Digital Edition

Aug.24, 2015

Issue link:

Contents of this Issue


Page 9 of 55

10 THE JOURNAL OF COMMERCE AUGUST 24.2015 COVER STORY WHEN UPS IN late July announced plans to acquire Coyote Logistics for $1.8 billion, some logistics con- sultants and Wall Street analysts practically howled their puzzlement. "We still find the pairing quite strange," equity research analysts at BB&T Capi- tal Markets said in an Aug. 3 investor note. The BB&T analysts likened UPS's agreement to buy Coyote to a hypothetical purchase of McDonald's by Morton's Steakhouse. "While they are both in the freight business, the similarities end there," they said. "Buying Coyote is an indication that they (UPS) see no significant growth in their core business of parcel," said Satish Jindel, president of SJ Consulting Group. "It should be a concern that they do not see growth in their core business, when FedEx Ground is grow- ing faster." But what if the $58.2 billion asset-based global transporta- tion company and $2.1 billion non-asset truck brokerage aren't primarily interested in the similarities they may share? Can a truckload bro - kerage actually help UPS grow its core parcel business? And what does this acquisi- tion tell us about the biggest wave of logistics acquisitions in years? At first glance, Coyote, a brash, innovative fast- growing company not yet in its teens, and 108-year- old UPS, known for a more straight-laced corporate cul- ture, may not seem a match made on e-Harmony. How- ever, the combination highlights underlying and growing shipper demand not just for broader global service portfolios, but deeper, richer levels of service. Welcome to the logistics and trans- portation equivalent of the "Experience Economy," in which the quality of the expe- rience of the shipper is as important as the service activity, delivering freight from one point to another on time and undamaged. That's especially true in a business in which the primary activity, transportation in a container of some sort, has been commoditized. "Customers are yearning for good quality transportation companies that understand their problems and come back with solutions," said Scott Dobak, CEO of Dicom Transportation Group of Montreal, which has made four acquisitions

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - Aug.24, 2015