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Powered by mergers and acquisitions in trucking and freight logistics services, the Transportation and Logistics sector saw a significant jump in deal volume in the first quarter of 2019.
At nine deals in Q1 2019, trucking and freight logistics services helped spur a 69.2% increase in deal volume over Q1 2018. There were 22 transactions in the Transportation and Logistics sector in total in Q1 2019, up from 13 deals during the same quarter last year.
Despite that activity, disclosed deal value (CA$397.5 million) fell by 83.3% in the most recent quarter over Q1 2018 (CA$2.4 billion). Comparing the most recent figures to Q4 2018 (14 deals valued at CA$516 million), deal volume was up by 57.1%, while deal value fell 23% due in part to a high number of transactions in Q1 2019 (15 in total) that didn’t have a disclosed value.
The top transactions for Q1 2019, excluding public offerings and shelf-registration activities, included:
While Q1 2019 was relatively quiet when it came to large transactions, Transportation and Logistics companies were busy making significant deals in other ways. Three of the big players, the Canadian National Railway Co., the Canadian Pacific Railway Ltd. and 407 International Inc., raised a combined CA$4.6 billion from the market. Many of those transactions reflect a common theme: companies raising money to invest in and refine their infrastructure.
In 2019 alone, CN plans to invest about CA$3.9 billion in expansion activities. As for CP, it’s planning investments of CA$1.6 billion as the company looks to add to its infrastructure by, for example, building more new rail in 2019.
Technology continues to be a significant focus of investment in the sector. Activities in 2019 include a CA$125-million funding round led by Brookfield Ventures to invest in Next Trucking Inc., a freight app that connects shippers with carriers. The funding will support further development of the app as Next Trucking looks to boost supply-chain efficiency.
What’s powering the investment frenzy? A major impetus are the trade deals Canada has entered into in recent years. They include the Canada-European Union Comprehensive Economic and Trade Agreement, which helped the Montreal Port Authority record its fifth straight year of volume growth in 2018.
As a result of Canadians’ appetite for consumer goods and unprecedented worldwide demand for Canadian grains and potash, the Port of Vancouver posted 4.4% growth in container volumes in 2018 over the prior year.
The trend has continued into 2019 as well, with major Canadian ports reporting volume increases in the early months of this year.