Even with geopolitical headwinds, transportation and logistics deal flow is improving, according to a mid-year report from consulting firm PwC. Buyers are shifting away from the traditional strategy of bolting scale onto their existing networks. Instead, they are now prioritizing the acquisition of scarce technology assets and capabilities that are difficult to develop independently. An easing regulatory environment is also helping spur deal activity.
“The next premium may not go to the biggest network. It may go to the operator with the hardest-to-replicate capability,” the Wednesday report said.
It noted specific buyer interest for providers that solve complex problems through AI and automation. Companies that can help increase shipment counts without adding humans and equipment are most desirable. Temperature-controlled, healthcare, reverse logistics, dedicated truckload and cross-border infrastructure are some areas seeing acute interest.
A more specialized focus has buyers paying higher acquisition multiples. The average deal size in the travel, transportation and logistics sector (for transactions greater than $50 million) is up 321% since 2023. (The $85 billion Union Pacific-Norfolk Southern merger announcement had an outsized impact on the growth rate.)
Deal valued totaled $39 billion in the first two months of the second quarter, a notable increase from $34 billion in the first quarter and $29 billion in the fourth quarter.
Buyers are also looking for tough-to-find physical control points at the ports and the borders.
“As trade lanes shift and supply chains regionalize, investors are competing for scarce nodes that provide access, resilience and pricing leverage,” the report said.
The report said a more accommodating regulatory landscape is allowing dealmakers to contemplate transactions once thought to be out of bounds. It pointed to the pending rail merger and a reemergence in airline consolidation (Allegiant’s $1.6 billion acquisition of Sun Country Airlines) as evidence.
If the Union Pacific-Norfolk Southern deal closes, the report said it could spark further deal activity at the short-line railroads and across physical rail, intermodal and transloading infrastructure.
“The regulatory environment and longer-term market outlook are giving dealmakers confidence to pursue larger transactions that may have faced greater scrutiny in the past,” said Arun Raisinghani, principal of transportation and logistics deals at PwC U.S. “Buyers are moving before the approval environment changes.”
The report flagged Amazon’s further emergence as a third-party capacity provider as a risk. To justify purchase premiums, investors must now rigorously test whether a target company’s customer relationships, margins and service models can survive the e-commerce giant’s encroaching logistics ecosystem.
Brokerage Compliance Symposium
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
F3 Awards Dinner
The night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
F3: Future of Freight Festival
Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowThe night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowIndustry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now