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Aug.24, 2015

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4 THE JOURNAL OF COMMERCE Editor's Letter Chris Brooks IF YOU'RE AN online shopper who waits until late in the holiday season to meet your gift-giving needs, chances are you've had to rely on express deliv- ery. If that delivery company was UPS, chances are Coyote Logistics helped arrange the shipment. For the past several holiday sea- sons, the largest U.S. transporta- tion provider has turned to Coyote, a $2 billion-a-year truckload freight broker, to help fill demand during the express carrier's busiest time of the year. Starting this holiday season, UPS won't have to outsource that busi- ness, because it's buying Coyote in a $1.8 billion deal expected to close before summer turns to fall. Dissected by Senior Editor Bill Cassidy in this week's cover story, the acquisition is the largest in UPS history, and its most important since the $1.25 billion purchase of Over- nite Transportation a decade ago. That deal formed what is today UPS Freight, the fifth-largest U.S. less- than-truckload carrier, with more than $2.6 billion in 2014 revenue. It also rounds out a business that, for all its wares, has largely lacked a true truckload presence. "When it comes to truck transportation, we've principally been in the LTL business," UPS spokesman Steve Gaut said. "This acquisition allows us to round out our portfolio with a proven FTL player that can deliver capacity without UPS having to build up a heavy asset base." At its core, Coyote, which secures capacity from 35,000 motor carriers and manages transportation services for shippers as a 3PL through a pro- prietary technology system, solidifi es UPS's position as a full-service logis- tics and transportation provider. It's just the latest in a rash of acqui- sitions by asset- and non-asset-based service providers looking to offer end- to-end supply chain solutions, on the North American and international stage and in an increasingly complex market that requires the precision only technology can provide. The buyers range from the biggest — Swiss 3PL giant Kuehne + Nagel this month fi nalized its acquisition of U.S.-based multimodal company ReTrans — to smaller up-and-comers such as Can- ada's Dicom Transportation Group, which has acquired four trucking and logistics businesses this year. No one has been as aggressive as XPO Logistics, which has acquired more than a dozen companies — from freight brokerage and forwarders to intermodal rail, contract logistics, expedited transport and last-mile logistics businesses — since Bradley Jacobs started the company in 2012. XPO this year has acquired dray- age company Bridge Terminal Trans- port, e-commerce delivery specialist Atlantic Central Logistics and Nor- bert Dentressangle, one of Europe's largest 3PLs that itself acquired U.S. contract logistics company Jacob- son last fall. It's also in the process of acquiring supply chain technology provider New Breed Logistics. In all, XPO has dedicated $3.7 billion for acquisitions this year, a number it's likely to exceed, given the $3.5 billion price tag for Dentressangle, as part of a strategy that aims to triple its rev- enue by 2019, to $23 billion. But every deal is dwarfed by UPS rival FedEx, which is working through a European Commission investigation of its $5 billion acquisition of TNT Express — two years after regulators shot down UPS's $4.8 billion bid for the Dutch delivery giant — and just months after FedEx acquired U.S.- based 3PL Genco for $1.4 billion. If it all seems too much to track, it probably is, and the pace isn't slow- ing. There were 116 transportation and logistics mergers and acquisitions in the first half of the year, compared with 101 a year earlier, and the value of those deals surged 57 percent to $64 billion, according to research fi rm PwC. For investors, there's no doubt about the return: Global 3PL revenue of nearly $750 billion in 2014 was up 7 percent, according to research fi rm Armstrong & Associates. But for shippers, all that matters is service, and the technology at the core of so much of today's merger activity will be put to the test. Technology, after all, doesn't move freight. JOC Let's Make a Deal The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, August 24, 2015, Volume 16, Issue No. 17. The Journal of Commerce is published bi-weekly except the last week in December (printed 26 times per year) by JOC Group Inc. 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105. Subscription price: $344 a year. Periodicals postage paid at Newark, N.J., and additional mailing offi ces. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 2 Penn Plaza East, Floor 12, Newark, N.J. 07105-2257. AUGUST 24.2015 EXECUTIVE EDITOR, THE JOURNAL OF COMMERCE AND JOC EVENTS Chris Brooks 973.776.7818 MANAGING EDITOR Barbara Wyker 973.776.7817 EXECUTIVE EDITOR, JOC.COM Mark Szakonyi 202.872.1234 SENIOR EDITORS Joseph Bonney, Trans-Atlantic, East and Gulf Coast, Latin America 973.776.7809 William B. Cassidy, Trucking and Domestic Transportation 202.872.1228 Bill Mongelluzzo, Trans-Pacifi c 562.428.5999 Greg Knowler, Asia +852 3975 2647 ASSOCIATE EDITOR Reynolds Hutchins, Intermodal Rail and Government/Regulation 202.572.1487 EDITOR-AT-LARGE Peter T. Leach 212.755.0940 RESEARCH EDITOR Marsha Salisbury 973.776.7828 ASSISTANT WEB EDITOR Dustin Braden 973.776.8652 ECONOMIST Mario O. 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