TORONTO, Ont. – Canada’s Less-than-truckload sector is ripe for consolidation, Cormark transportation market analyst David Newman told transportation industry professionals this week during a webinar on industry trends.
“I think it’s going to be a case of who is going to be the first to blink and then we will finally see consolidation. The Truckload business is scaleable and they’ve already rightsized. LTL isn’t scaleable. If you have a case of having to do something about your fixed costs, then that’s a case for consolidation,” Newman said.
Newman was participating in a CITT webinar along with editorial director Lou Smyrlis, discussing the results from our annual Transportation Buying Trends Survey , conducted in partnership with CITT, the Canadian Industrial Transportation Association and Cormark.
Newman cited Transforce’s recent stake in Vitran as indication large players may be getting ready for more than the small, bolt-on type acquisitions that have dominated transportation M&A activity the past couple of years.
Newman, fresh from cross country visits with Canada’s leading carriers, said several large players, such as Contrans and Trimac, are doing extremely well and are in a good position to consolidate the industry.
“Canadian government is certainly trying to prod business to use the dead money in their balance sheets. Companies are well armed with cash, they’ve gone through the recession, and are a bit older now and certainly valuations look good so if you are going to sell your business, certainly this would be an opportune time. We have a few catalysts for consolidation to happen, “ he reiterated.
In addition to LTL, Newman believes carriers on the tank side of the business may be targets for acquisition because the tank market is lucrative.