Looking ahead, more than half of motor carriers said they would be interested in buying or selling a firm, according to the recent Second Quarter Business Expectations Survey by Transport Capital Partners (TCP). Larger carriers (more than $25 million revenue) are twice as likely to be interested in buying as are their smaller counterparts.
Richard Mikes, TCP partner and survey founder, said, “The carriers are looking for partners to ‘tango’ with as volume and rate expectations are very positive. This means buyers have an incentive to step forward and sellers have enhanced asset values and cash flows waiting to be courted.”
TCP partner Lana Batts said, “It is an ideal time to strategically determine what the best future strategy is and develop a plan to maximize the carriers value proposition. This is where TCP comes in with its proven advisory role.”
The survey also inquired whether carriers would be interested in leaving the industry if tonnages do not increase in the next six months. Only 11% said yes for the last two quarters, contrasted to more than one-fifth that said yes in February 2009. Eighteen percent of smaller carriers had a similar response, while only 8% of larger carriers did.
Mikes said, “Our interface with larger carriers and investors indicates a higher degree of future confidence, and our assistance in strategic analysis generally confirms the survey results on the cross-currents evidenced this past quarter.”
Only 53% of the carriers that responded said they are getting an adequate rate of return to buy new equipment, compared with 47% that felt they’re not satisfied with the rate of return. Only 45% of smaller carriers (less than $25 million in revenues) believed they are receiving adequate returns, compared with 57% of their larger counterparts.
Batts said, “Even though 86% of the carriers in this quarter’s survey said they have access to reasonable credit, only one-half see the 18 months ahead as a possible key time to invest in buying new companies.”