TFI International buys UPS Freight in $800M blockbuster deal
TransForce International has announced it has acquired UPS Freight, the less-than-load (LTL) and truckload divisions of United Parcel Services.
Those divisions generated about US$3 billion in revenue last year, and will give TFI International what it says will be the most extensive North American LTL networks in the U.S. and Canada. The deal, valued at US$800 million, has been approved by both companies’ boards and the new unit will operate as TForce Freight.
About 90% of the new business will operate independently within TFI International’s LTL business segment, while the dedicated truckload assets will join TFI’s truckload business unit.
“We are pleased to announce this highly strategic transaction that will strengthen our service offerings to customers as well as our ongoing relationship with UPS,” Alain Bedard, chairman and CEO of TFI International said in a release.
“Our strategy of operating independent business units with a high degree of accountability is well-suited for building on UPS Freight’s strengths and improving margins over time. TForce Freight will continue to serve UPS’ ongoing LTL distribution needs, and UPS will continue to provide freight volumes and other services to TForce Freight after the transaction for a base term of five years. We also look forward to offering expanded strategic network opportunities to UPS in Canada. This transaction is a ‘win-win’, allowing TFI to continue our strategic expansion across the US and aligning with UPS’ ‘Better not Bigger’ strategic positioning.”
The deal places TFI International among the biggest LTL carriers in North America. With its expansive existing LTL network in Canada, Bedard said the deal will “create what we believe to be North America’s single most comprehensive LTL network.”
“We’re excited about the future and the opportunities this creates for both UPS and UPS Freight as part of TFI International,” said UPS CEO Carol Tomé. “The agreement allows UPS to be even more laser-focused on the core parts of our business that drive the greatest value for our customers.”
The acquisition includes an agreement for UPS Freight to continue using UPS’ domestic package network to fulfill shipments for a period of five years.
Included in the deal are 197 facilities, 147 of which are owned. TFI said it will also push into the Mexican market, expanding on its existing LTL brokerage operations there.
“In particular, we see compelling opportunities to improve TForce Freight’s efficiency and productivity and apply our proven business model to drive long-term value creation. We look forward to the new TForce Freight thriving in the years ahead under the TFI International umbrella,” Bedard added.
In 2020, UPS Freight’s operating income was “approximately breakeven” despite its $3 billion in revenue. TFI said it will improve margins through separate management of the LTL and dedicated TL businesses, and through operating efficiencies.
It also says it will make targeted investments in the LTL fleet in the first 12 months, lowering maintenance costs while improving efficiency and safety. The deal is expected to close in the second quarter.
“This acquisition would be one of TFI’s biggest to date, further shoring up the position as one of the leading full-service supply chain companies in North America and coming closer to competing head-to-head with larger U.S. companies such as Old Dominion and XPO,” Peter Stefanovich, managing partner of Canadian M&A specialist Left Lane Associates told Today’s Trucking. “This gives further credence to TFI’s promise to expand further into the US market in light of larger growth opportunities and less restrictions from Canada’s competition bureau.”
This is a developing story and will be updated with additional reaction
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Does TFI have a union ?
Will Ups freight still operate in same location terminals
will management change?
will pay scale change>
do employees have to reapply
So the drivers are gonna take a big pay cut
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Not really. I used to work for UPS Freight until recently. I know what Old Dominion and SAIA get paid, and they are not far off. Benefits will change for sure, but the in hand checks won’t or TFI will have manpower issues.
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I also worked for UPS Freight, SAIA and OD….(Sales) OD doesn’t pay their drivers OT, but they usually make around 30-35 hourly. The benefits are the best of any company I worked for with regard to health insurance and 401K match.
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Basically UPS failed at trucking and couldnt catch the market leader Fedex Freight so they throwing in the towel
When you are hauling freight across the country for next to nothing this is what happens, especially with there being so many choices in the LTL world. Instead off pricing into the market, they chose to give it away. I worked at UPS Freight and Old Dominion and all you have to do is look at the OR of each company and it’s not hard to figure out that quantity over quality was the mission of UPS Freight. They have been wanting to dump the freight side for years…pretty much after they acquired Motor Cargo/Overnite. UPS is basically a technology company that delivers small package. All about load plans, stops per hour, make more right turns than left, algorithm etc…
TFI WILL BREAK THE UNION ,START OF SOCIALISM IN AMERICA
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Ummm…not sure you have the definition of socialism input correctly.
They didn’t make a profit last year so they must be union.
Wow another one taken over by TFI. It seems that every second company you see on the road nowadays is a TFI company. I am surprised that this is not a concern for the government as it lessens competition in the marketplace.
How does this affect independent contractors who operate with UPS ?
What changes will there be for the employees of UPS Freight regarding hourly rate, mileage, pension and seniority? Also will the terminals UPS services be the same?
its getting crazy goverment has to stop TFI
great article