INDUSTRY FOCUS
TRANSPORTATION & DISTRIBUTION
OVERVIEW
The US transportation industry comprises 240,000 businesses providing employment to over 5.2 million Americans and generating a combined annual revenue of $909 billion. Sectors within the industry include air and freight transportation services, third-party logistics (3PL), warehousing, and distribution.
The companies holding the largest market share in the industry include DR Horton Inc., Turner Construction Company, AECOM, Fluor Corporation, and EMCOR Group Inc.
The transportation and logistics industry faced plenty of changes this past year due to new customs and border regulations as well as the Coronavirus disease (COVID-19) pandemic.
TRENDS & CHALLENGES
Consumer shopping preferences for speed, convenience, and individuality are reshaping the transportation market with the growth of online over retail. The ‘Amazon effect’ is driving the supply chain to focus on last-mile delivery. Newmarket leaders have emerged in the one-hour delivery club, from Amazon to Uber Eats and Ocado.
Auto-replenishment, consumption tracking, artificial intelligence, and virtual assistants (Siri and Alexa) are accelerating the end-to-end purchasing trend.
Companies are developing supply chains that can handle an eco-system of shorter, faster, and smarter deliveries; transforming from mass scale to more responsive and agile systems resulting in localized production and warehousing.
Facilities are incorporating technologies such as internet of things (IoT) sensors, smart packing, smart networks, and autonomous delivery vehicles.
Severe distress in the retail sector is also creating partnership opportunities for logistics and transport companies targeting the ‘direct-to-consumer model.
FUTURE FORECAST
The China-US trade war, as well as the COVID-19 pandemic, are driving more U.S. companies to establish new supply chains, with anticipated explosive growth in LATAM with Mexico becoming the new China. The automakers especially should continue to see strong growth and reliance on Mexico.
Digitization is giving shippers and carriers efficient tech tools critical to modernizing the industry. Digital freight forwarding technology will ease the transition from offline to online and assist in managing cargo and supply chains.
The last-mile delivery issue is likely to find a solution in 2021 with a few big winners who are going to quickly consolidate and capture the bulk of the market.
INDUSTRY PERFORMANCE
4.2X
EBITDA MULTIPLE
6.5X
SALES MULTIPLE
Disclosure: These key performance indicators are based on industry averages for a company with $10 million in revenue. The KPIs are not specific to the operational performance of your company or your sub-sector.
The information contained has been obtained from different sources deemed reliable, including DealStats, Deloitte, Dun & Bradstreet, and Business Reference Guide. Pacifica Advisors does not make any representation or warranty as to the accuracy of the data. PA is a mergers and acquisitions (M&A) advisor and business broker.