After a comparatively quiet stretch in the early part of the decade, mergers and acquisitions in the Canadian trucking industry have picked up in recent years. In 2018 alone, the sector has absorbed more than a dozen significant deals.

What’s driving all the activity? And should it be a big concern for consumers and fleet technology vendors?

In short, the deals are being driven by a host of factors — none of them foretelling any real doom and gloom for the industry. In fact, one could make the case that the consolidation trend could represent a positive move for the Canadian trucking sector.

Recent win-win M&A activity

TFI International — one of Canada’s five largest trucking firms — recently bought Gorski Bulk Transport, a liquid and dry bulk transport company with operations across North America. This was a very strategic move for TFI. It gives the company its first specialty truckload foothold in the U.S. In a published report, TFI CEO Alain Bedard said he made the move to take advantage of a strong trucking environment and added that he expects to do three to four more deals in Ontario in the next few months.

Another transaction over the summer paired up haulers Big Freight Systems and Kelsey Trail Trucking. Big Freight is owned by U.S.-based Daseke, the largest flatbed truck operator in North America. Kelsey had been in business 40 years and had resisted a number of offers to sell before agreeing to join up as a division of Big Freight. The two companies appear to have a lot of regional and operational synergies that will help them both grow.

Earlier this year another one of Canada’s trucking titans, the Mullen Trucking, purchased DWS Logistics, an Ontario-based provider of third-party logistics and warehousing services. This appears to be another win for both sides. DWS will operate as a standalone entity, taking advantage of Mullen’s trucking/logistics network to expand deliveries, and Mullen will further diversify its freight delivery service operation.

A pattern in this year’s transactions

Other deals announced this year seemed to offer similar synergies, with regional freight carriers joining up to cover more distance, Canada firms buying resources overseas, and larger carriers adding outlets that sell parts, temperature-control equipment, or wheels.

One common factor among the M&A transactions this year is that most, if not all, are structured to have the purchase operating as a standalone entity of the purchaser, with the prior owner staying on to run the unit. This can be seen as a positive indicator of an industry’s health, where both sides keep “skin in the game” and one company doesn’t just absorb the assets of another.

This is the way it tends to work in Canada. Big trucking concerns like TFI and Mullen Trucking have made dozens of acquisitions over the years, and they keep the new groups operating as their own profit-and-loss (P&L) centers. In the U.S., more acquisitions tend to get rolled up under the purchaser’s label, with operations merged and brands falling by the wayside.

This pattern has hidden impacts. Not only does it keep more operations intact — it tends to allow the operating units to retain more control over the technologies they use. If a buyer rolls up all of its acquisitions under one brand, it often standardizes on common technology platforms.

This is more typical in other industries, in other locales. But in Canada, trucking company parents aren’t in a hurry to embrace the complexity of forcing separate van, refer and last-mile operations to share systems for dispatch, security or analytics. That forces technology vendors to stay sharp, keep focused on customer service, and not rely on big, enterprise-wide build-outs to drive big increases in market share.

Trucking’s new generation

There are other factors driving the wave of M&As. One is that the industry itself is maturing. Today’s operators have different priorities than yesterday’s group.

The truckload industry in Canada essentially started back in the early 1980s, freed by deregulation to operate without constraints of a wide range of controls, including vendor price setting. The young entrepreneurs that started companies in those days have either passed away or are looking to give their assets to a new generation. Those without a logical succession plan are starting to make moves to sell.

The next generation is looking more strategically at the future. Families that inherited control of their elders’ trucking firms see opportunities in partnering with larger players with the capital to help them expand their businesses. Pinched by business challenges ranging from driver shortages to rising costs of fuel to the need to invest in more technology, these new entrepreneurs are starting to listen when competitive offers come in.

The trucking industry’s resurgence in recent years has increased the number of willing buyers. Larger fleets with improved financial positions have jumped at the opportunity to increase market share, enter new markets, and acquire new drivers.

How is the consolidation affecting the overall transportation industry? It certainly has strengthened the bigger players and either removed weaker players from the market or given them a new lease on life, going forward with more stable backing.

Don’t expect a significant impact on consumers, though. While consolidation may push prices up for certain routes, the trucking industry is so big and so diverse, the market will tend to absorb the current level of M&A activity without any real fall-out. Unlike many industries where a handful of top players dominate the market, trucking is much more egalitarian. Even the biggest firms in Canada control only a small segment of the overall market.

We’re seeing more M&A this year, and the trend will probably continue. It will shake up some markets and alter the competitive balance in certain spots. But, unlike in many other industries, Canadian trucking is insulated from the major upheaval consolidation can cause.