. Pfizer has also partnered with FedEx along with UPS and DHL to distribute its version of the vaccine. After distributing their initial supplies, Pfizer and Moderna plan to distribute up to 2.3 billion doses combined worldwide in 2021.1
European Union Levies New Tax on Ships that Serve European Ports
The European Union (EU) plans to move the maritime sector into its Emissions Trading System (ETS), to levy a new tax on ships that serve European ports. This move is part of the EU’s strategy to cut overall greenhouse gases by more than 50% by 2030. Countries who own these ships could see their daily operating costs of tankers increase by about 20%. Many countries see the tax as an effective tariff. The International Maritime Organization (IMO), an arm of the United Nations, expressed concern that this tax undermines progress on antipollution rules for its 174 worldwide members.2
No One Profits from the Soaring Container Prices
A shortage of shipping containers in China and eastern countries is causing prices for containers to skyrocket in those regions. The shortage is from an import/export imbalance between the east and west caused by a surge in China’s exports once the lockdowns in China were lifted and the western nations were still locked down. Ostensibly, container suppliers and manufacturers should be thriving off this increase in prices, but raw materials for containers are in short supply, rendering higher costs for all.3
ZIM Uses Small Size to Thrive in Bottlenecked Industry
ZIM, an Israeli-based container ship operator, used its small point-to-point premium services to circumvent shipping logjams that ultra-large vessel operators have encountered. These sector leaders have faced delays causing maritime regulators globally to launch probes of bottlenecks hitting inbound and outbound supply chains. ZIM has also carved away traffic from airfreight providers, as airfreight services typically cost far more than ocean freight services. Until a few years ago, ZIM was seen as a potential takeover target by rivals, as the industry has endured rapid consolidation. They intend to go public for an aggregate for the share value of $100 million.4
EPA Sets Emissions Limits for Commercial Airliners and Large Business Jets
The EPA set its first-ever emission limits for commercial airliners and large business jets ahead of the Christmas holiday. The standards align U.S. rules with global standards that limit carbon-dioxide and nitrous-oxide emissions from jets. The limits are set to take effect in 2028 for all existing and new aircraft. By conforming to these standards, it ensures U.S. aircraft manufacturers will not be shut out of international markets since three out of every four aircraft produced in the US are exported. Environmentalists criticize the new rules for not being aggressive enough and have expressed that they intend to sue the EPA over the matter.5
Senate Completes FAA Investigation for 737 MAX Tragedies
A congressional panel issued a report documenting safety-oversight lapses by the FAA, from intimidation of federally protected whistleblowers to lax policing of maintenance errors. The report cited patterns of FAA managers avoiding accountability for failures to ensure proper staff training and undermined some inspectors' enforcement decisions. According to investigators, those who report safety violations were often victims of retaliation. Senate investigators noted that the FAA’s cooperation was unacceptable throughout the investigation and, at times, was borderline obstructive. The FAA has cleared the 737 MAX to fly again, and American Airlines has just completed its first flight with it. Boeing agreed to pay $2.5 billion to settle charges saying that it defrauded the FAA on the 737 MAX.6 7
Hub Group, Inc. Acquires NonstopDelivery for $94.5 Million
Hub Group, Inc. acquired NonstopDelivery, Inc. for $94.5 million on December 9, 2020. Founded in 2000, NonstopDelivery provides basic last-mile delivery services, including warehousing, distribution, product assembly, and reverse logistics to some of the largest retailers and manufacturers in the U.S. The acquisition of NonstopDelivery adds last-mile service capabilities to Hub Group’s solutions offerings, which enhances end-to-end solutions for its customers in one of the fastest growing sectors of Transportation.8
Americold Realty Trust Acquires Hall’s Warehouse Corporation for $480 Million
Americold Realty Trust, the world’s largest publicly traded Real Estate Investment Trust (REIT) that focuses on warehouses, acquired Hall’s Warehouse Corporation based in South Plainfield, New Jersey, for $480.0 million on November 2, 2020. Hall’s Warehouse provides warehouse distribution facilities and transportation services for their warehouse customers. This acquisition compliments Americolds Northeast footprint and will be funded from recent equity offerings and debt private placements. This is a common strategy for the warehousing industry as demand for distribution facilities has skyrocketed and has attracted deep-pocketed investors.9 10
Largest Transactions Closed
- Elizabeth River Crossings
- Abertis Infraestructuras, S.A. and John Hancock Life Insurance Company
- Innovel Solutions, Inc.
- Costco Wholesale Corporation
- Gulf Coast Marine and Terminal Operations and Assets of Dow Inc.
- BlackRock, Inc. and Royal Vopak N.V.
- Performance Team LLC
- A.P. Møller - Mærsk A/S
- Hall's Warehouse Corp.
- Americold Realty Trust
- American Steamship Company
- Rand Logistics, Inc.
- Three Marine Terminals in CT, DE and LA
- Buckeye Partners, L.P.
- TForce Worldwide, Inc.
- TFI International Inc.
- The Apex Group, Inc.
- KLN Investment (US) LLC
- MAC Trailer Leasing, Inc.
- Mizuho Leasing Company, Limited
Source S&P Capital IQ as of 1/13/2021 and PCE Proprietary Data
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.
EBIT - Earnings Before Interest and Taxes