Last year didn’t see the major deals like the ones TransForce made for DHL Canada and Dynamex in 2011. But although acquisitions may have been flatter in the TL and LTL sectors, things have been heating up at the other ends of the spectrum.

David Newman, transportation analyst with Cormark Securities, believes this bifurcation of transactions in the trucking industry toward asset-light and asset-heavy concerns is the result of a flat freight market up the middle, while activity in heavy haul and bulk was the result of fairly robust energy markets. Also, asset-light tends to perform better on a relative basis in periods of weaker economic activity.

Newman sees the increased interest in non-asset 3PLs as a response to a tepid economy. “With extra capacity in a weaker economic environment, shippers tend to look for better deals, which 3PLs may be able to source,” says Newman.

Mike McCarron, former managing partner of MSM Transportation, recently sold to Wheels Group of Mississauga, Ont., for $18.6 million. He thinks there’s lots of room for growth in this segment. “The use of third-party logistics providers is more prevalent in other parts of the world than North America, and it’s become a $13 billion industry in Canada. Many of those guys who started those 3PLs back in the early 1980s are now greying and looking for an exit strategy. I think you’ll see lots of deals among 3PLs as consolidation continues,” says McCarron.

Although the MSM purchase was between two Canadian companies, US firms are also keenly interested in the Canadian 3PL market. In August of 2012, XPO Logistics of Greenwhich, Conn. acquired Kelron Logistics Inc., a non-asset 3PL with operations in Toronto and Vancouver.  Later in the year, Torus Freight Systems of Richmond Hill, Ont. was purchased by Transplace, a large 3PL and technology firm based near Dallas, Texas.

“Yes Canada is of particular interest to us,” according to Transplace CEO Tom Sanderson. “We have a strong US presence and we started from scratch in Mexico five years ago. But we needed a foothold in Canada to complete our North American service pack.”

Specialized and bulk commodity trucking sits at the other end of the scale from the logistics sector, but it, too, experienced increased interest and activity in 2012. These are asset-heavy, niche-driven operations that require a significant investment in specialized equipment.

TransForce entered the US oil field business after buying I.E. Miller Services in 2011, an oil field  transport provider with eight terminals from North Dakota to Louisiana. In 2012 the Canadian trucking giant increased its presence by acquiring assets from Peak USA Energy Services of Texas, a similar oil field service company based in Texas.

But TransForce has also been busy acquiring shares in the LTL market, and recently disclosed a 6.2% stake in Vitran that it had bought on the open market in December 2012.  Cormark’s David Newman sees this as either a small investment or potentially the start of a strategic takeover. “We believe Vitran could be in play. If the hoped-for recovery does not come to fruition, then TFI may be interested in bidding for Vitran’s profitable Canadian LTL business, which has a strong coast-to-coast overlap with TFI’s LTL operations,” says Newman.

Nonetheless, TransForce’s recent moves into the US market indicate that it is looking south of the border for growth opportunities. But the US market can be a difficult place to navigate, as many Canadians have learned.

“The competitive dynamics of the US market is prohibitive to a smaller Canadian carrier,” says Walter Spracklin, analyst for RBC Dominion Securities Inc. “Vitran has tried and it hasn’t been an easy thing. But TransForce has been building in the US keeping its focus on its same day delivery service through Dynamex and its specialized services through its oil field division in the US.”

TransForce is growing very attractive bundles of services that could accrue high valuations when and if they’re sold. “We see (TransForce’s) waste haulage, in particular, as a gem,” says Spracklin. “It’s a less competitive market with higher barriers to entry and more attractive pricing.”

Trimac is another Canadian company that is not afraid to play in the US pool. A publicly-traded company with a strong family history, this specialized commodity hauler has been operating in the US since 1979, and runs the American division as a separate entity. In 2012, Trimac US,  purchased two tanker washing businesses in Spartanburg S.C., and Charlotte, N.C., an area that is strategically important because of a large volume of tanker traffic.

Trimac Transportation Services chair and CEO Jeffrey J. McCaig suggests the key to working in the US is to separate the Canadian and US divisions and run them independently. “I think we have the right approach,” he says. “It’s a different market with a different set of strategies and approaches, and we see as much or greater potential for growth in the US. We do have a central dispatch and a central planning arm. When we have a truck crossing the border there’s someone on our team looking for a load to come back.”

Trimac was busy acquiring companies on the Canadian front as well. In 2012 it bought the tanker division of Liquid Cargo in Mississauga, and controlling interest in Fortress Transport in Guelph, Ont. Another interesting project is Northern Resources Trucking which is a partnership between Trimac and several First Nations bands in northern Saskatchewan. Trimac recently took back majority interest in Northern Resources, whose share had become diluted over the years as other First Nations bands joined the partnership.

McCaig’s position on acquisitions is perhaps unique. For one thing, Trimac doesn’t believe in selling properties after it has acquired them—they’re in it for the long haul. And the corporation doesn’t cater to using consultants or agents to find deals, nor does Trimac have a department specifically looking at acquisitions.

