Talk about a wild start to the morning.
TFI International buying the outfit for $800MM.
Wonder how this will affect the work force, if the buyers are aggressive against unions or not etc.
UPSF Being Sold!!
Discussion in 'LTL and Local Delivery Trucking Forum' started by McUzi, Jan 25, 2021.
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SidewaysBentHalo, road_runner, LtlAnonymous and 4 others Thank this.
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Interesting. Do not really understand the sale unless there is some kind of problem brewing. I would think assets alone would be worth far more than 800 million. I did some quick research and saw that UPS paid 1.25 billion for Overnight. There must be something in the details that I am missing.
Mooseontheloose, LtlAnonymous and Rugerfan Thank this. -
Not surprising at all. UPS has been looking to unload their LTL arm for years. They nearly had it sold to XPO a few years ago until Amazon pulled their freight in-house and XPO got hit with a steep, unexpected drop in revenue and backed out. UPS had hoped that LTL shippers would pay a premium for the UPS name and found out the hard way that it's a commodity business. UPS wasn't interested in investing in new equipment and upgrades. Many of their trucks were 2m+ milers and their ELD rollout was a disaster.
Transforce (TFI) is Canada's largest LTL Carrier. They can't use the Transforce name in the US because there's a driver staffing agency using it so they'll call the new company, "TForce". They work with unions and have a history of turning around troubled freight companies. It's definitely an upgrade for UPSF and probably the best buyer they could have hoped for.Mooseontheloose, road_runner, LtlAnonymous and 6 others Thank this. -
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In my short 2.5 years as a warehouse manager I never had anything from an outside vendor come in on UPSF. Not that we were a big operation. Per corporate, We used FedEx Freight for all of our shipping. Mostly inter company hazardous tote shipping.
Dale thompson, LtlAnonymous, God prefers Diesels and 1 other person Thank this. -
It’s not a party working for TFI. Up in Canada they usually buy up a company, move the assets into one of their other operating companies then purge the recently acquired property. They don’t seem to care about retaining any of the employees; it’s pretty much like a competition elimination when they make an acquisition up here.
TFI also wrings every bit of profit out of their business units. I know a driver working for one of their subsidiaries, when COVID ramped up back in March, the wash bay and truck wash accounts at his company got shut down. Almost a year later and they’re still closed. That’s the kind of pressure they put on their business units to keep their margins thick. Might be better to invest in them rather than work.Dale thompson, Mooseontheloose, Northeast Hillbilly and 2 others Thank this. -
TFI already owns Transport America and CFI.
Corn-Fed, LtlAnonymous, flood and 3 others Thank this. -
United Parcel Service Inc. agreed to sell its freight business to rival TFI International Inc. for $800 million, saying it is pulling out of the domestic trucking market to focus on the soaring small-package-delivery business.
The sale is one of the biggest strategic shifts by new Chief Executive Carol Tomé since she took the position last June. She has adopted a mantra of “better, not bigger” in assessing UPS’s operations, and jettisoning the freight business eliminates future capital investments needed to keep the division competitive.
The agreement announced Monday would allow the business to continue using UPS’s domestic package network for five years to fulfill shipments. TFI, which is based in Canada, provides similar freight trucking services, as well as logistics services and parcel shipping in Canada.
UPS Freight offers less-than-truckload services, in which cargo from multiple shippers is combined in a single trailer, in all 50 states, Canada and Mexico. The business has about 14,500 employees, 80% of whom are full-time, UPS said.
The unit is the sixth-largest carrier by revenue in the U.S. LTL market, behind carriers including FedEx Corp.’s FedEx Freight unit and Old Dominion Freight Line Inc., according to SJ Consulting. UPS Freight generated an estimated $3.15 billion in 2020 revenue, down slightly from 2019, according to UPS. TFI, which has truckload, less-than-truckload and logistics operations, reported revenue of about $4.1 billion in 2019.
PS on Monday said it expects to book a noncash impairment charge of roughly $500 million before taxes for 2020. The deal is expected to close in the second quarter.
UPS moved into the trucking market with its acquisition in 2005 of Overnite Corp. for $1.25 billion, then its largest-ever acquisition. It said it decided to sell the business after assessing its portfolio, enabling it to pay down long-term debt. The delivery giant said it would retain historical pension assets and liabilities, while pension benefits earned after closing will be TFI’s responsibility.
UPS and rival FedEx have faced huge increases in shipping volume during the pandemic, as consumers have ordered everything from their essential goods like toothpaste and toilet paper to bulky items to outfit home offices and outdoor play sets. The carriers have raised shipping rates and added new surcharges to offset the higher costs, but it has had little effect in slowing demand for online buying.
“As more and more parcel goes B2C [business-to-consumer], the bundling with freight and parcel is less relevant,” said Satish Jindel, president of research firm SJ Consulting Group Inc. UPS’s freight “is mostly industrial and manufacturing.”
The acquisition leaves UPS rival FedEx, whose FedEx Freight unit has better operating margins than UPS Freight, as the biggest major parcel shipper with a less-than-truckload operation, Mr. Jindel said.
The Teamsters union represents some 11,000 UPS Freight workers who ratified a five-year contract with the company in late 2018.
Write to Jennifer Smith at jennifer.smith@wsj.com and Paul Ziobro at Paul.Ziobro@wsj.comLtlAnonymous, R. Buron, TrknBozo and 2 others Thank this. -
@Russian Rabbit how will this news affect yall.
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I was at TST Porter, they had terminals in all the major cities in Western Canada. Many were facilities bought and paid for years ago.
After a few years Transforce began liquidating the terminals and moved the freight into Canadian Freightways.Dave_in_AZ, LtlAnonymous and R. Buron Thank this.
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