INDUSTRIES SERVED

Transportation & Logistics

Industry Overview

This industry includes third party delivery and courier services that deliver freight, cargo, shipments, mail and other items via air, water or land. The industry also includes logistics Software companies that manage logistics and assist with trade and compliance. Major suppliers include oil refineries, vehicle manufacturers, and software companies. Target customers range from corporations and manufacturers to individual customers. The industry is in its mature stage and lightly regulated. Companies that deal with international deliveries face slightly higher regulation due to trade and compliance factors. As a fragmented industry, there is strong potential for consolidation.

Major players have been growing through tuck-in acquisitions across the globe to enhance their global distribution network and exploit location specific advantages. Going forward, the industry is expected to face some turbulence due to political tensions and uncertainties relating to trade. The possibility of a U.S.-China trade war and a no deal Brexit has created fear among consumers.

The IMF has cut its global growth outlook and predicts global growth to slow down. In addition, the possibility of a market correction will create head winds for this industry over the next couple years. This will be offset in the long-term by increasing globalization and e-commerce which facilitates international trade.

Industry Drivers

E-Commerce Growth

The economy has witnessed disrupted brick-and-mortar retail operations and rapid growth in e-commerce. Because e-commerce supply chains handle a large number of items in smaller quantities, order fulfillment and delivery operations are more complicated and labor-intensive. The rise of e-commerce is fueling demand for storage and warehouses.

Economies of Scale

Major players in this industry are able to increase their market shares through their wide global network, established supply chains and location-specific advantages. However, there is very low barrier to entry, and the threat from substitution is high.

Global Supply Chains

Supply chain disruptions can put a halt to activities in the Transportation and Logistics industry. For instance, the supply chain backups resulting from the pandemic are a major problem for short-haul drivers that move product from coastal ports to inland distribution centres like rail yards.

Selling a Transportation & Logistics Company

Consolidations frequently take place in the Transportation & Logistics Industry. As Canada’s leading private market M&A Advisory firm, Beacon understands that selling a business is an important decision. A dedicated business owner not only seeks to extract maximum value from the sale of a business but also seeks to sell the business to a competent buyer who can continue the company’s legacy. Beacon has worked on valuation and M&A advisory mandates in the entertainment industry, bringing extensive experience in deal negotiation to the table. Our experienced advisory team will assist your business in navigating the entire sell-side M&A process.

As an entrepreneur or business owner who is exploring a potential sale, it is important to understand some key factors specific to the transportation and logistics industry that might impact the likelihood of a potential sale. These are factors that determine business attractiveness for potential buyers and investors.

Cost reduction – Successful companies in this industry look for ways to cut expenses in order to maximize profit and margins. Examples of cost-cutting initiatives include maintaining good supplier relationships, outsourcing orders that do not fit in the strategic focus of the company, etc.

Established Supply Chain – Major suppliers include oil refineries, vehicle manufacturers, and software companies, all of which are integral to the operation of businesses in the transportation and logistics industry. Good supplier relationships will ensure efficiency and low costs for transportation and logistics companies.

Added Value Services – Higher profit margins can be achieved by penetrating in niche markets. Some customers have specific requirements that are not covered by all transporters. Successful transport companies often offer a wide portfolio of services to meet these specific requirements.

With 40 years of combined experience serving businesses within Toronto, Ontario, and abroad, the Beacon transaction team has extensive knowledge and experience successfully working for several automotive companies from a variety of industries. Whether it be a valuation or sale, our team can provide expertise and resources found only at larger corporations, paired with the personalized touch of our M&A Advisory team. Contact us today to get in touch with one of our advisors.