UPS announced today it is buying Coyote Logistics for $1.8 billion as it maneuvers for a slice of the burgeoning freight brokerage business.
Coyote, which acquired the Chattanooga-based Access America in April 2014, has major operations in Warehouse Row in downtown Chattanooga and the purchase is expected to provide a premium for employees and managers who own part of Coyote.
Coyote has helped support UPS in the past during the busy holiday season, the last two of which have caused headaches for the shipping giant. The Chicago-based logistics firm booked revenue of $2.1 billion last year.
UPS said Friday that it expects the acquisition adding to its earnings next year. The Atlanta company anticipates the transaction could result in $100 million to $150 million in annual operating savings.
The deal is targeted to close within 30 days.
"The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments," said UPS Chief Executive Officer David Abney. "This high quality acquisition significantly increases UPS full-truckload scale and we are uniquely positioned to take advantage of exciting new revenue growth and synergy opportunities."
Keynote speaker and CEO of Coyote Logistics Jeff Silver speaks Wednesday, Nov. 12, 2014, at the Chattanooga Area Chamber of Commerce's Spirit of Innovation Awards luncheon at the Chattanooga Convention Center in ChattanoogaJeff Silver, Coyote CEO, said the company's technology and organization "will enable us to scale quickly to take full advantage of the added customers, lanes and capacity within UPS.
"It's a great day for Coyote employees, our customers and our contracted carriers," he said.
Coyote arranges customers' freight shipments on available trucking capacity contracted to members of its large carrier network, numbering more than 35,000 trucking companies. Following the acquisition and integration of Access America Transport to its network last year, Coyote added industry leading strength in flatbed serviced segments such as heavy equipment and construction.
During the peak holiday shipping season, UPS often supplements its fleet with contract transportation providers to meet customer demand. Coyote has played a growing role in supporting UPS peak operations over the past few years and the company expects to leverage Coyote's carrier network even further for this purpose in the future.
UPS has also identified revenue growth and fleet efficiency synergy opportunities by hauling shipments arranged by Coyote using existing UPS backhaul capacity within its tractor/trailer fleet.
"Through the Coyote network, UPS will provide our combined customer base with an even more seamless supply chain solutions portfolio from multi-modal freight shipments to small-package delivery," said Alan Gershenhorn, UPS executive vice president and chief commercial officer.