The value of deal activity in the T&L sector continued to increase in the last 12-month (LTM) period (12 months ending May 15, 2022), despite global economic and political uncertainty. The value of deal activity in the LTM was $246 billion, a 6% increase over FY 2021, while deal volumes moderated somewhat, down by 7%.
Reduction in deal value (down 40%) and volume (down 9%) in cross-border transactions during the LTM was more than offset by increased activity within local markets. A core economic sector — and one undergoing significant disruption via tech innovation and supply chain restructuring — T&L provided financial investors opportunities to increase participation in the M&A market to over 62% of the value of all deals (up from 47%).
Despite increased total deal value in trucking, passenger air and shipping, the logistics subsector continued to be the engine of M&A activity, accounting for 36% of total deal volume in the LTM.
The high level of M&A activity in the T&L sector is expected to continue in FY 2022 as companies address a number of challenges. Due to uncertainties related to new COVID-19 variants, the war in Ukraine, material and equipment shortages and overall supply chain disruptions, many companies are considering near-shoring opportunities and attempting to gain more control over their supply chain.
The T&L sector has entered a second phase of recovery from the pandemic, but the reopening is impacting subsectors of T&L in different ways. Passenger ground transportation was significantly impacted in 2020, and continued to suffer from ongoing restrictions in 2021. However, the sector is expected to recover in 2022, with regional mobility rebounding as government and self-imposed restrictions soften. Similarly, air passenger transportation is expected to bounce back, despite inflationary costs, as consumers look forward to a summer of travel. The reopening of the economy, however, led to a decline in e-commerce activity, and now companies must consider their current e-commerce supply chain infrastructure in order to balance current capacity and costs without sacrificing future growth.
We expect that technology-backed solutions will continue to play a large role in T&L deals, with investors seeking technology-driven solutions to improve efficiencies and manage costs, especially in today’s inflationary economic environment. Attractive investment opportunities include real-time solutions to help truckers identify optimal routes to reduce fuel costs and tools that help freight forwarders manage fleets with less personnel, as well as automated solutions that enable warehouses to run 24/7.
“A generational level of disruption in the sector - driven by restructuring supply chains, the scale of e-commerce activity and a wave of technology innovation - continue to attract investors to the sector.”
Principal, Transportation and Logistics Deals Leader, PwC US
Managing Director, Transportation and Logistics Deals Leader, PwC US