“Our operations people know who the competitors are,” says McCaig. “I don’t like the model of going out and chasing acquisitions. Liquid Cargo was a competitor for many years that has a paving business and other interests. And when they wanted to divest themselves of their truck line they knew we could provide it a good home.”

Interestingly, another major player, Mullen Group, made no acquisitions in 2012. Mullen’s acquisition team typically looks at about one hundred possible deals during the year, about a dozen of them seriously. “We haven’t done anything this year, and I don’t know why, there are lots of opportunities but nothing jumped out at us,” says CEO Murray Mullen. “But we don’t target acquisitions on an annual basis, and sometimes they come in bunches.”

But acquisitions seem to have come in bunches for Stan Dunford, chair of Contrans, another chief executive who, like Murray Mullen, is not interested in looking Stateside for acquisitions. Contrans had a busy year, beginning by acquiring bulk and pneumatic tank carrier Wilburn Archer Trucking of Norwood, Ont., finalizing the deal to absorb MacKinnon Transport’s van division and drivers, and then acquiring Peter Hodge Trucking of Milton, Ont., giving it a significant presence in the dump and tank sector in southern Ontario.

Meyers Transportation Services of Belleville, Ont., also found a good fit for their transportation businesses, but they had to go across the border to find it. Meyers just completed a transaction to acquire an 80,000-square-foot-warehouse in Cheektowaga, N.Y., close to the Canadian border.

According to Meyers’ president Jacquie Meyers, the new warehouse will allow them to consolidate the small warehousing operation they already had in Buffalo and to integrate it with the trucking business they own in St. Catherine’s, Ont. “We are always trying to strengthen our ties with US carriers by giving them easy access to the Canadian market,” she says. “It was the synergies that sealed the deal in the end.”

Dan Goodwill of Dan Goodwill and Associates Inc., suggests that cooperation between Canadian and US carriers is a paradigm that runs throughout the industry.“Typically Canadian LTL carriers form partnerships with US regional and national carriers,” he says. “This seems to be more prudent financially than sticking their toe in the US market. Canadian LTL carriers haven’t been all that successful setting up shop in the US.”

One major Canadian carrier that espouses the cooperative model is Day and Ross Transportation, headquartered in Hartland, N.B. According to COO Douglas Harrison, “We have a partnership with R and L Carriers, the fourth largest LTL carrier in the US,” he says. “It’s great way to leverage our expertise and market positions on both sides of the border. This is not an interline relationship, but a true exclusive relationship. Our executives meet together on a quarterly basis.”

Most recently Cavalier announced a new partnership with RIST Transport, which will combine the two carriers’ networks and provide two-day service between the northeastern US and markets in Ontario and Quebec. RIST has 11 terminals in the northeastern US, covering Pennsylvania, New York, New Jersey, Connecticut and Massachusetts. The partnership also will include freight consolidation services and warehousing on both sides of the border.

Maritime-Ontario Freight Lines Limited also followed the US partnership model, partnering with U.S. Xpress to launch a cross-border North American shipping solution. Through the partnership, each company will leverage its dominant national network to move freight across the border and throughout each country, creating one seamless North American network, covering the United States, Canada and Mexico. M-O will carry the freight across the Canada/ U.S. border crossing and U.S. Xpress will be responsible for Mexico/U.S. Border crossings.

“While many companies on both sides of the border claim to have an international presence, the extent of their reach is limited,” said Maritime-Ontario chief operating officer, Bill Henderson. “With our partnership, we will have more than just a few trucks over the border.  Both companies offer best-in-class transportation solutions and are recognized premium brands in their respective countries.  Needless to say, we believe this is a true game-changer for North American freight hauling.”

With the focus on acquisitions as a prescription for growth, it’s not surprising that American investors are looking north. “In the past few years we’ve seen Canadian companies coming to the US, and recently the push has been to do cross-border business with Mexico, and now the emphasis is doing business in Canada,” says Andy Ahern, president of Ahern and Associates of Phoenix, Ariz.

Ahern suggests that there is equity money available in the US and that Canada looks like a good prospect. “They (US investors) see Canada as a stable market. Look at Canada Cartage for example (long-standing Canadian family trucking business bought by a US equity firm in 2007). This was an old-line company with lots of dedicated carriage work. This was a good company with not a lot of risk and a lot of upside.”

But can we expect to see a real big deal in the future something along the lines of what YRC did a few years ago, bringing Yellow, Roadway and Reimer together under the same banner? “I don’t see it happening,” says Douglas Nix, vice chairman of Corporate Finance Associates. “There’s a lot of guys shopping for distressed assets and under-performing companies. You could line up a hundred buyers for a company but that doesn’t mean you’ll get a premium valuation from any of them.”

Nix thinks there has to be a compelling reason for a company to buy out another one. “As far as general freight goes it’s hard to tell the difference between one carrier and another except on rates. What I’ve seen is a lot of guys looking to fill niches and service holes. They’re focusing less on size and more on their needs.”

But Nix does see growth happening in the contract and dedicated services division.  “Where I do see an advantage is for those providers who can supply a customer with dedicated equipment and drivers. This takes the transport provider out of the spot market and into a deeper relationship with the shipper.”