No Match Found
Canada’s Transportation and Logistics industry continued to invest for the future in the third quarter of 2019, with trucking companies being particularly active in mergers and acquisitions amid a rising focus on last-mile delivery.
Of the 24 deals in the industry in Q3 2019, seven (29%) involved trucking companies. The activity helped lead to an overall increase in both deal volume and deal value of 9.1% and 54.4%, respectively, in comparison to Q3 2018. But looking at the prior quarter, deal volume and value were down by 25% and 21.1% respectively.
There was one mega deal in Q3 2019: the CA$3.25-billion acquisition by the Canada Pension Plan Investment Board of a 10% equity stake in 407 ETR. Without that transaction, deal value would have fallen by 73.6% on a quarter-over-quarter basis and by 48.2% in comparison to Q3 2018.
Transportation and Logistics companies have been busy making investments or launching initiatives related to technology deployment or adoption. Maersk, a global shipping firm, is now working with its brokerage arm, Vandegrift (which it acquired in February 2019), to introduce Maersk Customs Navigator, a tool that will let importers from Canada and the United States coordinate customs activity through a single process flow.
Through online customs clearance, Maersk says the tool can save three to five minutes per quote. Besides putting all information in one spot, Maersk Customs Navigator allows for the integration of data feeds, giving customers access to real-time reporting. This real-time availability of information will give shippers an edge when it comes to planning and forecasting, as well as eliminating operational challenges like detention and demurrage.
Technology is also playing a role in other areas of the Transportation and Logistics sector, including ports and last-mile delivery services. Purolator, for example, is investing CA$330 million to build a national hub in Toronto. Automation will be an important feature of the hub, which is set to be open by 2021.
Seeking to further diversify operations and revenues beyond commodities, the Canadian National Railway Co. acquired the Massena rail line from CSX Corp. in Q3 2019. Such deals show how the company is looking to inorganic acquisitions as it focuses on opportunities to transport more consumer goods.
Infrastructure is another big focus for the railway industry. In September 2019, the Government of Canada announced CA$157.3 million in funding for transportation infrastructure in Prince Rupert, BC, including a project led by the Prince Rupert Port Authority to build a double-track bridge across the Zanardi Rapids. The funding also supports other areas of railway infrastructure in Prince Rupert as the government and other players look to expand the region’s trade capacity.
The expansions show how, even with ongoing trade uncertainties, cargo growth continues to push the Transportation and Logistics industry to invest.
In Q3 2019, Amazon.com Inc. announced the acquisition of a 9.9% stake in Cargojet Inc. The deal will help Amazon’s speed up delivery times in Canada, particularly as it works to expand its one-day and same-day offerings. The agreement is conditional on Amazon increasing its use of Cargoject’s network and includes the possibility of increasing its stake even further after the first tranche vests. The transaction builds on a commercial relationship the two companies entered in 2015.