TFI International posts strong Q1, prepares to close UPS Freight deal

TFI International’s blockbuster acquisition of UPS Freight couldn’t have been timed better. The division achieved record Q1 earnings, with UPS’s Supply Chain and Freight Group more than doubling profits.

But Alain Bedard, TFI International’s chairman and CEO, knows there’ll be more work to do when the acquisition closes later this quarter.

“The division did better in Q1,” he acknowledged during an April 28 conference call with analysts to discuss TFI’s Q1 results. “It’s still a far cry from where it should be. The trend is good, but once we take over the company is going to have to accelerate the change and improvement that’s taking place right now.”

When TFI International bought UPS Freight in January, the group generated US$3 billion in revenue but struggled to make money. Bedard said “We feel very strongly we have a great plan. We have the support of the management team there and they understand where we want to go.”

Canpar - TFI
Pricing in the P&C segment is strong. (Photo: TFI)

Bedard wants to see the group move from break-even at the time of the acquisition, to an operating ratio (OR) of 97 within a year of closing, to an OR of 90 within three years.

Meanwhile, TFI International itself is coming off a strong quarter. It posted net income of US$66.9 million, up from $55.8 million year-over-year. Operating income rose 17% and revenue climbed from $0.92 billion in Q1 2020 to $1.15 billion this year.

“We are in the best position in the company’s history,” Bedard said. “And the pending acquisition of UPS Freight will make us even stronger.”

Currently, Bedard said, TFI International has more freight than it can handle in the U.S. truckload segment. That has put upward pressure on rates.

“We are short not of freight, we are short of drivers,” Bedard said. “Every morning we are overbooked 10-15%. Rates are being pushed up.”

Rates are also increasing in the package and courier (P&C) segment, where volumes have jumped 15% and prices about 7%. UPS just posted record Q1 results with prices up about 10-12%, which Bedard said is a tide that’s raising all boats.

“The leadership of UPS is helping everyone in the industry adjust prices to levels that make much more sense,” he said. “The pricing environment in P&C is really good.”

Bedard also has a positive outlook for the Canadian economy once vaccine rollouts are completed.

“Sure, we have lockdowns in Canada right now,” he said. “But the vaccine rollout is taking on more speed. We believe Q2 is going to be transitional but in Q3 and Q4, the Canadian economy is going to be roaring really strong.”

As TFI International works to close its UPS Freight acquisition, Bedard said smaller tuck-in acquisitions are more likely to take place this year. “It’s in our blood. We do that all the time,” he said.

He was happy to see other sizeable acquisitions recently completed in the Canadian LTL space. Mullen Group has announced purchases of Bandstra Transportation and APPS Transport.

“I’m finally happy to see the other company is doing something,” Bedard said. “We can’t buy them all. It’s a good thing for our industry. We have a great relationship with the other company and have very high respect for the other group. Way too many small companies are happy making 1-2%. The other company buying those two companies has never been focused on making two points.”

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James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 20 years and holds a CDL. Reach him at or follow him on Twitter at @JamesMenzies.

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